Shopping for budget auto insurance is a hassle, and it’s one of those expenses you don’t think much about until you need it. However, drivers must hold minimum liability coverage, according to federal law.
The right auto insurance coverage does not need to break the bank. If you’re looking for a guide to budget auto insurance, you have come to the right place.
There are many things to consider beyond rates when shopping for auto insurance. You should look at the coverage you need, the factors determining your rates, and any eligible discounts.
When you are ready to purchase an auto insurance policy, you should conduct a little research. By comparing a handful of quotes from the top auto insurance companies, you can ensure you’re getting the right coverage at affordable rates.
Who needs to purchase budget auto insurance?
In the United States, federal law requires all drivers to carry a car insurance policy. Each state sets a minimum coverage amount that drivers need to purchase. Generally, you can get by with budget liability-only insurance since it meets the legal requirements for car insurance.
Full coverage auto insurance is more comprehensive than liability and more expensive. The law does not require drivers to carry full coverage auto insurance, but there are some situations where you may have to purchase a full coverage policy. Your lessor will likely require a full coverage policy if you lease your car. This requirement helps protect the lessor’s financial interest in your vehicle.
What are the different types of auto insurance coverage?
There are a few different types of auto insurance coverage. The insurance coverage you need depends on various factors, like if you need to meet your state’s minimum insurance requirements. You might also need to carry additional coverage if you lease your car.
Liability insurance is the bare-minimum coverage required by drivers in all states. Liability auto insurance covers the cost of repairs to other people’s property in the event of a collision. If you get involved in an accident, liability insurance will not pay to replace or repair your vehicle.
If you don’t hold liability insurance, you will get in legal trouble for driving without insurance, but you also might get sued by the other party to cover damages.
There are three main components to liability auto insurance: bodily injury, each person; bodily injury, each accident; and property damage.
Bodily injury covers the medical bills of others that you injure while driving. Property damage pays to replace or repair any property you damage from your driving.
Collision insurance is typically optional and protects the financial interest in your vehicle. If you want your insurance company to help cover the cost of repairing or replacing your car after an accident, you need to purchase collision insurance.
No states require collision insurance, but you will likely need it if you lease your vehicle. Collision insurance also protects the lessor’s investment since they have a financial stake in your car.
Comprehensive coverage helps fill the gap left by liability and collision insurance. Collision insurance only covers damages resulting from an accident.
If you hit an animal or your car gets damaged by a natural disaster, comprehensive insurance will pay to repair or replace your vehicle. Comprehensive insurance also covers theft and fire damage.
In addition to these three primary auto insurance coverages, there are other options for budget auto insurance. If you drive less than the national average of 10,000 miles per year, you might look into usage-based car insurance.
Usage-based auto insurance — also known as pay-per-mile or pay-as-you-go auto insurance — allows you to pay lower rates, depending on the miles you drive.
You may also receive discounts based on your driving behavior. Not all usage-based insurance policies include driving behavior evaluation — those that do rely on a black box or telematics device to monitor your driving. To get the best rates, you should avoid risky driving, such as excessive speeding, abrupt stops, and driving during dangerous hours.
What factors determine the rates you pay for auto insurance?
A few different factors impact auto insurance rates. Primarily, your driving history influences the rates you pay for auto insurance. If you have a history of reckless driving, multiple speeding tickets, or a DUI, your rates will be much higher.
If you are a younger driver who’s new to the road, you lack a driving history. Since the insurance company cannot evaluate your driving behavior, your rates will be somewhat higher.
Generally, auto insurance rates will decline after you turn 25 years old. You have likely proven to the insurance company that you are a safe driver by this time.
Older drivers may also see their rates increase. There are ways to mitigate rate increases due to age, such as taking adult driving courses and using telematics devices.
The car you drive has a significant impact on your rates. A newer sedan with advanced safety technology will likely cost less to insure than an older sports car.
Safety technology like lane change awareness and backup cameras reduce your risk of a collision. Any feature that minimizes the chance of filing a claim will likely lead to lower rates.
The inherent safety features of different vehicles signal whether or not the car is risky to the insurance company.
Controversially, a driver’s gender impacts the rates they pay for car insurance. Drivers who identify as male typically pay higher car insurance rates than drivers who identify as female. The cited reason is that those who identify as male are more prone to engaging in risky behavior.
Other factors determine your rates for auto insurance, such as location and credit score.
How can you get cheap auto insurance?
Selecting a policy based on the cheapest auto insurance rates might not be the best way to save money. Instead of purchasing a cheap barebones policy, you should look for discounts.
Many auto insurance companies offer a wide range of discounts for its drivers. Driving behavior is a crucial factor in determining auto insurance rates. The auto insurance company can monitor your driving behavior by using a telematics device. If you prove to be a safer-than-average driver, you could get significant discounts.
If you get in an accident, having liability-only insurance will leave you on the hook for quite a lot of money.
A good student discount can help you save money if you are in school. Good student discounts offer incentives for students to do well in school. Good grades come with lower auto insurance rates.
You could also bundle your car insurance with other coverages since most leading insurance companies offer great bundling discounts. You may want to protect an RV, motorcycle, boat, or other insurable assets.
Which auto insurance company offers the affordable coverage that you need?
There are countless auto insurance companies available, and it can be overwhelming to narrow down your options and find the best policy for you. After reading this article, you should better understand how to find cheap auto insurance with just a click.
The best way to find affordable auto insurance is by comparing quotes. You can compare quotes from leading insurance companies with the push of a button. When you view rates and coverages from multiple companies simultaneously, you can find the best policy.