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Gone are the days of walking into an insurance agent's office and walking out with coverage based on a chat and a handshake. Today, many of us shop for auto insurance using the internet, which is far more convenient and less intimidating.
Shopping for car insurance online can save you plenty of money, too, since some insurers give better rates to online customers. It also gives you a chance to get quotes from multiple insurers to make sure you're getting the best deal. Here are five steps you can take to find the least expensive car insurance when shopping online.
1. Look for Online-Only Insurance Deals
Some insurers offer lower auto insurance rates if you start the process of getting a quote online.
For example, Progressive rewards potential customers with an average discount of 4% for simply getting a quote on the insurer's website (even if an agent finishes the quote with you over the phone), plus an average discount of 8.5% if you accept and sign your documents online. Similarly, Liberty Mutual says would-be customers can save 12% or more by getting a quote online rather than over the phone or in person. By completing this process online, you're saving an insurer time and manpower, so they can pass that savings on to you. Win-win!
2. Compare Quotes From Various Insurers
The Insurance Information Institute recommends comparing rates from at least three car insurance companies before you commit to one. To get a rate quote, you'll give an insurer some preliminary information about yourself, the car you drive and your history as a driver. Start with insurers you're familiar with or that your friends and family recommend, then expand your search from there.
You may also consider using a rate comparison website like ValuePenguin or Insurify that can provide several rate quotes in one place. These sites typically request some key information and then present you with quotes from the insurance companies they're partnered with. These websites allow you to quickly see which provider may offer you the best rate, but they may provide a fairly narrow selection of insurance companies.
Even though car insurers tend to look at similar criteria, comparing rates is still important since they all have slightly different formulas for setting rates. Because of this, it can be difficult to predict what kind of rate you'll get unless you get a quote.
Just a quick note on comparing premiums: There are different types of car insurance with varying levels of coverage. Make sure when you're shopping around that you're comparing the same or similar plans—this includes any policy add-ons, the estimated mileage you provide and your deductible amount. A quote for liability insurance from one company will be much lower than a quote for no-deductible comprehensive coverage from another, for example.
3. Consider Bundling Insurance Policies
Insurance companies often offer customers a deal on auto insurance plans if they're bundled with other types of coverage. For example, Progressive gives an average 12% discount on auto insurance if you also use them for home or renter's insurance.
See if you can switch other types of insurance you hold and combine them in a bundle with one agency to enjoy the savings—or ask your current home or renters insurance agency if they'll give you a discount for adding on car insurance with them.
4. Don't Leave Any Discounts on the Table
There are myriad ways to save money on car insurance in addition to bundling with other types of insurance.
- Multiple-policy discounts: Some insurers will offer a discount if you and other drivers in your household all sign up for an insurance plan together. Geico, for instance, says its customers could enjoy a multi-car discount as high as 25%.
- Group discounts: Insurers may even have a partnership with your employer that allows you to get a discount on coverage. Some insurers offer discounts for members of the military or to those who bank with certain credit unions.
- Safety factors: You can save on your premium if you have a pristine driving history, or if you don't drive a lot. Additionally, you may be able to score savings if your car has certain safety features on board, such as anti-lock brakes or an anti-theft system.
- Driving behavior: A few car insurance providers offer discounts if you sign up for their optional tracking programs, which are usually in the form of a smartphone app. These programs monitor your driving habits, and if you drive in a way the insurers consider to be safe (such as not speeding and no hard braking), you can lower your rates.
For example, Esurance offers the DriveSense program, State Farm has the Drive Safe & Save discount and Progressive offers Snapshot. Progressive claims those enrolled in its program save as much as $145 per year. Beware, however, that if programs like these deem your driving habits to be high risk, you may actually end up paying more.
5. Pay Your Premium All at Once
Paying your auto insurance premium monthly might be more convenient and easier to budget, but it usually isn't the most cost-effective strategy. Many insurers offer discounts if you're willing to pay for your premium for the entire policy period all at once, which can sometimes save you hundreds of dollars over the course of a year.
This may not be an option for those on a tight budget, but if you have enough savings, it can reduce the overall cost of insurance quite a bit. You may also find that some insurers will give a small discount if you sign up to pay your premium via autopay.
Another option is to sign up for usage-based (pay-per-mile) insurance. It's not offered by all insurance companies, but it allows you to pay only for the miles you drive rather than the same amount each month regardless of how much you drive. If you don't drive frequently, going this route could translate into significant savings.
How to Apply for Car Insurance Online
If you know which car insurance company you want to use, you can apply directly on their website. If you prefer to use a comparison website, you can start there and compare quotes first.
Regardless of whether you go directly to the site or use a third party, you'll be asked for a variety of information about yourself, your driving history and your vehicle.
You'll typically have to provide information such as your ZIP code; make, model and year of your car; your age; your gender; marital status; traffic and accident history; and your current insurance information. You'll also be asked to estimate how many miles you drive annually. Once you select the type of coverage you want and any discounts you're eligible for, you'll get a quote. If you accept it, you'll have to complete some paperwork before your insurance kicks in.
Improve Your Credit for Even Cheaper Car Insurance
In addition to all of the factors listed above, car insurance companies in most states also check your credit when determining your eligibility for coverage (the practice is banned in California, Massachusetts, Hawaii and Michigan). Statistically, those with lower credit scores are bigger insurance risks, and insurance companies may charge higher rates to make up for that risk.
If you're struggling to get approved for good car insurance rates, consider making an effort to improve your credit scores. One quick way to do this is with Experian Boost™† , a free tool that lets your utility and phone bills count toward your credit report. If you have a solid payment history, it can improve your credit score instantly.