Cheap Car Insurance Options That Still Offer Great Coverage
KEY POINTS
- Lemonade uses telematics -- a usage-based technology -- that makes its car insurance cheap for most drivers.
- Costco members can get an exclusive discount by buying CONNECT car insurance through Costco.
No one wants to pay more for car insurance, especially when you haven't gotten into an accident recently or you haven't requested more coverage. And yet many do end up paying more year after year, sometimes even by as much as hundreds of dollars. In fact, according to the latest Consumer Price Index, car insurance rates have spiked 19.2% since last year, a reflection of both the rising costs of car repairs and frequency of natural disasters.
Since insurance in general isn't getting cheaper, it's important to find the lowest rate for your desired coverage. With that in mind, here are two lesser-known companies that offer cheap car insurance.
Lemonade
If you live in Arizona, Illinois, Ohio, Oregon, Tennessee, or Texas, Lemonade car insurance might be worth considering.
Lemonade is a company that uses telematics to price your policy. This technology measures your driving behavior and records how frequently (and far) you drive. It can be installed on your phone through the Lemonade app, and it helps Lemonade collect data on your driving to give you a fair price on your premium.
It also combines artificial intelligence with underwriting to create a pretty seamless process for buying car insurance. While other companies make you fill out long forms online, Lemonade lets you buy car insurance in a chatbot format. It's really simple -- it really does take about three minutes -- and the company's copywriters deserve an award for creativity.
The biggest downside is that Lemonade isn't available in all fifty states, only the six listed above. That said, Lemonade is trying to expand to other markets, so it's possible Lemonade will be available to you in the future. If Lemonade isn't available where you live, but you like the idea of telematics and usage-based policies, you can check out other pay-per-mile insurance companies.
Costco (CONNECT)
Costco members could save big on car insurance by purchasing it through their favorite warehouse retailer. While Costco doesn't underwrite policies itself, it has a partnership with CONNECT (a company that's backed by American Family Auto) to offer Costco members an exclusive discount.
According to Costco, this discount helps its members save on average about $596 in the first year they switch, or about $50 per month. Plus, Costco Executive members will get some extra perks, like roadside assistance and a deductible waiver on repairable windshield damage.
To get started, you can request a quote on Costco's website. Note that you might have to call CONNECT directly, though Costco will give you that phone number after you try to request a quote.
Shop around for car insurance before you decide
The best way to cut car insurance costs is to refuse the auto-renewal on your policy and shop around periodically for a cheaper rate. It's not uncommon to overpay for a policy simply because you haven't checked out what's available and requested insurance quotes. As you're shopping around, you might want to request quotes from these seven companies, as they may offer cheap rates depending on your situation:
Alternatively, you could work with an independent insurance agent to find the best rates in your area. Independent agents aren't employed by insurance companies, so their opinions are considered less biased than "captive agents," that is, agents who do work for a single insurance company. Instead, independent agents work with dozens of companies, so they can shop and compare rates for you. It's free -- insurance companies earn commission from the companies, not you -- and it could save you time.
All in all, you shouldn't have to overpay for car insurance year after year. If you're tired of seeing your rates creep up, check out the car insurance companies listed above. Shop around and compare rates, and don't assume loyalty to one company will result in the lowest rate. You might save hundreds of dollars just by switching companies, and perhaps even more depending on how much coverage you're seeking.
Our Research Expert
Steven Porrello writes about personal finances topics ranging from credit card offers to Costco deals to choosing the best places to park your cash.
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