How to get the cheapest Auto insurance?

Cheap car insurance

Not all car insurance is the same. If you want cheap car insurance, you have to choose the lowest amount of coverage that’s legally required. This “bare bones” coverage usually consists of liability insurance at the lowest legal limits. If you cause an accident, it pays for others’ property damage and medical bills and that’s it. For more coverage, you have to raise the limits and buy optional coverages, which bring the price of insurance a lot higher.

Jump ahead:

Liability limits are usually written like this: 30/60/25. In this example, using Texas minimum requirements, the numbers show coverage that would pay:

• medical expenses of up to $30, 000 per person
• medical expenses up to $60, 000 per accident
• up to $25, 000 for property damage

To give you an idea of how much state minimum coverage costs, here are average annual rates for the cheapest car insurance coverage in every state.

Minimum car insurance rates by state

Methodology: The table shows the average annual rate of 10 ZIP codes in the state for minimum coverage from the following carriers, in no particular order: Progressive, Allstate, State Farm, Nationwide, GEICO and Farmers. In some states, uninsured motorist coverage and/or personal injury protection coverage is mandatory in addition to liability. For those states, these coverages are included in our average rate shown in the chart, though we list just the state minimum levels for liability. Data was provided for CarInsurance.com by Quadrant Information Services. New Hampshire doesn’t require drivers to have car insurance, but most drivers do, and we’ve listed what is mandated if you choose to carry coverage.

When it makes sense to buy the cheapest car insurance

Going with the minimum liability car insurance required by your state is rarely recommended. The amount of coverage required by state law is low, which means even a minor accident can exceed the amount your insurer will pay out. "You should be careful to have adequate coverage to fully protect your vehicle and other assets so you don't get stuck with out-of-pocket expenses, " says Penny Gusner, consumer analyst for CarInsurance.com. But there are a few scenarios in which having minimum coverage may be a good strategy. Here are four:

1. Your car is old and not very valuable, so you skip comprehensive and collision

Collision coverage pays to repair your car if you're in an accident. Comprehensive coverage pays to replace your car if it’s stolen and pays for damages from fallen objects, like a tree, and from fire, floods, animal strikes and vandalism. Both of these types of protection are optional. Comprehensive and collision only pay out up to the actual cash value of your car. That’s why these coverages may be unnecessary if the vehicle isn't worth much.

"This is especially true for a car that you aren't driving as much, such as an extra car that sits most of the time and you want to pay as little as possible for insurance, " says Gusner. “If you are looking to save to buy a newer car, then by dropping down coverage to state minimum you can put away the money saved for the replacement car."

William Harris, an independent insurance agent in Los Angeles, echoes Gusner, but points out the consequences. "Dropping comp and collision could be reasonable, but remember that, if it's your only car, you'll have to pay for any body work or be prepared to drive around a car that looks like a wreck."

2. You don't drive very much.

If you log few miles on your car, Gusner says minimum coverage may suffice, simply because the less you drive, the less risky your driving experience will be.

"If you are retired, work from home or otherwise don't drive much, then dropping liability coverage to the lowest possible limits can save you money, " she says. "You aren't as likely to be in an accident as someone who commutes to and from work each day or drives for work."

She adds that consistently driving few miles each year will likely snag a low-mileage discount.

3. You don't have a home, big savings or other assets to protect.

If you're in an accident, the other driver or drivers can sue you to cover damages beyond what your insurer pays out, which puts all your assets at risk. But if you don't have any assets to target, it's less likely you'll be sued, says Gusner.

But that comes with a strong warning: "Just because you don't have much doesn't mean a lien can't be placed against you, or that your license and registration can't be suspended if you cause an accident and can't pay for all damages, " Gusner says. "If you don't want to end up in that type of situation, then it's wise to buy higher liability limits if you can afford it."