Is the absolute cheapest car insurance right for you? Competition among car insurance companies has prompted many of them to claim insurance discounts better than what the other guys offer. They all claim to give you the best deal to the tune of a couple hundred dollars annually. But cheap car insurance may not be the best choice for everyone.

Cheap and affordable are two different things. By focusing on affordable car insurance coverage that protects your car, assets, and loved ones, you will be in a much better position.

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Cheap car insurance – You get what you pay for

The old adage that says we get what we pay for does indeed hold true with car insurance. The insurance company is out to make money, so they simply can’t fully cover every one of their customers at a rock-bottom price for any possible claim. As a result, they must charge more for things that will cost them more in the event of a claim.

In every state, drivers are required to carry certain minimum coverage for bodily injury liability coverage, liability insurance coverage, and property damage liability coverage.. (OK- you can prove financial ability to pay in New Hampshire, but this will cost you a LOT of money upfront.) This is expressed in a three-number format representing thousands of dollars. In New York, for example, the minimums are 25/50/10. The cheapest car insurance will usually provide just those minimums and no more.

With the tort-happy culture we live in today, $50,000 in liability coverage can be easily exceeded if you end up in court opposite an experienced personal injury attorney. Should you lose the case and the plaintiff is awarded a sum larger than what your insurance covers, you will be responsible for the rest.

For younger people, the balance can be paid through garnishment of wages. But for older people who have built up assets, it’s not beyond the realm of possibility for a court to seize those assets to pay the bill. Cheap car insurance could hurt you if you have any sizable amount of assets.

Who are the most likely buyers of cheap car insurance?

There probably aren’t many drivers who wouldn’t welcome saving some money on car insurance, but there are some groups of people for whom cheap car insurance is an absolute necessity. The first of these are young males between the ages of 18 and 26.

There are several factors involved in calculating car insurance premiums. Still, the two main ones that drive the cost higher are:

  • The amount of risk the driver poses to the insurance company
  • The type of car being insured, and the amount of use it gets

Young American males typically pay the highest car insurance rates because they tend to drive a bit more recklessly than the rest of us. (Sorry, guys – but statistics are consistent here.) They also tend to drive vehicles that pose a higher risk, either because they are built or modified for performance, or the vehicles are so old they are reaching the point of safety issues. So for young males, they need to find cheap car insurance to offset the fact that they are at the highest risk for insurers.

Other groups who might need cheap car insurance have had multiple accidents, multiple traffic violations, or have been convicted of DWI. As a result, all three groups become a higher risk and demand higher premiums.

It’s essential to shop around and compare quotes from the most affordable major insurers in the US. The cheapest car insurance would be the minimum coverage limit required in your state. In many states, this is liability-only insurance which covers property damage and medical payments for others due to an accident you cause.

Another alternative is full coverage, but it can cost more than the annual minimum policy. It includes additional coverage like uninsured motorist coverage, comprehensive coverage, and collision insurance.

Are there any extras with cheap car insurance?

If you absolutely must have or prefer to have cheap car insurance, forget the extras. Collision insurance is just one example of added coverage that drives up premiums. As the value of both new and used cars continues to climb, collision coverage will not get any less expensive. If you have a loan on your vehicle, you may already know this because you must carry collision coverage.

Fire and theft is a policy extra that can vary from vehicle to vehicle. The most desired cars for thieves will carry a higher cost for theft protection. Believe it or not, the ’94-’96 Honda Accords are consistently the most sought after by thieves because there is such a high demand for parts on the black market. Theft insurance on one of these cars, especially in a central metropolitan area, will add significantly to your insurance premium.

The lesson in all of this is to consider carefully what types of coverage and limits you are comfortable with. For example, if you have assets worth protecting, is a more expensive car insurance policy a cost-effective way to keep them protected in the event of a personal injury or liability claim? If you are young or have a tarnished driving record, are there other ways to cut expenses to have the best possible car insurance?

Your insurance company weighs the risks and benefits before they offer you an annual rate. You should do the same before you accept any offer an insurance company makes.

Remember that car insurance companies use credit scores, marital status, and driving records to calculate annual premiums. It’s essential to keep a clean record because it may be harder to get cheap car insurance. Poor credit also affects insurance costs, making it harder to find an affordable insurance company.

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