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The Cheapest Car Insurance Won’t Always Save You Money

Searching for the cheapest car insurance is an understandable quest, especially when you take into account the fact that the average annual cost for auto insurance is $795 nationally, according to a recent study done by the Insurance Information Institute (III), and as high as $1,140, $1,043, and $1,000 if you live in D.C., Florida, or Nevada. With stats like those applying pressure to your pocketbook, there’s certainly no shame in trying to get the biggest bang for your buck. That said, where auto coverage is concerned, purchasing the least expensive car insurance you can find is rarely, if ever, the best value.

The Cheapest Car Insurance Required by Law
Regardless of whether you go cheap or go smart when it comes to auto insurance, everyone who owns a car needs to know what the minimum required insurance coverages are in their respective state, and the penalties that are in place if you choose not to abide by them. Every state in the union is required to mandate auto insurance, adopting one of two basic systems:

  • Tort States —In Tort States, which include 38 of the 50 states in the nation, drivers are required to carry a minimal combination of Bodily Liability and Property Damage Liability coverages. These coverages pay all, or a portion of, the total medical and property damage costs you are liable for if you’re found to be at fault in an auto accident.
  • No-Fault States —In No-Fault States, drivers are usually required to carry a combination of Bodily Liability and Personal Injury Protection – or PIP – coverage. At the risk of oversimplifying things, in a No-Fault State it doesn’t matter who caused the accident. The insurance providers pay the medical costs (and sometimes property damage costs) incurred by the drivers they insure, regardless of who’s at fault.

What Coverage Does the Cheapest Car Insurance Required by Law Provide?
Required amounts vary widely state-to-state; everywhere from Bodily Liability Coverages of $10,000/$20,000, and Property Damage Liability Coverage of $5,000 in Mississippi, on up to Bodily Liability Coverage of $50,000, Property Damage Coverage of $100,000, and Uninsured Motorist Coverage of $25,000 in the state of Maine. Keep in mind, however, that your insurance company will only cover costs up to the amount you are insured. And if you choose to roll the dice and drive without insurance, you should know that the penalties for not carrying minimal coverages can range from a $100 fine for first offenders to fines of several thousands of dollars, jail time, suspension of your driver’s license and auto registration, and the impounding of your vehicle for drivers with a history of ignoring mandatory insurance laws.

The Cheapest Car Insurance vs. the Best Value in Car Insurance
Which brings us to the difference between getting the least expensive car insurance possible, and getting the best value where auto insurance coverage is concerned. The truth is that if you’re in a serious auto accident, state required minimums are rarely, if ever, going to cover the losses – and all costs above and beyond your policy coverages are going to be your responsibility, whether you can afford it or not. Add to that the fact that uninsured motorists constitute up to 14% of the drivers on the road according to one NHTSA study (and as many as 25% or more of drivers in the states of Colorado, California, Mississippi, Alabama, and New Mexico), and it’s a smart consumer that goes above and beyond state regs when it comes to auto insurance. According to state-by-state statistics provided by insurance giant Allstate, most drivers are catching on. Insurance coverages of $100,000/$300,000 for Bodily Liability, $50,000 for Property Damage Liability, $50,000/$100,000 for Uninsured/Underinsured Motorist Coverage, and $5,000 for Medical Payments, are the rule rather than the exception in most states. To make a long story short, protecting you and yours from financial ruin is the most important factor when considering auto insurance amounts and coverages, and the cheapest car insurance on the market usually isn’t going to provide you with that kind of umbrella.

Getting the Best Value for Auto Insurance
Fortunately, getting the best value rather than opting for the cheapest car insurance possible does not mean that you’ll have to take out a second mortgage on your home to finance auto insurance. Being aware of the factors that you can control that determine auto insurance rates is vitally important, however, if you want to get a good deal. Good driving histories, good credit histories, good student discounts, driving cars with added safety and theft protection features, and doubling up on auto and home insurance are just a few of the ways that you can lower your premiums. And if you use the proven strategy of understanding the exact coverages that you need, then soliciting multiple quotes from a number of providers, you’ll be able to compare rates, coverages, and service–ensuring that you’ll get the best rates possible every time. Whether you choose to do the legwork all on your lonesome, or use a reputable quote finding service like to do the job for you, understanding the difference between the cheapest car insurance in the land and the best value for car insurance is key to getting the best coverages at the best prices for you and yours.

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