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The rule of thumb to get the lowest possible auto insurance premium is to shop around and compare prices from several companies. The competitive auto insurance market leaves the door wide open for a bargain, but those bargains are only found when customers do their due diligence. Every insurance company has a different set of variables they use to calculate and determine premium rates for new applications and renewals. They use DMV record updates to obtain a list of all traffic tickets and accidents that their policyholders generate over time.

lower auto insurance premium

New, or long-time, insurance customers can always use the directory in the National Association of Insurance Commissioners to locate all available regulators in the state. The official website of the Department of Insurance also offers a buyers' guide and comparison features across companies. Higher prices often mean better services and an easier claim process, but that is not always the case with auto insurance. Many affordable policies like 20 down payment car insurance or zero down payment from less popular names also deliver quality protection and for less money. A lot of independent websites offer comparison functions to help customers find the best price for the same coverage. Many of them give an objective overview of premium rates, and they have no affiliation with any insurer. Even with the lowest premium for the coverage, buyers can often lower their quote price even further through these non-affiliated agents.

Even with the lowest premium for the coverage, buyers can often lower their quote price even further through these non-affiliated agents.

Car Models Affect Insurance Rates

Model, make, and year of the vehicle are important factors that determine premium prices. High-performance cars will be more expensive because they have powerful engines, quick acceleration, and high-top speeds, which may lead the driver to go faster than he or she is capable of safely driving. Luxury cars, with collectible values, also tend to have high maintenance and repair costs. In either case, the risk will be higher for the insurance companies, hence expensive premiums. Choose your car carefully and purchase only from the models for which the insurance is affordable for you. Expensive and cheap are relative terms, but affordable always refers to the amount you are able or willing to pay. A good 'deal' gives more value than you might otherwise be able or want to afford.

High Deductibles Lower the Rates

A deductible is the amount of money that should a need claim to arise, policyholders should pay out of their own pockets in addition to the payout from insurers. For example, an increase of the deductible from $250 to $1,000 will reduce the rate of up to 40 percent on the policy.

Older Cars do not Need Collision and Comprehensive Coverage

Unless the car is one of the collectibles or antiques that have high value in the market, chances are an old car does not need optional coverage such as collision and comprehensive coverage. The trick is to add up the total amount of collision and comprehensive, then multiply the result by 10. If an older car is worth less than that, it makes sense to omit the optional coverage. Everybody has a different personal preference, but here is an average statistic for consideration:

  • A typical policyholder files a claim once in every 11 years, and report of a total loss once in every 50 years.
  • When collision and comprehensive costs are higher than the car is worth, it is almost a waste of money.

Credit Score

As controversial as it may seem, a lot of auto insurance carriers still use your credit score as a variable to determine approval and premium. For some insurers, a bad credit score increases the possibility that policyholders skip payments due to their financial conditions. The threshold between bad and good can be different between companies. Still, a policyholder from the "good credit" category can get a fifty percent less premium rate than his/her "bad credit" counterpart. Pay your bills on time and ask for a report on a regular basis to check for discrepancies.

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Low Mileage

Applicants must provide data such as home addresses, professions, and office addresses. In cases where the distance between home and office is quite short, the annual mileage can be lower than the norm. Some carriers offer 20 down payment car insurance for low mileage upfront, but it is a good idea to ask for it when the company does not mention it. The logic is that short mileage reduces the chance of an accident as your car will be in use (at risk) for a shorter time. Also, the car will be in good condition, even after everyday use, for years.

Group Discounts

Members of popular organizations, or groups, often enjoy discounts. If a policyholder is a member of a community group, for example, military, veterans, engineers, teachers, he/she should ask for very cheap car insurance no deposit. Insurance companies should provide a list of eligible groups when requested to do so.

Other Discounts

In addition to low mileage and group-exclusive discounts, insurance companies offer a range of other discounts such as driver's education course, defensive driving, good grades for students, multi-vehicle policy, and safety devices. All factors that contribute to lower the risk of road accidents should come with rewards. However, applicants usually must ask for them.

Installment Option

An installment option appears to be a good idea at first, but there is an administrative fee for that. Policyholders who choose to break up the bills over a more convenient period pay more in total. The solution is to pay upfront whenever possible. Additional fees for installment payments become more noticeable if policyholders start with small premiums. For those who have to pay a considerable amount for coverage, they may find that installments are a viable option.

No Lapses

Insurance companies are generous enough to offer 20 down car insurance, but even a brief lapse can cancel all the benefits.

Home insurance as well as other types of insurance," lapses are common issues when policyholders want to switch carriers and do not pay during the transition period. It is a good idea to continue the payment until the new coverage takes effect to avoid lapses and a company's cancellation. These factors can affect the premium with the new insurer as well.

Some factors are impossible to control — for example, age, record of previous claims due to involvement in accidents and gender. However, policyholders can harness all other variables to reduce their premiums.

Patricia Hernandes