Car Insurance Company

Why do people buy new car insurance?

Buying car insurance can save you money, but many car owners renew their policies every year without checking the prices of other insurance companies.

In a March 2022 Forbes Advisor survey of 2,000 drivers, they were asked what would motivate them to buy a new auto insurance policy. More than half said any of these three reasons would make them buy:

  1. Bad experience with car insurance application (55%)
  2. Looking for the best price (54%)
  3. The current company does not have the types of coverage I want (52%)

Older drivers (aged 58 to 76) chose price as the #1 reason to shop, while for younger drivers (aged 18 to 25), bad claims experience and coverage types were the top factors.

Factors affecting the cost of car insurance

The cost of car insurance will vary depending on several factors, which usually include:

  1. Your driving experience
  2. Your age and driving experience
  3. Where do you live
  4. Choice of auto insurance coverage
  5. Deductible amount (if you buy Collision Insurance and Comprehensive Coverage)
  6. Car model
  7. Your car insurance history, such as whether you had ongoing coverage or passes

Your credit insurance score (the use of credit in calculating the cost of auto insurance is prohibited in California, Hawaii, Massachusetts and Michigan)

How can I find the best price for car insurance?

Once you decide how much auto insurance you need, it's time to start buying a policy. Rates often vary greatly between companies for the same coverage, so it's wise to compare auto insurance quotes from multiple insurance companies. For example, in California, rates for a good driver range from $1,668 (Wavanesa) to $3,940 (Hartford) - roughly $2,270 for the same driver.

Here's what you should do to find the cheapest car insurance.

1. Shop around

If you don't shop, you won't know if your prices are the highest or the cheapest. Getting multiple quotes will help you find the most affordable car insurance company. You can find free quotes online or by working with an auto insurance agent. Independent insurance agents may provide quotes from multiple companies. Insurance quotes are always free.

2. Ask for discounts

Ask about auto insurance discounts when you get auto insurance quotes. Generally, you can lower your car insurance costs with discounts on:

  1. By "bundling" multiple insurance policies from the same company, such as auto insurance and home insurance.
  2. Insurance of several cars in one company.
  3. The right to a good driver's discount.
  4. If you have a student under the policy, get a discount if he studies well.
  5. If you have a college student on your policy, get a discount if they are at school without a car (usually it must be at least 100 miles).
  6. Take a safe driving course if you are 55 or older.
  7. Payment of the insurance bill for the car in full for the term, and not monthly.

3. Choose a higher deductible

Collision and full coverage are franchised. The deductible is the amount of money that the insurance company deducts from the amount of the insurance check.

The higher your deductible, the less you will pay for insurance.

Here is an example. Let's say you're in an accident and your car sustains $2,000 worth of damage. If your collision deductible is $500, the insurer will deduct it from the settlement, so you'll get a $1,500 check to cover the repair.

If you choose a high franchise, try to set aside money for that franchise so that you have it on hand in case you need to file a claim later.

4. Ask about the pay per mile policy if you don't drive much

If you have a car but use public transportation to work and don't use it often, check out the pay-per-mile auto insurance policies.

These policies charge a monthly base rate as well as a per mile rate. They may be a more affordable option if you don't spend a lot of time driving.

Let's say your pay per mile insurance has a base rate of $40 per month and 5 cents per mile. If you drive 500 miles per month, your monthly bill will be $65 ($40 plus 500 miles times $0.05).

5. Ask about usage-based car insurance

Usage Based Insurance (UBI), also called telematics, may sound like pay per mile, but it's quite different. With a usage-based insurance policy, the car insurance company closely monitors your driving and creates a driving score.

For example, a usage-based insurance program might track your speed, braking, acceleration, distance traveled, and time of day. The program will use a smartphone app or device connected to the vehicle to track your driving.

These programs often offer an initial discount, and then you can save more depending on your driving. But not all drivers with UBI can save money. These programs are best suited for excellent drivers.