A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 19, 2021

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One of the easiest ways to find the absolute cheapest automobile insurance companies is through the World Wide Web. There are a number of factors in determining car insurance rates, including where you live, the type of coverage, and your credit history. As a result, rates will vary from person to person.

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Although there are a number of car insurance companies that advertise cheap rates, the price of insurance should not be the only factor in choosing the right car insurance for your needs. A cheap policy will often not have the complete coverage that you want to protect your vehicle and passengers.

Insurance Rate Factors

The price of insurance rates is made up of various factors. This means that even if you get the same coverage as a neighbor or friend, the amount that each of you pay will probably vary, sometimes by quite a bit.

Your driving experience will be a big determinant in what you pay for your insurance.

Because younger drivers do not have much experience on the road, the car insurance rates for young individuals under the age of 25 are much higher.

How good of a driver you are will also be a factor in how much you pay for insurance. If you have a history of accidents or other driving violations, you will pay more for your premiums. If you have major violations, such as license suspensions or DUIs, not only will you pay astronomical amounts for your insurance, there is also a chance that your policy will be cancelled.

If you drive a vehicle that is newer and more expensive to fix, you will more likely pay more for your insurance. If you have certain safety features and anti-theft devices, most insurance companies will give you a discount on your premiums. How much you use your vehicle will also determine how much you pay. The less you drive the cheaper your rates will be.

Your credit history is also a factor. If you have a poor credit history, most insurance companies will charge you more for your premiums. Whether or not the company you choose takes your credit score into consideration, it is always a good idea to work on improving your credit.

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Types of Insurance Coverage

Besides the factors that determine each individual’s insurance rate, what type of coverage you choose will affect how much you pay for your car insurance. In order to get the cheapest car insurance rates you would need to choose just basic coverage. Each state has set certain basic requirements in regards to insurance protection. To find out what the minimum requirements are in your state, visit the National Association of Insurance Commissioners website.

For the cheapest insurance policy and to satisfy your state’s requirements, you would more than likely choose liability insurance with the minimum limits. Liability insurance will help protect you if you are in an accident and have caused damage to another vehicle or person.

To help cover damage to your own vehicle, there is comprehensive and collision insurance. Some states require coverage to protect you from uninsured motorists, while in other states it is optional. Some states also offer additional coverage for bodily injury. Although these will increase the cost of your policy, it may be the right decision to make, depending on your situation.

Downfalls of Cheap Insurance

If you are on a tight budget, buying insurance coverage based on price may be your only choice. It is important to understand that sometimes cheap isn’t always the best, and there are often downfalls to choosing the cheapest coverage.

If your premium is inexpensive because you chose basic coverage with the minimum limits and you were to get into an accident, the chances of you paying a lot out of your own pocket are high. Having more extensive coverage with higher limits would probably save you money in the long run.

Your premiums may be lower because you chose a high deductible. If you have money in the bank to cover the deductible in the case of an accident, that may be the way to go. If you do not have extra money lying around, you may want to spend more money on a monthly basis in order to have a lower deductible.

Another downfall of cheap insurance is that some of the cheapest companies may not be very stable. When you are looking for a company that sells cheap insurance, you should always research the company. One way to do so is to visit a website that rates car insurance companies such as A.M. Best.

Make sure the company has a good to excellent rating and a stable outlook. If you find a reputable company that also offers cheap insurance policies, you have hit the jackpot!

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