This is the best way to lower your car insurance costs

You may be able to get a better rate from another provider. (iStock)

If you own a car or simply drive one on the regular — even if you feel you drive safely, you need car insurance. In fact, most states require you to have at least a minimum amount of liability coverage, and if you’ve financed your vehicle, your lender likely required full coverage.

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The average car insurance cost in the U.S. is $1,004.68, according to the Insurance Information Institute. But the actual cost for each driver can vary based on a long list of factors, and if you can’t afford your car insurance payment, you may be looking to lower coverage or even cancel your current insurance coverage.

Before you go down the path of cutting corners, you should visit a multi-lender marketplace like Credible to compare auto insurance companies. Credible's free financial tools will help you save on car insurance by allowing you to compare rates or other fees. Start checking out what else is out there today.

If you still need help determining whether to switch your insurance coverage to lower your car insurance costs, here’s an insurance plan that could potentially save you money without requiring you to skimp on coverage.

How to save on car insurance

The best way to lower your car insurance costs is to shop around for better coverage. This may sound like an obvious solution, but the fact is many drivers don't take the time to research car insurance rates or look for insurance discounts and deals that could save considerable cash in the long run.

No auto insurance company has a corner on the market when it comes to pricing. In fact, rates can vary wildly by the state — the average cost to insure a car in Louisiana is $1,443.72 compared to just $762.59 in Vermont. As a result, shopping around could allow you to retain the coverage you need to protect your vehicle while also saving money.

4 things to consider when choosing car insurance

When considering a different car insurance provider, there are at least four considerations:

  1. Type of coverage: As you shop around for new insurance coverage, it’s important to make sure you’re comparing apples to apples. When getting insurance quotes, companies may offer lower rates to entice you to sign up, but those rates may be tied to lower coverage amounts. Check your coverages on your current insurance policy and make sure you’re looking at quotes for the same levels as other insurers. Head to Credible now to get a free quote — it only takes two minutes!
  2. Required coverage: You’re required to have a certain amount of liability coverage in most states, so check with your state’s insurance commission to make sure you pass that requirement. Also, if you’ve financed or leased your vehicle, check with the lender or leasing company and compare what you have to ensure you don’t violate the terms of your agreement. At the same time, consider getting rid of any insurance coverage you don’t need, especially if there’s a low chance you’ll actually use it. Again, Credible's partners can help you with this time-consuming process by allowing you to compare car insurance costs in just minutes. Plus, they explain what each insurance provides.
  3. Ongoing policy costs: Many car insurance companies will offer discounted rates upfront to get you to buy a policy, but then they’ll increase the rate after the first policy period ends. Check to see what your policy will cost now and in the future, so you don’t have to go through this entire process all over again in six months or a year. If you're looking to lower your car insurance, you're going to want to consider several auto insurance companies. Start your search on Credible, where you can complete the process entirely online.
  4. Deductibles: In addition to coverage levels, it’s also important to compare deductibles on your collision and comprehensive coverages. Raising your deductible will result in a cheaper rate. But if you need to file a claim, it’s important that you have enough cash to cover the deductible without putting your financial situation at risk.

It’s a good idea to compare at least three to five different insurers to maximize your savings. This process can be rather time-consuming if you request a quote from each insurer individually, so consider using an online marketplace like Credible to explore pricing and compare quotes from multiple insurance companies in one place.

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What to do if you can’t find a cheaper rate elsewhere

While shopping around can make it possible for you to save money on your car insurance policy, it’s possible that you already have the best rate available. (Just remember: Don’t rule out shopping around again in the future. There’s no guarantee you’ll find a better rate. But using an online marketplace like Credible can improve your chances).

If this happens, the last thing you want to do is cancel car insurance. If you have a lapse in your coverage, it could make it more challenging to get car insurance in the future. Even if you do get approved, you may end up with a higher rate. Even if you’re getting rid of your car, consider a non-owner insurance policy.

Overall, you should consider how you can find a balance between your current budgetary restraints and your financial ability to pay for a claim out of pocket.

Start with optional coverages like roadside assistance and rental car reimbursement. While these are nice to have, they’re not required, and you have a better chance of getting by without them than other forms of coverage.

Whatever you do, try to avoid cutting your liability coverage. If you cause an accident and your policy doesn’t cover the full claim amount, you may end up getting sued for the remaining amount. You can’t cut coverage levels for collision and comprehensive protection, but you can increase your deductibles — again, make sure you can afford the higher deductibles before you commit.

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