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How to choose the right, cheap car insurance for your budget

An adult stands by their car and stares out at a nice scene as the sun sets in the distance.
KEHAN CHEN/Getty Images
An adult stands by their car and stares out at a nice scene as the sun sets in the distance.
KEHAN CHEN/Getty Images
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When it comes to car insurance, the rate you pay can vary vastly from other drivers, and can also differ significantly from one insurance company to the next. That’s because car insurance rates are personalized to each driver and are based on many factors, including your driving record, claims history and the make and model of your car. To help illustrate what the average person pays for car insurance, Bankrate compared 2022 rate data from Quadrant Information Services and determined a national average. When it comes to full coverage, the national average cost of car insurance is $1,383 per year and $585 per year for minimum coverage, according to our analysis.

Those rates may seem expensive to some drivers, but it’s important to remember that the individual rates for each driver will likely differ from the average. And, with a little work, it may also be possible for drivers to find cheap car insurance rates on the right type of coverage for their needs. But what exactly is the best way to choose the right, cheap car insurance for your budget? To start, it may help to consider the tips below to help, which may be useful during your search to find the best car insurance at the cheapest rates available in your area.

How to choose the right, cheap car insurance

If you are looking for the cheapest car insurance, focusing on price is essential. However, you should also consider factors besides price to find the right car insurance company. There are a few things you should consider to help narrow down your options. While shopping for cheap car insurance, consider your location, your driver profile and the discounts you can qualify for.

1. Consider your vehicle and driving record

Your car insurance premium is based on many factors, including the make and model of your vehicle, the age of your vehicle, the mileage and its safety features. Because older vehicles usually have a lower value, they are often cheaper to insure than newer cars with more expensive parts and repair costs.

In addition, your driving record, including the number of at-fault accidents and moving violations you have received, will impact your car insurance rate. Generally speaking, safe drivers pay the lowest car insurance rates. If you have an SR-22 on your record, you might be required to purchase high-risk auto insurance, which usually has a higher premium.

2. Consider your personal factors

Besides your driving record, other personal factors will impact your car insurance quote. Some personal factors include your age, credit score, state, ZIP code and the number of miles you drive annually. However, certain states do not allow insurance carriers to factor credit score into your premium, such as California, Hawaii, Massachusetts, Michigan and Washington. Additionally, Hawaii does not permit age as a rating factor.

Because car insurance quotes can vary significantly based on driver profile, getting multiple quotes is valuable. Each insurance company calculates rates differently and weighs each factor according to a unique formula. What that means is that if you have certain issues that may cause you to pay more for insurance, like a minor fender bender on your driving record, you may find that one provider offers much cheaper rates than another.

3. Compare quotes based on coverage

When shopping for an insurance company, comparing quotes is one of the most helpful things you can do. In addition to your driver profile, your chosen coverage limits, add-ons and deductibles will also determine your rate. Make sure to get several quotes for the same type and amount of coverage for accuracy.

The amount of car insurance coverage you need has a direct impact on your premium. As a general rule, the higher your coverage limits are, the more your policy will cost. On the other hand, choosing a high deductible could lead to paying a considerably lower rate.

If you lease or finance your car, you will probably need to purchase a full coverage policy, which includes collision, comprehensive and liability. If you own your vehicle, you may have the option to purchase a cheaper minimum coverage policy that includes minimum coverage only, but it will not offer as much financial protection.

4. Know which discounts apply

As you compare insurance providers, pay close attention to the discounts offered. Many car insurance companies offer discounts to help drivers get a better rate, but the discounts available are unique to each carrier. Here are some commonly available car insurance discounts:

  • Multi-policy: Purchasing two or more policies from the same company, usually as a home and auto insurance bundle, can help you get a cheaper premium.
  • Multi-vehicle: If you insure more than one vehicle on your auto insurance policy, many insurance providers will lower your rate.
  • Claim-free: Drivers who have no insurance claims on their record within the last several years can sometimes qualify for a claim-free discount.
  • Pay in full: If you can afford to pay your annual premium upfront and in full, you can probably save some money on your premium.
  • Good student: Drivers who get good grades in high school or college can often qualify for a smart student car insurance discount.

If you qualify for multiple discounts, most insurance companies allow them to be stacked together, which lets you maximize savings if you qualify for more than one. You can ask about the discounts that are available so you know what you may qualify for when choosing a company. Applying discounts may help lower the cost of car insurance so you can get the policy you need without compromising your coverage.

5. Research trusted third-party ratings

In addition to car insurance quotes and coverage options, it is also a good idea to look at third-party ratings for every provider you are considering. Some of the most notable and trustworthy organizations are J.D. Power, AM Best and Standard & Poor’s (S&P). By considering third-party ratings, you are able to get a deeper understanding of the company’s overall customer satisfaction and financial stability.

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Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, and NextAdvisor, among others
Edited by
Insurance Editor
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Part of  Guide To Saving On Car Insurance