Shopping around for a new car can be a lot of fun; shopping around for car insurance … not so much. Still, if you own a car, you have to have car insurance to protect yourself and other people, too. It’s not just a “nice” thing to do — it’s the law.
The problem is, car insurance can cost a bundle, especially if you’re a new driver, you’ve got a brand-new car or you’ve got a history of accidents or moving violations like speeding. Fortunately, there are a few things you can do to help keep the cost of your car insurance as low as possible. One of the best ways to keep auto insurance costs low is to shop around to find the best insurance company with the best rates for your needs.
USAA
We proudly serve military members and their families. Since 1922, we have stood by our members. We are your organization for insurance, banking, investments and retirement.
Discover how well we can take care of you today. Members who switched saved an average of $707 a year.[See USAA website for details1
Liberty Mutual
Un-complicating auto coverage. Understanding your coverage options shouldn't be so hard. We'll guide you through available coverage types, starting with who and what is covered.
Trusted For 100+ Years. Convenient Mobile App. 24-Hour Claims. Claims Free Discount. Multi-Policy Discount.
Top Auto Insurers
Do a search for “auto insurance,” and you’ll find dozens of companies eager for your business. But as with any product or service, you need to sort out the good (or better yet, great) options from the not-so-great choices. That’s a pretty time-consuming process. Luckily for you, we’ve done the heavy-lifting for you. Here are two top-ranked car insurance companies that deliver on their promises, so you can feel confident you’re getting the best insurance at the most competitive rates.
USAA
USAA is popular with lots of drivers because of its relatively low rates and top-rated customer service. But the problem with USAA is, not everyone can qualify for a policy with them. That’s because USAA only offers insurance products to active and retired military members and some relatives of service members and vets (including kids and spouses). To find out if you qualify (either through your own service record or the service record of a relative), USAA offers a simple qualification tool on its website.
If you do qualify, there’s a lot to like about USAA auto insurance. First, the rates are very competitive. USAA works kind of like a credit union, pooling a large group of people to offer low-cost products without taking away from features and benefits. In addition to auto insurance, USAA offers other types of insurance as well as banking products. And like other insurers, they offer additional discounts on top of their already-low rates. Plus, USAA consistently earns awards for its stellar customer service.
Liberty Mutual
What if you don’t qualify for USAA membership or if their car insurance just doesn’t meet your needs or expectations? No worries — you’ve got another great option with Liberty Mutual. Even though this company has been around for a long time (since 1912, longer than USAA), it wasn’t as well known as some other insurance companies — that is, until those catchy emu-themed commercials started popping up over the past year or so. (The emu mascot comes from the company’s nickname — LiMu.) Like USAA, Liberty Mutual offers lots of insurance options and low rates, and it’s also earned its fair share of kudos from satisfied customers. Liberty Mutual offers plenty of discounts, including discounts for buying a policy online, bundling discounts, and of course, discounts for good behavior. Plus, this company offers an add-on option to cover the cost of replacing your car with a similar one if your car winds up being totaled. Even if you qualify for USAA, it’s a good idea to run your numbers through Liberty Mutual’s calculator to ensure you’re getting the best deal.
Other Ways to Trim Car Insurance Costs
Shopping around and comparing auto insurers is an important part of keeping your premium costs in check. But there are other factors that also influence your car insurance costs. Knowing what they are — and how to control them — can also reduce your car insurance premiums so you can save even more money.
Buy an older car
Older cars are cheaper to fix, and they also tend to have a lower value (except for antique or classic cars). That means they’re also cheaper to insure. Instead of opting for this year’s model, consider buying a used vehicle that’s a few years old, when insurance costs will be cheaper but repair bills still won’t be sky-high.
Buy a “safer” car
Insurance companies are all about statistics. They know which makes and models of cars have been in more accidents historically, and they know that makes insuring those cars somewhat riskier (and potentially more costly for them). As a result, insurance companies tend to charge higher premiums for those cars. When you’re shopping around for your next car, try plugging in your car make, model and other variables into an insurance company’s estimate calculator to get a rough idea of what your insurance costs might be. You just might decide that “dream car” could be a nightmare in terms of insurance costs. Plus, cars that are less “flashy” may be less likely to be targeted by car thieves, which also means they’re less risky from an insurance standpoint.
Opt for a higher deductible
The deductible only kicks in when you make a claim on your policy, like after an accident or other event where your vehicle gets damaged. The deductible is how much you have to pay out of your own savings before the policy coverage kicks in. You can have a really low deductible, like $250, or a really high deductible of $1,000. Since a higher deductible means you’ll be covering more of the cost of repairs yourself, auto insurance companies typically lower your policy cost and your monthly premiums. If you opt for a higher deductible, make sure you have enough money in savings to cover that higher cost, just in case you need to make a claim.
Improve your driving habits
Speeding or making lots of claims for fender-benders (or more serious accidents) marks you as a risky driver, and that means your policy costs will go up. Make sure to follow speed and other driving laws so insurers see you as a good risk. Some insurers offer discounts for drivers who take safe-driving classes. Just be sure the cost of the class isn’t more than the discount you’ll get.
Improve your credit
Your credit history has a major effect on whether you’ll qualify for loans or low interest rates. But it can also have a bearing on your insurance premiums. That’s right — if you have bad credit, insurance companies tend to see you as a bigger risk, and that means your premiums can be a lot higher. Making sure you pay your bills on time and taking other steps to improve your credit is one way you can help control the amount of your premiums, plus it’s good for your financial future, too.
Know what discounts are available
Auto insurers frequently offer policy discounts for cars with safety features or anti-theft systems, and some offer other discounts, like a good driver discount, student discount or a discount for having more than one product with them (like a bundle that includes car and home insurance, for example). Some associations may offer discounts to members, too. When it’s time to renew your policy, ask an agent to review the discounts that are available to see if you qualify for any, or visit the insurer’s website and do a search for discounts.
Consider relocating
Insurance rates can vary a lot depending on where you live. Right now, New Jersey has the highest auto insurance rates, based in part on the number of accidents in the state and the number of drivers. Moving to another state or even another area within the same state could help decrease your premiums. Moving closer to your job could also help since you’ll be driving fewer miles — and less time on the road means there’s a lower risk you’ll be involved in an accident.
Get older
This one’s not really in your control, but it can make a big difference in your car insurance premiums. Like all insurance, auto insurance premiums are based on risk statistics. And since younger drivers are statistically more likely to have accidents due to their inexperience behind the wheel, insurance companies tend to charge a lot more for policies covering people in their teens and early 20s. In this case, there’s nothing you can do but wait for your premiums to decrease as a result of getting older. In the meantime, look at the other factors listed above and explore other options that might save you some money, like the student discount or good driver discount.
Think before cutting coverage
One word of caution: When you’re looking for ways to save on auto insurance, don’t skimp on coverage limits. It can be tempting to decrease your overall coverage to keep costs low, but doing so can expose you to increased out-of-pocket costs that can add up to thousands of dollars if you’re at fault. If your car is very old, it might be OK to drop collision or theft, especially if the cost of maintaining those options is close to (or more than) the actual value of your vehicle. But before decreasing your coverage limits or dropping collision or comprehensive entirely, just be sure you’re ready and able to assume the consequences if a worst-case scenario occurs.
Shopping around for car insurance can be time-consuming, but taking a little time to visit these top-ranked vendors and comparing your coverage options and discounts can yield major savings. Both USAA and Liberty Mutual offer simple-to-use calculators and dashboards to help you navigate the process with ease. Invest a little time now and you just might wind up saving a lot of money over the life of your car (and stay safer, too).
Karen Harrison has been writing about personal finance topics for the past 20 years. In that time, she’s learned time-tested tips and strategies for helping consumers get the most from their hard-earned dollars and cents, including best ways to save, earn, invest, and just plain have fun without breaking the bank. In addition to her work as a personal finance writer, Karen has learned a lot from her own personal financial ups and downs, and she’s always eager to help others avoid the pitfalls and celebrate the victories along the way.
