How to Find Cheap Auto Insurance

Auto insurance provides financial protection in case of an accident or other vehicle damage. In exchange for an annual premium, the insurance company agrees to pay a portion or all of your losses. There are many different policy options available, allowing you to customize coverage amounts to your specific needs and budget. The most common coverages include liability, collision and comprehensive, as well as medical payments and uninsured/underinsured motorist coverage.

Typically, you must have at least the minimum required coverages in your state before you can drive legally. Other optional coverages include personal injury protection (PIP), which pays your own medical expenses and lost wages, regardless of who caused the accident; and collision, which reimburses you if your car is damaged by an object or another vehicle. Some states also require you to have certain other types of coverage, such as uninsured motorist or underinsured motorist coverage.

How much you pay for auto insurance depends on a variety of factors, including your age, gender, driving history and location. The type of car you drive also influences your rate, as does your credit score. People with poor credit scores often pay higher rates than those with excellent ones, but it’s possible to find affordable policies even if your score isn’t great.

In addition to comparing prices, consider the financial stability of an insurer, its reputation for customer service and specific coverages offered. The claims-paying ability rating of an insurer is particularly important, as it indicates how likely the company is to pay out a claim. Ratings are provided by organizations such as A.M. Best, Standard & Poor’s, Moody’s Investors Service and Weiss Ratings.

Other factors that influence your rate are the number of accidents and tickets you have on your record, the type of car you own and whether it is equipped with safety features such as antilock brakes and air bags. Your occupation and education may also affect your rate, as people in some professions are more likely to be involved in crashes than others.

If you want to save money on your auto insurance, it’s a good idea to choose the cheapest policy that meets your minimum requirements for liability coverage. However, there is no such thing as “full coverage.” In reality, you should have enough auto insurance to protect your assets if you are sued for a large judgment and not so much that you’re paying for unnecessary coverage.

Money expert Clark Howard recommends USAA and Amica Mutual for drivers in every region of the country. In addition to a strong track record, both companies offer discounts for safe driving and for having multiple vehicles. In addition to the basics, look for a company that offers additional coverages such as new-car replacement, vanishing deductibles and usage-based or pay-per-mile insurance.

In some states, it’s illegal to drive without car insurance. To avoid being fined, make sure you have a policy that meets the minimum required coverages in your state. Then, shop around to compare prices and coverages to find the best deal on your car insurance.