Most things come at a cost, so life can get quite expensive. Especially in the United States, where most places require a car to get around, car insurance can become a major expense. And most states require car insurance, so there’s little way of getting around that. According to Quadrant Information Services, the average cost of car insurance in the United States for drivers with clean records is $1,655 per year or about $138 per month for full coverage. Premiums for car insurance also vary based on several factors, such as your driving record, the type of vehicle you drive, age, and gender. 

Having car insurance is without a doubt an added expense that can hurt some people financially in the short term, but driving without it can lead to dire legal consequences in the case of an accident. You can be looking at license suspension and thousands of dollars in fines if you don’t have car insurance. If you’re afraid that you can’t afford your car insurance, read on to find out some cost-reducing strategies you can follow to lower the cost of your car insurance. 

What is car insurance and much does it cost?

Car insurance protects drivers from random events that can happen by limiting their expenses in the case of an accident, if their car is stolen, or if a catastrophic event damages their vehicle. New Hampshire and Virginia are the only states that don’t require drivers to have car insurance. Driving without it may result in a fine and you can get your license and registration suspended.

As previously mentioned, car insurance costs over $1,600 per year on average. Premiums depend on many factors, especially on how much coverage you need. Other factors include:

  • Age – Older drivers pay lower car insurance rates than younger drivers because they are more experienced. However, senior drivers may pay more than older drivers because they are at higher risk of an accident. 
  • Location – If you live in an area with higher crime rates, you’ll probably pay higher premiums. 
  • Driving history – An insurance company will review your driving history to see if you’ve been in accidents or if you’ve gotten tickets.  Your driving history indicates how much of a risk you pose. 
  • Type of vehicle – Insurance companies will look at the age of your car, its safety features, and if it’s a luxury vehicle, among other factors, to determine your premium price. 
  • Credit score – The importance of your credit score can’t be overlooked in any situation. A low credit score will mean you’ll have to pay more for your car insurance premium. Only a handful of states don’t allow insurance companies to calculate your premium rates based on your credit score. 
  • Deductible – A lower deductible means a higher premium. 

Ways to lower your car insurance cost

  • Shop around! You’ll likely get a high quote from the first insurance company you contact, but don’t despair. Request quotes from several car insurance providers so you can choose one that works best with your financial situation. However, just because you get a lower quote from a company, it doesn’t mean that company is best suited for your needs. Be sure to check their reviews before moving forward.
  • Check for car insurance discounts. Many insurers offer discounts for switching to their company. You can also get a discount for having a clean driving record. Here are some other car insurance discounts you should be on the lookout for:
    • Low-mileage discount for drivers who don’t drive often and are at a lower risk for accidents
    • Bundling two types of insurance policies like home and auto
    • New vehicle discounts for cars that are under a few years old
    • Discounts for active military members, members of sororities or fraternities, and college alumni
    • Discounts for teen drivers with good grades
    • Discounts for cars with high-security systems that decrease their risk potential
    • Discounts for drivers with claims-free histories
    • Discounts for drivers with a good credit score
    • Discounts for government workers
  • Raise your deductible. The deductible is the amount a policyholder pays out-of-pocket before the plan pays. Paying more out-of-pocket means you will pay lower for your premium. Lower your coverage limit and raise your deductible if you want to get cheaper rates. However, keep in mind that this practice can be risky. If you get into an accident and file a claim, you’ll have to pay more out-of-pocket with a lower premium and higher deductible. You’ll also have to pay more if your coverage limit is low. Talk to a customer service agent to ensure you have enough coverage to be protected. 
  • Search for usage-based car insurance if you’re a safe driver or if you don’t drive that often. Usage-based car insurance looks at your driving record and habits to determine the price of your premium. 
  • Search for state-run car insurance. If you live in several states including New Jersey or California, you might be eligible to get state-subsidized car insurance if you meet certain requirements. One of these requirements might be making below a certain income. 
  • Consider trading in your vehicle since some cost more than others. 
  • If you’re more of an adventurous driver, consider driving more safely. A clean driving record means you can qualify for lower rates. According to Value Penguin, car insurance premiums increase by about 46% after an accident with a bodily injury claim. 
  • Work on improving your credit score because insurers often link credit history to the likelihood of a policyholder filing a claim. 

Here’s a list of some of the cheapest car insurance companies available on the market right now: 

  • Geico – Best for good drivers
  • State Farm – Best for drivers with an accident on their record
  • Farm Bureau – Best for drivers with a poor credit score
  • Erie – Best for drivers with a DUI on their record
  • USAA – Best for military families
  • Metromile – Best for low-mileage drivers 

How to get financial help with car insurance after you’ve exhausted all other avenues: 

If you’ve tried everything, but you’re still struggling to pay for your car insurance, try seeking help from a certified credit counselor to learn how to manage your debt. Also, try to look into extra work for additional income, or apply for a debt consolidation loan to group your debts into.