Dirt Cheap Car Insurance: Too Good to Be True?

While shopping around for car insurance, you may come across some prices that seem too good to be true. And if you listened to your parents growing up, you’ll know that some things are, in fact, too good to be true.

But that doesn’t mean you have to be paying an arm and a leg for car insurance. There are instances where dirt cheap car insurance is surprisingly affordable. Understanding how insurance companies calculate their rates will help you to decide whether their dirt-cheap price really is too good to be true or not.

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How Driving Profile Affects Insurance Rates

One of the main factors that insurance providers take into consideration is you as the driver and how much risk you bring to the table. Insurance companies look at:

Age: The older you are, the more driving experience you have. So, drivers over 25 tend to have lower insurance rates.
Gender: Men statistically get into more accidents than women, therefore their insurance rates are typically higher.
Record: Any previous accidents, tickets, or charges within the last ten years affect your insurance rates. If your driving record is clean, your insurance will be much lower.
Credit score: Your credit score indicates to your insurance provider how reliable you are when it comes to making payments on time. The better your credit score, the lower your car insurance premiums.
Frequency: The more that you drive your vehicle, the more risk there is to the insurer. Having a shorter commute or driving less than the average person will lower your rates.

How Your Car Affects Insurance Rates

The vehicle that you insure will also cause the price of insurance to vary. Here’s what insurance companies consider when it comes to your car:

Age: If the car is brand new or a vintage car, the insurance rates will be higher. This is because the cost of repairs is higher on these types of vehicles.
Make and model: The make and model of your car also affect insurance rates. Reliable companies and safer builds have lower insurance.
Size of car: A large truck tends to have lower insurance than a small car. This is because the truck has less of a chance of being damaged in an accident.
Safety features: Anti-Lock Brakes (ABS), airbags, theft deterrent systems, etc. help to lower your auto insurance rates.

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Additional Factors That Affect Insurance

Driving history and the type of car you have are not the only factors in calculating insurance rates. Insurance prices also depend on:

Discounts: Some insurance companies offer profession-based discounts (for government workers, military personnel, etc.), loyalty discounts, or special discounts that you may qualify for, like safe driver discounts.
Policy type: The more coverage your policy offers, the more expensive it will be. Having the minimum amount of dirt cheap auto insurance, which only covers liability collision damage, is much more cost-effective in terms of premiums.
Deductible: Higher deductibles mean that you pay more out of pocket when you make a claim. In turn, they also indicate lower rates.

How to Know You Can Trust a Dirt Cheap Car Insurance Policy

There is no simple way to tell whether or not the dirt-cheap insurance policy you’ve found is trustworthy or not. You’ll need to consider your specific circumstances in order to determine what’s reliable.

For example, if you are a young driver with multiple accidents, and you find a policy with comprehensive coverage for dirt-cheap, you should be pretty skeptical of it. But, if you are an experienced driver with a clean record who qualifies for discounts, then a lower rate is quite reasonable.

Reading the fine print and researching the insurance company are both great ways to ensure that you are not getting ripped off so that you have the coverage you need at a price you’re comfortable with.

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Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.