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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

You already get cheaper rates if you are married or a homeowner because married people and homeowners tend to file fewer claims. But you can save even more by purchasing 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 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.

If you insure more than one car on your policy, you get a multi-car discount. Expect 10 to 25 percent savings off your collision, comprehensive and liability premiums.


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. Watch for pitfalls in coverage

You can only go so far with discounts and comparison shopping. Some carriers can provide you a lower rate, but they do it by limiting coverage in ways you might regret in the event of an accident.

For example, some companies limit coverage of permissive drivers or don't cover them at all. That is, if you lend your car to a friend who has an accident, your liability limits might be reduced or the claim might not be honored. The same discount policies might not extend to a rental car, as standard policies do. (See "7 ways cheap car insurance can backfire.")

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