Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Apr 1, 2021

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Key takeaways...

  • Insurance costs will vary by location, how many miles you drive, and the type of car you own
  • Comprehensive coverage protects you in case of fire or theft
  • Every state requires a minimum amount of damage liability coverage for every driver that wishes to operate a motor vehicle

One of the greatest marketing lures used in advertising is the word “cheap.” The desire to save money has been transformed into a necessity in the current economy, and everyone wants to find the absolute best prices on necessities.

Car policy costs can vary widely and depend on many factors including the costs assigned to each aspect of the policy by the insurer.

Every insurer is different and the best way to find the cheapest car insurance annual premium is to compare car insurance companies for FREE by entering your zip code into our search tool above!

What are the policy coverage components?

Costs will vary by location because crime rates and dense populations present higher risk of loss to the driver and the insurer.

Multiple components are standard in the auto insurance policy and adjusting the coverage amounts in these major categories can reduce the overall annual premium.

The individual situation must be evaluated when the limits are set in each category to prevent a financial hardship in the case of loss.

  • Comprehensive – All events that are not directly related to a collision are covered under this policy component. Expensive vehicles should have this component with sufficient coverage to replace the vehicle, but older cars might not warrant this coverage. Fire, theft, and storm damage would be covered under comprehensive insurance.
  • Collision – Whenever the vehicle is struck by another car or strikes a stationary object, the damage is covered under the collision component. Decisions to lower the coverage limit must be weighed against the motorist’s ability to pay for repairs. This component is not required by law, but financial resources must be available to repair or replace the vehicle.
  • Liability – Every state requires a minimum amount of liability coverage for every driver that wishes to operate a motor vehicle. All lawsuit damages would be paid under this component up to the policy limit. This component limit should be sufficient to cover possible litigation associated with an accident. Damage to property belonging to another person is covered by the liability component.
  • Personal Injury – Medical expenses to treat the injuries sustained by other people in an accident are paid under the personal injury component. Cost-cutting measures in this category could be costly if the limits are set too low.
  • Medical – Many drivers choose to carry this component to cover any medical expenses for their own injuries sustained in an accident. This is an important component if other major medical insurance is not available.

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What are available discounts?

Each insurer emphasizes certain aspects of the risk spectrum to offer discounts for certain behaviors and characteristics of the vehicle and driver status.

Ask about all possible discounts offered by each insurer to lower the annual premium in any possible way. Some obscure discounts are offered by insurers that wish to draw a certain group into their insured pools.

The following are some discounts:

  • Safe Vehicle – Insurers use the VIN to determine the safety measures on the vehicle at the time of manufacture. Airbags, roll bars, side-impact bars, and other safety devices lower the risk of injury and reduce the damage to the vehicle which reduces the actual cost of repair for the insurer.
  • Low-Mileage – Cars that are not driven often are considered lower risk than high-use vehicles that are on the road all the time. Every insurer evaluates the number of miles driven and assigns a different discount.
  • Group Discount – Certain professional groups are offered discounts by various insurance companies because of their perceived lower risk factors. Research and direct questions are the best way to find these discounts.
  • Anti-Theft Device – In high-crime areas, substantial policy discounts are offered for armored collars, kill switch, steering wheel lock and electronic ignition keys. These devices lower the incidents of theft which reduce the cost to the insurer. Direct questions are the best way to find out if an insurer offers discounts for these devices.
  • Multi-Vehicle – When more than one vehicle is insured under the policy, each insurer will offer certain discounts on the annual premium.

Why is the driver profile important?

Insurance companies weigh the risk factors directly associated with a driver differently so rates vary widely and research is required to find affordable rates if the driver is placed in a high-risk category.

Some insurers will refuse to underwrite a policy for a driver that has multiple moving violations and accidents, while others will simply assign an exorbitant premium to the policy.

This major category has more impact on the annual premium than any other.

  • Good Credit History – Acceptable credit score thresholds are set by each individual insurer and the rates will vary for the driver when the credit score changes drastically from one policy period to the next. Sustained good credit will lower the annual premium.
  • Senior Citizen – Older drivers are offered discounts by many insurers, but the discounts vary widely and apply to people above a certain age and below whatever age the insurer considers appropriate. Drivers over 80 will not have this discount because the risk level increases with age after a certain point.
  • Defensive Driving – Each insurer will place a different value on training completed by drivers. If attending a class will offer a 20 percent discount, complete the class to get the discount. Other classes are available and the companies know how to find the training in your area.
  • Clean Driving Record – Moving violations and accidents within the past three years will have an impact on the annual premium, but the actual cost varies between the insurance companies based on their willingness to accept certain risk pools.

What is the final decision?

Every driver must make their own decision about which insurer will offer the best combination of cost and coverage.

If one insurance company is substantially less expensive for comparable coverage, investigate the company’s claim payment record through A.M. Best, which is the insurance industry watchdog.

Making insurance payments to an insurance company that does not pay claims is not a wise decision.

You can find the cheapest car insurance! Enter your zip code below and start comparing car insurance quotes for FREE!


  1. https://www.esurance.com/info/car/myth-comprehensive-covers-everything
  2. https://drivinglaws.aaa.com/tag/liability-laws/
  3. https://www.progressive.com/lifelanes/liability-coverages-explained/
  4. https://www.statefarm.com/insurance/auto/discounts
  5. https://www.edmunds.com/auto-insurance/does-your-credit-score-affect-your-car-insurance-rate.html