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Cheaper auto insurance: A guide

Everybody wants cheaper car insurance, but how do you actually find it?  

Focusing solely on the lowest insurance rates is a mistake if you go without the coverage you need. The whole point of insurance is to stand between you and financial disaster.

However, with a little research, you should be able to find cheaper auto insurance without sacrificing important coverage. 

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1. Comparison shop

Sometimes, you'll get the best deal with your current car insurance company. But in many other cases, the road to the cheapest car insurance policy will take you elsewhere.

In general, the more you pay for car insurance, the bigger the difference between insurance companies' rates. Every company calculates its own price, and they often differ by hundreds or even thousands of dollars.

Comparison shopping can help you uncover cheap car insurance companies and auto insurance discounts. How often should you compare car insurance quotes to find the lowest premiums? Experts generally suggest looking around at least once a year -- but certainly at these times, when your rates are most likely to change dramatically:

For more information, see "7 reasons your car insurance rates drop."

2. Bundle your policies

Your insurance company may offer more affordable car insurance rates if you purchase both your home insurance and auto insurance policies from the same provider.

According to data gathered for Insurance.com by Quadrant Information Services, the nationwide average multi-policy discount given for bundling home and auto insurance is 8 percent.  By bundling renters and car insurance a discount also applies, with the nationwide average being around 5 percent.

3. Raise your deductible

Simply raising your deductible from $250 to $500 can lower the collision or comprehensive portion of your premium by about 20 percent, according to the Insurance Information Institute.

Remember, though, that a higher deductible means more money out of your pocket in the event of a claim. Cheap insurance can become expensive fast if you have to pay your deductible with a high-interest credit card. (See "How much can I save by raising deductibles?.")

4. Ask about discounts for which you qualify

Is your daughter a straight-A student? You may qualify for cheaper car insurance by obtaining a good student discount. Does your car have anti-theft deterrents? Your insurer may give you a price break because the car is less vulnerable to theft. (See "12 secrets of car insurance discounts.")

Talk to your agent about all auto insurance discounts that are available and find out if you qualify for any of them, chances are you do.

5. Buy the right type of car

If you're shopping for new wheels, your choice of automobile can play a big role in getting lower insurance rates. Cars that cost less to repair or replace generally receive lower premiums.

You'll also get better rates if your car has certain safety features. Insurance companies often give discounts for features such as anti-lock brakes, side airbags and automatic safety belts.  Anti-collision technology is becoming popular in new vehicles; if your car is equipped with the new tech ask your agent if any discounts are available.

6. Avoid tickets and accidents

A poor driving history can easily disqualify you from getting the cheapest car insurance. Insurers will check your record to see if you present a high level of risk. Speeding tickets, accidents, drunk driving citations – all can drive your insurance rates higher.

Drive sensibly and cautiously and you'll be on the way to cheap car insurance by avoiding surcharges and receiving a good driver discount. (See "How much will a ticket affect my insurance rates?")

7. Don't carry unnecessary insurance coverage

If you have an old beater, reduce your car insurance costs by dropping comprehensive and collision coverage. When should you make this move toward cheaper auto insurance? Many experts say it's time to drop these coverages when the actual cash value you’d receive for your vehicle doesn’t justify the insurance expense. (See "When to drop collision and risk it all.")

Have an extra car in the household you can use if yours is in the shop due to an auto accident?  If so, skip rental reimbursement coverage.

Also, don't pay extra for personal injury protection or medical payment insurance (if they aren’t required by your state) if your family already has a good health insurance plan.

8. Don't ignore your car insurance agent

Experts generally recommend you sit down with your agent annually to discuss any changes in your life that might impact your auto rates or give you reason to adjust your coverages or limits. For example, your insurer may offer cheaper car insurance if you've dropped your daily commute in favor of working from home.  Or, if you recently bought a home you may be eligible for a homeowner discount, but also may want to discuss raising your liability limits to protect this new asset.

Has your teen recently flown the nest and landed car-free at a university or college? If so, let your agent know that the teen does not drive your car for the majority of the year.

Being proactive can help you nab these and other auto insurance discounts -- and keep your car insurance rates cheap.

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