Updated March 17, 2021

Cheapest Car Insurance

Read more about Car Insurance

"I wish car insurance was more expensive," said no one ever.

If you're anything like most people, you want the most affordable car insurance that gets the job done.

It might be tempting to only get your state's minimum coverage, especially if you're a new driver who luckily hasn't experienced an accident.

But that's not always the best idea. Any money you'd save would be completely wiped out in case of a serious accident. Even if you're a safe, defensive driver, an accident can happen to anyone.

Do you feel your car insurance is fairly priced?

Instead of cutting costs in the wrong places, look for car insurance companies with competitive rates and great discounts.

See which insurers are the best for your budget below. At the end, find out how to stay safe with defensive driving tactics that prevent accidents and keep your rates low.

Here are some of the best, cheap car insurance companies:

Military Members: USAA

  • Average 6-month premium: $448
  • Pros: Lowest prices, great service, high customer satisfaction
  • Cons: Only available with military connection

USAA is a definite winner—if you're able to get a policy. This insurance company is only available if you're a military member or veteran, or a family member of one.

Their base price is already low, but you can also take advantage of their many discounts. Plus, you can bundle your car insurance policy with condo, renters, boat insurance, and more. USAA also scores high in customer service and claims satisfaction.

Other insurance companies like GEICO may have special insurance policies for military members, but USAA will usually be the cheapest option.

Like most of the insurance companies in this list, USAA offers a good student discount. If you need another reason to keep getting good grades, this is it.

These low prices aren't available to everyone, unfortunately. Check out these other companies for affordable options.

Bad Credit: GEICO

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  • Average 6-month premium: $575
  • Pros: Helpful app and website, lots of discounts, good customer service
  • Cons: Harder to find a local agents, home insurance available through a third party

Will you actually save 15% or more with GEICO? It depends on your personal details, but they typically have some of the cheapest rates for those with bad credit or no credit. It's a good choice for young drivers who haven't gotten the chance to build up their credit history.

You can get even lower rates with discounts for bundling, good grades, car safety features, and more. GEICO also has a great website and app. You can log on to easily change your policy, pay bills, and file a claim.

If you want to bundle auto and home policies, keep in mind that GEICO doesn't sell their own home insurance. They offer home insurance through a partner, so you'll have to deal with two separate insurers to get that bundling discount.

GEICO uses a credit-based insurance score to set rates instead of your financial credit score. This means they look at certain aspects of your credit score along with other factors. So if your credit score isn't stellar, there's a lot more leeway for you to get decent rates.

Getting in an accident feels even worse when you see how much it spikes your insurance. Find out which company is best for keeping rates low.

Should car insurance companies consider credit score to set rates?

Recent Accidents: Liberty Mutual

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  • Average 6-month premium: $642
  • Pros: Many coverage types, lots of discounts, options for high-risk drivers
  • Cons: Below-average customer service, base rates can be high without discounts

Accidents happen to the best of us. If you cause a fender bender, Liberty Mutual has lots of coverage options that make the accident less stressful. These include accident forgiveness, better car replacement, and more.

To new and experienced drivers alike: Never, ever drive while intoxicated. It puts your life and the lives of those around you at risk, and it's never worth it. On top of that, a DUI will spike your insurance rates and you'll likely need to get an SR-22 form.

An SR-22 form is required in most states if you've had a DUI. It makes it hard to get insurance. Some companies don't offer policies to high-risk drivers with an SR-22 at all. Liberty Mutual is one of the insurance companies that will still insure you.

Liberty Mutual is affordable in many areas, but prices vary a lot by ZIP code. Get a quote first to see if prices are competitive where you live.

According to the Insurance Information Institute, you can expect your premium to go up if you file a claim against your insurance for an incident that is your fault. Don't let that deter you from filing the claim. The other party could sue you and you risk losing your coverage entirely.

If your car insurance is too high, you might not be getting the most out of discounts. See which company offers the best opportunities to save below.

Discounts: State Farm

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  • Average 6-month premium: $677
  • Pros: Many discounts, high claims satisfaction, variety of coverage options
  • Cons: Expensive with bad credit or accidents

State Farm is the largest car insurance company in the U.S. Their base rates aren't the lowest, but they offer plenty of discounts to make up for it. It's always a good idea to ask your insurance agent about any discounts you qualify for.

This company is a good choice for young drivers. They have a safe driving program that gives you discounts for good driving habits. You can also get condo, renters, home, boat, life insurance, and more. It's a good option if you're looking to bundle multiple policies.

But there is a catch. State Farm's rates are affordable if you have a clean driving record and good credit. If you've had a recent accident or poor credit, your rates will spike by up to 180%.

Discounts are great, but it might be easier to shop with your target price in mind. The next insurer lets you pay within your budget.

Choose Your Price: Progressive

  • Average 6-month premium: $793
  • Pros: Name your price tool, safe driving program, good discounts
  • Cons: Average customer service and claims satisfaction

Progressive has a bunch of tools to help bring your car insurance down. They offer multiple ways to get a quote. You can name your price and get a policy that works with your budget.

If you want to bring down prices even more, try out their Snapshot program. It uses a device installed in your car to track your driving behavior. You'll be rewarded for safe driving with discounts on your premium.

Although these tools are convenient, Progressive doesn't have great customer satisfaction ratings. That's something to keep in mind if great customer support is more important to you than low rates.

Fun Fact: The actress who plays Flo the Progressive girl based the character on her mom.

Driving a lot can also drive up your insurance rates. The next company offers relatively low prices, even if you're a fan of cross-country trips.

High-Mileage Drivers: Farmers

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  • Average 6-month premium: $834
  • Pros: Good for bundling, easy to file a claim, lots of discounts
  • Cons: High premiums for bad credit or driving record

Maybe you just know them for their catchy jingle, but Farmers offers pretty great savings too. They offer many coverage types, so it's a good idea to bundle your insurance with them. In addition to car insurance, they offer home, renters, motorcycle insurance, and more.

If you drive often, you know that mileage affects your car insurance premium. Farmers doesn't raise prices as much as some other insurance companies for higher mileage. It's worth getting a quote from them if you love to take road trips.

Not everyone has a perfect credit score or driving record. If this is you, look for a different car insurance provider. Farmers' prices are high if you have bad credit or a recent accident on your record.

One of the best ways to save on insurance is to get multiple policies from the same provider. Find out where you can bundle your home, life, and car insurance below.

Bundle Policies: Allstate

  • Average 6-month premium: $912
  • Pros: Good customer service, many coverage options, easy claims process
  • Cons: Not as affordable as other picks, expensive for bad credit and DUIs

You're in good hands with this car insurance company. Allstate also carries home, life, motorcycle insurance, and more. So you can get all of your insurance under the same roof. Their multipolicy discount is a great way to save.

Although they don't have the lowest base rates, you can take advantage of their many discounts. You can get a lower price just by going paperless or setting up autopay.

Like many other insurance companies, Allstate has a safe driving program that gives you a discount for good driving. If you let them track your driving, you can get a discount of up to 25%.

Infrequent Drivers: Metromile

  • Average 6-month premium: Pay per mile
  • Pros: Easy sign-up, cheap if you drive <10,000 miles per year, only charges up to 250 miles per day
  • Cons: Only available in some states, app tracks your driving

As a new driver, you might not use your car very often. If you're thinking, "I don't want to pay $700+ when I barely drive," this company is for you. With Metromile, you won't have to pay a high premium if you're a low-mileage driver.

Each month, you'll be charged a base rate plus a per-mile rate. Base rates start at $29 per month, with a per mile rate of around $0.06 to $0.08. If you drive 500 miles a month, that comes out to $59 (or $354 for a 6-month period).

Metromile is only available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. Low-mileage drivers in other states will have to look elsewhere.

What do you value most in car insurance?

Choosing the Right Coverage

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If you want cheap car insurance, it's tempting to just get your state's minimum coverage requirements. This isn't always a good idea.

Having the minimum might work if you can't afford more and you drive an old car. If you have a newer car or get in a serious accident, the minimum isn't enough. Consider additional coverage to protect yourself:

Most states require bodily injury liability and property damage liability insurance. This covers damage to other people and their property if you cause an accident.

Your liability limits should roughly equal your net worth. To get your net worth, add up all your debts and subtract that from your assets. Assets include cash, investments, real estate, and cars you own.

For example, if you have $70,000 in assets and $20,000 in student loan debt, your net worth is $50,000.

If you get in an accident, collision insurance will cover damage to your car. The coverage kicks in regardless of who caused the accident.

Comprehensive covers damage to your car that isn't caused by a collision. It covers theft, vandalism, falling objects, and more.

Uninsured/Underinsured Motorist
This coverage protects you when another driver causes an accident. If the driver doesn't have enough insurance to cover your damage, your insurance will pay out for you. Some states even let you use this coverage for hit-and-run accidents.

What Is a Car Insurance Deductible?
Your deductible is the amount of money you need to pay out of pocket before your insurance kicks in. Every time you file a claim, you're responsible for paying your deductible amount first. Most deductibles range from $100 to $2,000.

For example, let's say you have a $1,000 deductible. If you get in an accident that leaves you with $2,000 worth of repairs, you'd pay $1,000 and your insurer would pay the other $1,000. If an accident resulted in $800 in repairs, you'd pay for all of it yourself.

The higher your deductible, the less you pay for car insurance. Opting for a very high deductible might seem tempting since you'll pay less for your coverage, but keep in mind that you're responsible for that deductible amount. Make sure you can afford that out-of-pocket payment in case of a serious accident.

Ways to Lower Your Car Insurance

If it seems like insurance premiums go up every year, that's because they do. According to the most recent data from the National Association of Insurance Commissioners, the national combined average premium increased by 14.9% from 2012 to 2016.

Even though insurance companies keep raising rates, there are a few smart ways to your policy affordable. Here's how you can keep your insurance rates as low as possible:

Always Shop Around
Don't stay with a company just for the loyalty discount. You can save hundreds on car insurance by comparing quotes every year. Insurance companies look at many factors when setting your rates. Shopping around helps you avoid unnecessary price hikes.

Drive an Older or Safer Car
This might sound obvious. But a fancy, new sports car will cost more to insure than a safe SUV. Insurance companies look at all kinds of factors when setting your rates. Your car plays an important role in that.

If your car has a lot of safety features and isn't super-expensive to repair, you'll pay less for insurance. A fast, flashy car is more likely to get in accidents. So it'll definitely raise your premium.

Usage-Based Insurance
These days, a lot of companies offer a discount if you let them follow your driving habits. Usage-based insurance involves tracking your driving though an app. The insurance company will get information like how hard you brake and how often you drive.

It might sound a little creepy, but you can save a good amount by joining these programs. You'll usually get 5% off just for joining. Actual savings are generally around 10% to 20%.

Improve Your Credit Score
Improving your credit score can get you lower rates. Statistically, people with bad credit get in more accidents. So, car insurance companies charge more if you have bad credit (except in California, Hawaii, and Massachusetts).

Best Discounts for Car Insurance

Good Student
It's expensive to get car insurance for college students. But you can bring that cost down by getting good grades. Many car insurance companies let you save if you maintain at least a B average grade. That's a win-win for your GPA and your wallet.

Many car insurance companies sell other types of insurance too. If you need home, renters, or life insurance along with auto, bundle them together. You can get around 15% off if you buy multiple policies from the same company.

If you have more than one car to insure, you can get some pretty nice savings. Insurers give you up to 25% off for having multiple cars on your policy. This is a good incentive to keep families on the same policy.

Safe Driver
No one wants to get in an accident. If you're able to stay accident-free for 5 years, you can get a hefty discount. Some companies offer up to 30% off for safe driving.

Paperless Billing
You've probably transitioned to online for many of your bills already. But going paperless for car insurance can actually get you a small discount.

Paid in Full
Pay for your entire policy upfront and you could get a discount. The discount can be as high as 20% with some insurers.

All these discounts will help reduce your rates. But remaining accident-free will keep your rates even lower. Find out below how to stay safe every time you're behind the wheel.

Defensive Driving Tips

Racking up all the discounts available helps a lot. But how you drive has a big impact too. Defensive driving will help keep you safe and prevent an insurance spike caused by an accident. Here are 5 ways to keep you calm and collected on the road:

Stay Focused
As a driver, there are many factors competing for your attention. The best way to stay focused is to get rid of as many distractions as you can. Loud music, social media, and eating all detract from the most important task at hand: safe driving.

Scan Your Surroundings
Instead of getting distracted by your phone or eating, focus on surroundings. Check your mirrors and scan the road ahead of you. Keep an eye out for other cars, pedestrians, bicyclists, and animals. Always be ready to safely slow down and avoid potential danger.

Follow the 3-Second Rule
Avoid accidents using the 3-second rule. When the car in front of you passes a non-moving object, count how many seconds it takes for you to reach the same object. A gap of at least 3 seconds will give you time to react in case the car ahead stops suddenly.

Avoid Road Rage
Anger is dangerous on the road, and it can cause you to drive in ways you normally wouldn't. To prevent road rage from getting the best of you, give yourself extra driving time so you don't feel rushed. If another person is driving aggressively, let it go—getting back at them is not worth it.

Control Your Speed
Stick to posted speed limits if conditions are good. In bad weather, you may have to drive slower in order to stay safe. High speeds make your car harder to control. Driving much slower than traffic is also dangerous because drivers around you must brake and speed up more often.

What Experts Say

As a part of our series on car insurance, CreditDonkey interviewed industry experts to answer readers' most pressing questions. Here's what they had to say:

Bottom Line

If you want to save on car insurance, don't just hack away at your coverage limits. Instead, get quotes from different companies for the coverage amount you need. You'll be glad you have enough insurance if an accident happens.

There's a chance the cheapest insurance companies still aren't cheap enough for you. Luckily, there are things within your control that can lower your rates. Drive an older, safer car, try driving-tracking apps, and work on improving your credit score.

And don't be afraid to bug your insurance agent about any discounts you might qualify for.

Donna Tang is the head of purpose and audience at CreditDonkey, a car insurance comparison and reviews website. Write to Donna Tang at donna.tang@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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Do you feel your car insurance is fairly priced?
31% Yes, it's fairly priced
69% No, my rates are too high
Source: CreditDonkey
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How Does Car Insurance Work

How Does Car Insurance Work

Does insurance cover you or the car? Depends on your policy. Read on to learn about the payout, how full coverage works and what happens if you're at fault.

About CreditDonkey
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