Written by Spotloan

Wondering how to identify budget-friendly car insurance options and cut costs in the new year? The average annual cost for full coverage car insurance in the United States is $1,134. Experts maintain that most Americans are overpaying for auto insurance by hundreds of dollars each year. Whether you’ve stuck it out with your overpriced policy out of loyalty or a lack of better options, this is one change that could save you a significant amount of money this year. And thankfully, there are plenty of easy ways to identify budget-friendly car insurance options.

Four Tips to Identify Budget-Friendly Car Insurance Options

1. Comparison Shop for Cheaper Car Insurance

Unfortunately, searching “who has the cheapest car insurance?” isn’t likely to get you very far. Different insurance providers have different criteria that they consider, so premiums can vary significantly from one provider to the next even if the coverage amounts are the same. Your age, location, and other personal details can all alter the price you pay for insurance. Experts recommend getting quotes from multiple providers before making a decision, and they call this process comparison shopping. Most car insurance providers let you submit your information online to get a quick and convenient quote almost instantly. 

Get at least three car insurance quotes, so it’s easier to tell if you’re getting a good deal or not. And remember to comparison shop every six months or whenever your insurance policy renews. Insurance rates change frequently, and this is a very competitive industry. Many insurance companies offer competitive rates and discounts to lock in new customers throughout the year. Personal changes like a new home, marriage, or milestone birthday can alter your rates, too. Whenever you’re shopping for something significant like car insurance, it’s best to get multiple prices. Comparison shopping for used cars and mortgage rates are two other strategies that can add up to impressive savings.

2. Consider Your Car Insurance Coverage Needs

There are many different types of coverage available when it comes to car insurance. To avoid any confusion, most people opt for full coverage, which includes comprehensive and collision and is often more expensive than other options. When you’re looking at your insurance needs, understanding the differences in the options like liability insurance vs. comprehensive insurance can help you choose the right ones, and save money. In the case of an accident, liability insurance won’t cover damage to your vehicle, but it will cover damage to the other vehicle.

Liability insurance might be the better option for you if you have a much older car and plan to replace it soon anyway. Comprehensive insurance covers the damage done to both vehicles and may be the better option if you have a newer car. Similarly, if you already have health insurance, you can skip the medical payments add-on coverage. Or if you have multiple cars, work from home, or live close by public transportation options, you can skip the rental car reimbursement option, too. Consider your needs and play around with your coverage limits and other options to see what is the most cost-effective option without sacrificing the coverage you need. As a helpful note, if you have a loan against your car, your lender will likely require both comprehensive and collision insurance, so be sure to check their requirements.

3. Bundle Insurance Policies If You Can

Insurance providers often offer discounts for combining car insurance and homeowners insurance or car insurance and renters insurance. This is one of the best tips for locking in a budget-friendly car insurance policy. Many different insurance companies offer incentives for bundling policies, and this can save you anywhere from 5 percent to 30 percent. Bundling also simplifies your bill-paying processes and makes it easier to stay on top of your budget.

4. Ask About Additional Car Insurance Discounts

There are tons of different discounts that car insurance companies might offer. Some are obvious, and some you’d only know about if you asked. Once you have a few insurance companies and quotes listed out, start calling and asking about potential discounts if they weren’t outlined already.