Car insurance, though not the most thrilling aspect of vehicle ownership, is undeniably one of the most crucial. Your policy is designed to shield you from financial disaster in the event of a collision or related injury. Moreover, in most states, possessing insurance coverage is a prerequisite for vehicle registration. Consumer Reports advises actively shopping for the optimal policy, not only when you acquire a new car but also every few years thereafter, to ensure you consistently secure the most favorable deal.
Through an extensive survey encompassing over 40,000 insurance policyholders, Consumer Reports has pinpointed the insurance providers that deliver superior service coupled with the most competitive monthly premiums. To achieve the best car insurance rates, it helps to grasp the specific attributes insurers consider when calculating your monthly premiums. These factors include:
- Driver Profile: Your age, driving experience, and past driving record—such as previous accidents or traffic violations—can all influence your premium cost. This is because the insurer might place you into a higher-risk category. The addition of a teenage driver to your policy can also lead to increased costs.
- Car Type: Generally, the more expensive the vehicle, the higher the premium. This is due to the increased cost of repairing and replacing costly cars. High-performance vehicles also tend to be more expensive to insure because of the elevated risk associated with operating a faster car.
- Credit History: According to Experian, a leading credit reporting agency, most states permit insurers to incorporate a customer’s credit score into their rate calculations. Insurers assert that credit history serves as a reliable predictor of the likelihood they will need to pay out insurance claims. However, California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah either restrict or prohibit this practice. In other states, enhancing your credit score can contribute to securing a better rate.
- External Conditions: Local weather patterns, traffic congestion, and other environmental factors that heighten the probability of claims can result in higher rates. For example, if your area has a history of damaging storms, such as major hurricanes and widespread flooding, leading to numerous car-insurance claims, your insurer may seek approval from your state’s insurance regulator for a broad rate increase. This adjustment would reflect their increased exposure to such risks. Similarly, customers residing in areas with higher collision rates are also likely to pay more.
Finding the Best Car Insurance
We meticulously evaluate and compare car insurance options to ensure you receive the utmost value for your investment.
Loyalty Doesn’t Necessarily Pay
A common misconception is that insurers reward long-standing customers. However, a recent national survey commissioned by Consumer Reports indicates that periodically shopping around for a better rate can lead to significant savings. Thirty percent of the policyholders surveyed reported switching insurers within the past five years. Among this group, a remarkable 70 percent cited obtaining a more favorable annual premium as the primary motivation for changing providers.
“Price optimization” represents another compelling reason to explore new insurers every few years. To date, nearly half of U.S. states have outlawed this controversial practice, which permits insurers to raise rates for reasons unrelated to an increased liability risk. The mechanism is as follows: If an insurer determines that you are unlikely to switch to a competitor, they may increase your rates simply because they can, ultimately costing you more money.
Factor In Life Changes
Significant life events, such as getting married, adding a teenage driver to your policy, acquiring or selling a vehicle, or changes in your commute distance (as many experienced during the pandemic)—warrant a discussion with your insurer. Inquire about how these changes will impact your costs or potential savings. Furthermore, actively solicit quotes from other insurance companies to ascertain which carrier offers the most advantageous rate. Remember to request an adjustment to your coverage to reflect your car’s depreciation; insurers typically do not initiate this without your prompting.
For a comprehensive list of insurers that might not be easily discoverable through a simple online search, consult Consumer Reports’ car insurance ratings.
Select a Top-Rated Insurer
While securing a lower premium is important, price should not be the sole determinant. Strive to find a carrier that, in addition to offering competitively low premiums, provides fair and prompt claims settlements, delivers exceptional customer service beyond claims, assists you in thoroughly reviewing your policy, and proactively offers guidance and advice.
Consumer Reports rates insurers based on member feedback concerning premium costs, the ease of processing claims, the quality of non-claim-related customer service, the thoroughness of policy review, the clarity of policy coverage, and the provision of proactive help and advice. To compile these ratings, we surveyed 40,566 auto insurance policyholders nationwide in early 2024 regarding their car insurance experiences. (The survey sample included 28,958 CR members.) These individuals provided us with 50,129 reports on their interactions with car insurance companies and indicated whether they had switched insurers or filed a claim between 2020 and 2024.
Do Not Skimp on Liability Coverage
Most states mandate that drivers carry at least minimum liability coverage. However, it is strongly advisable to enhance your coverage beyond these minimums if your financial situation permits. Without adequate liability coverage, you could face personal responsibility for tens of thousands of dollars if you are found liable for injury or death following a crash.
- Liability insurance: This coverage extends to bodily injury and property damage inflicted upon another party in a collision. Experts recommend purchasing more than the legal minimum, even if you don’t possess substantial assets to safeguard. Depending on your state’s laws, a portion of your wages could be garnished if a judgment is made against you. A more protective level of coverage would be $100,000 per person, $300,000 per incident, and $100,000 for property damage. Douglas Heller, an insurance expert at the Consumer Federation of America (CFA), suggests that an umbrella liability policy may be worth considering. Such a policy extends coverage for both your car and home, offering additional layers of protection. These policies are specifically designed to shield assets such as your home and retirement savings and typically increase per-person liability coverage to $300,000.
- Low-limit coverage: Heller acknowledges that while umbrella policies and policies with higher liability limits provide superior protection, they can be financially challenging for lower-income drivers. Currently, only three states—California, Hawaii, and New Jersey—offer specialized insurance coverage tailored for lower-income drivers. Heller emphasizes that possessing low-limit liability coverage is preferable to being uninsured or refraining from driving altogether, which can restrict access to economic opportunities.
- Uninsured motorist coverage: In numerous states, this coverage is optional but highly recommended. According to the Insurance Information Institute, 14 percent of drivers do not carry car insurance—a statistic that has remained relatively constant for over two decades. This makes uninsured motorist coverage a prudent investment, even if not legally required. This typically inexpensive coverage covers medical expenses for you and your passengers after a crash caused by an uninsured, at-fault driver.
Why opt for uninsured motorist coverage in a no-fault state, where your insurer covers your expenses regardless of fault? Because it also provides reimbursement for lost wages following a crash. Furthermore, uninsured motorist insurance extends protection to you and your household members as pedestrians and in hit-and-run incidents. (According to the National Highway Traffic Safety Administration, pedestrian fatalities have been on the rise in the U.S. since 2010. In 2022, the most recent year for which data is available, 7,522 pedestrians lost their lives and over 67,000 were injured in motor vehicle crashes.) Heller advises securing at least as much uninsured motorist coverage for yourself as you would for others involved in a collision.
- Underinsured coverage: A growing number of motorists are choosing to carry only state-mandated minimum liability coverages in an effort to save money. Underinsured coverage protects you if you are involved in a collision with a driver whose insurance coverage is insufficient to cover the full cost of injuries and property damage.
Identifying Savings on Other Coverages
Collision insurance, which covers crash damage, and comprehensive insurance, which safeguards against vehicle theft and damage from storms, are two types of coverage where you might be able to reduce your premium. You may also be able to forego other types of coverage to achieve further savings.
- Adjust your deductible. Raising your comprehensive and collision deductibles from $500 to $1,000 can, on average, trim 11 percent off your premium, notes Hunter at the CFA. Just ensure you have the financial capacity to cover the increased out-of-pocket cost should you unfortunately be involved in a crash.
- Older cars often don’t require extensive extra coverage. Consider dropping collision and comprehensive coverage when your annual premiums equal or exceed 10 percent of your car’s book value. Otherwise, you might end up paying more in premiums over time than you would ever recoup for the repair or replacement of your damaged, stolen, or totaled vehicle. (If you own a classic car that is appreciating in value and is not primarily used for commuting or routine errands, consider obtaining a classic car policy. This type of coverage insures your vehicle for an agreed-upon value based on its collectibility and other unique factors.)
- Consider dropping rental reimbursement coverage. If you have access to another vehicle while yours is being repaired, purchasing this coverage may be unnecessary. Similarly, you can skip roadside assistance coverage if you possess a more cost-effective auto-club membership or if roadside assistance is included as part of your car’s warranty.
- Review personal injury protection (PIP) and medical payments coverage. If you already have robust health insurance coverage, you might not require this through your auto policy. However, retain this coverage if you lack health insurance or if your regular passengers might not be adequately insured.
- Actively pursue discounts. These can include savings for bundling home, auto, and umbrella policies with the same carrier; completing a safe-driving course; informing your insurer about a reduction in your annual mileage; and reporting your teenage driver’s strong academic performance (typically a B average or better).
Additional Steps to Maximize Savings
- Maintain a clean credit and driving record. Both significantly influence the price of your insurance premium. For the most favorable rates, aim for at least three years of clean driving history. In most states, a higher credit score generally translates to lower rates.
- Choose your car wisely. Premiums vary considerably by model. When comparing different vehicle models, ask your insurer for premium quotes on each one you are considering. Luxury and high-performance cars typically cost more to insure than more mainstream vehicles.
- Assign the right driver to the right car. Consult your insurance agent to determine the principal driver for each vehicle in your household. Strategically matching drivers to cars based on their driving records and vehicle values can potentially lead to savings. For instance, pairing a lower-value car with the driver who has the longest commute might be more cost-effective than assigning that driver the higher-value car. (Naturally, this strategy may necessitate some family negotiation.)
- Consider enrolling in driver monitoring programs. Some insurance companies offer discounts if you permit them to monitor your driving habits using a smartphone app or a device that plugs into your car’s diagnostic port. While these programs hold the potential for substantial savings, you must be comfortable with a certain degree of privacy compromise, as your insurer will track your movements much like some smartphone apps do. Before signing up, inquire about the specific data your insurer will use to calculate discounts, whether any negative driving behavior could actually increase your rate, and how all collected data can and will be utilized.