Finding and maintaining cheap auto insurance is no accident. It’s something that requires a little bit of knowledge, some research, and then some ongoing effort into the future.

5 Steps to Cheap Auto Insurance

Below are five steps to cheap auto insurance that are virtually guaranteed to help you save money. But before we get to them, it’s important to know how insurance companies determine your premiums.

Most of them use a rather complicated formula which factors in several things:

• make, model, and book value of the car being insured
• the state and local area you live in
• age and marital status
• driving history – including accidents and violations

Step #1 – Know State Requirements

The first step in finding the best deal on car insurance is to know what the minimum requirements are. Every state in the union requires some sort of insurance, be it through a licensed provider or a means of self-insurance, and companies will generally charge roughly the same rate for the minimums. Once those requirements are met, anything else added to your policy is an “extra”. And the extras are where the rate differences lie.

Step #2 – Compare Companies

The next step is to begin looking online and/or making phone calls to compare one policy with another. But make you’re doing what’s known as apples-to-apples comparisons. In other words, if the first policy you investigate includes the state minimums plus full collision and glass, make sure the second and third policies are either exactly the same or as similar as possible. Online comparisons tend to be the quickest and easiest way to do this.

Step #3 – Pay the Policy in Full

Very few people realize that their credit rating plays into how much they pay for insurance. Yet, if you can pay for your entire policy up front, the insurance company will not be concerned about your credit rating or your ability to pay. They will have their money and you will get a lower rate because of it.

Step #4 – Avoid Accidents

It’s a fact of life that car insurance is all about risk. Whenever you have an accident you pose a greater risk to the insurance company that they will lose money on your policy. That’s why accidents cause our rates to go up. Drive safely at all time to avoid accidents. This is one of the best things you can do to keep your insurance rates low.

Step #5 – No Violations

Just like accidents, violations will cause your insurance premiums to rise. Serious infractions, such as DWI or leaving the scene of an accident, can cause you to be placed in a special high-risk pool with substantially higher rates. They can even result in you being dropped from your current car insurance company, so avoiding tickets and violations is a smart idea. If you already have some on your record, keep a clean slate from this point forward and eventually they will be taken off your record.