Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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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

UPDATED: Sep 13, 2020

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Key takeaways...

  • High-risk drivers usually pay more for car insurance
  • Students can lower the rates by getting good grades
  • Where you live can impact your monthly premium

Car ownership is a large financial responsibility. Beyond the simple costs of the auto and the maintenance, there is the expense of suitable insurance.

Auto insurance is in place so the driver can provide proof of “financial ability” to pay for any damages or injuries to others should he/she be involved in an accident.

In each of the 50 states, insurance of some level is required to legally drive on the roads and highways.

When trying to find the cheapest insurance, there are several things that go into the search. Compare auto insurance quotes online for FREE by entering your zip code above!

Table of Contents

Risk

For drivers just starting out, or for those with bad driving records, insurance costs are higher. There is no real way to avoid this, but there are ways to get into something called a “risk pool.”

A risk pool is a group of insured drivers that “split the risk” and share in the expense of the policies collectively, thus reducing everyone in the risk pools policy.

For example, a driver with two DUIs is going to pay high premiums.

But by finding an insurance underwriter that specializes in risk pool insurance policies, the cost may be reduced as much as 7 to 10 percent per month.

New drivers benefit from the risk pool policies because they have not yet proven their safety record, and can reduce high-risk policies by up to 10 percent each month.

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Good Student Discounts

Drivers just starting out can get cheap insurance policies if they maintain a certain grade point average or have a proven record of community work and extra-curricular activities.

The driver needs to bring transcripts, report cards and signed slips to prove their eligibility for the reduced insurance policies.

The driving force behind these good student discounts is the idea that students who excel in academics are less risk because they show scholastic responsibility and civic enhancement, traits insurance companies like.

This is often a great motivator to help students achieve a foundation for future success. Reward them in their wallets and they rise to the top.

Where do you live?

Where you live plays a key role in getting cheaper insurance. It goes without saying that someone who lives in a rural community is going to get reduced insurance simply because there is less traffic and less crime.

Someone who lives on a farm in rural Michigan logically gets cheaper insurance than someone who lives in inner-city Detroit, just by mere car theft data.

What is not as well known is the domicile you live in gives different rates for insurance. For example, renters of apartments tend to pay higher driving premiums than people who own their own homes.

To get the cheapest possible insurance policy, look for a broker that specializes in getting auto policies for your particular living situation.

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Shop Around

Do not settle for the first offer you find. What many insurance consumers do not realize is that policies, often the same exact policy, can vary depending on the broker, company or how the policy is written.

One broker may quote a rate that the next broker quotes at 10 to 15 percent less than the first.

Get at least three quotes from three different underwriters before making any decision.

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Drive Less, Pay Less

The amount you drive plays a role in the policy premiums. If you truly want to save money on your insurance each year, reduce the mileage you drive each year.

For example, your policy will be much higher if you drive 20,000 miles each year versus 10,000. This is because the insurance companies run regression analyses to determine the policies value.

The logic behind this is, the less time you are on the road, the less chance there is for accidents, thefts or mishaps.

This results in cheaper insurance policies. It pays to be frugal in your driving, if at all possible.

Buy in “Bulk”

To save money on a yearly insurance policy, opt to pay it all at once if you have the financial means.

Instead of making 12 monthly payments, make one yearly payment.

This often results in savings between 5- to 10 percent on the yearly fees.

f you have the available funds, this is one of the most logical, and easiest methods to get cheap car insurance.

The Car Makes the Difference

If you are really trying to stretch the insurance dollar, and are shopping for a new car, eschew sports cars or those considered high risk.

While a Ford Taurus may not be as sexy a choice as a BMW Z4, the car is going to be cheaper to insure.

Shop smart and purchase-wise. The car choice plays a key role in determining how much money you will spend on the needed insurance policy.

Likewise, if you buy the car outright, and go with a pre-owned vehicle, you do not have to carry the collision coverage that a leased or financed car requires.

By owning the car outright, you can simply purchase your states bare minimum policy and save considerable amounts of money.

There is no one set way to get the “cheapest” insurance possible, but by using the above-mentioned techniques, you can find discounted rates.

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References:

  1. https://www.acceptanceinsurance.com/our-products/auto-insurance/high-risk-auto-insurance/
  2. https://www.safeauto.com/
  3. https://en.wikipedia.org/wiki/Michigan
  4. https://www.allstate.com/auto-insurance/cars-trucks/bmw/z4-car-insurance.aspx
  5. https://www.thebalance.com/comprehensive-vs-collision-coverage-527402