Buying Car Insurance on a Budget

In this economy, budgeting is more important than ever. If you're in the market for car insurance, here are some tips to help you make sure you're getting the best deal.

It's important to realize that just because a company offers cheap car insurance, that doesn't mean they're a good company to buy insurance from. Some companies aren't key on customer service or have shady practices. That's why it's important to check your potential car insurance carrier against your state's department of insurance (every state has one), to protect yourself against future hassle.

Discounts - insurance companies offer discounts for certain drivers, like those with professional affiliations or low-risk occupations. Check with your employer to see if your company has group insurance rates that will work within your budget.

Credit score counts - those with "bruised credit" often pay higher insurance premiums, so if your credit is in decent shape, try to reap the benefits with a provider that will take your credit score into account.

Senior citizens - Seniors can get lower rates on their car insurance. If you qualify, be sure to ask. It's a nice bonus for those who are often on a limited budget.

Safety features can lower your rates - If your car is equipped with certain safety features or theft-deterrent systems, you can usually get a lower rate. Antilock brakes are at the top of the safety-features list, and many cars have them. Automatic seatbelts and airbags are also often on the list, so check with your auto insurance provider or competitors to see if they offer a discount.

Driving record is important - a history of traffic tickets or accidents can raise your premiums, so try to drive and park safely to keep auto insurance rates down to protect your budget when shopping for auto insurance.

Pick the best plan for you - plans that don't offer as much protection cost less. Make sure you know what kind of coverage you actually need before beginning to shop for car insurance. The downside to less coverage is that if something happens, you're liable instead of the insurance company. If you drive an older car, typically one worth less than $2,000, you might want to consider dropping collision insurance to help your budget. Also, raising your deductible can help lower your car insurance rates.

Combined coverage - If you have home insurance, or another type of insurance, ask your insurance provider if they sell car insurance. Combined coverage may be available and can help the budget.

Renewal discounts - Many companies also offer a renewal discount, so if you've been with the same car insurance company for several years, ask them if they offer renewal incentives.

Car cost/insurance cost - if you're in the market for a car, as well as insurance, keep in mind that the more expensive and higher-performance a car is, the higher your premiums are likely to be. This is even more true if the type of car you own/may buy is one that is frequently stolen or expensive to repair.

Shop around - ultimately, you'll probably want to go with a well-known insurance provider that still has low rates. This will save you money now and if something happens in the future.

See my other articles for more great ideas on shopping for auto insurance, including the benefits of shopping online.