Most drivers believe they pay too much for car insurance. Although most states require drivers to purchase car insurance before taking the wheel, it is important not to overpay for this financial service commodity. Drivers should regularly compare car insurance quotes in order to identify competitive coverage bargains. Drivers should also consider risk, discounts, coverage, the insurance quotation process and state-specific insurance incidentals when saving money on car insurance is important.

#4: Risk. Car insurance underwriters assess the driver’s risk in order to determine how much the driver should pay for car insurance. The driver’s individual record, or driving records of family members on his car insurance policy, can help the insurance company to predict the likelihood of paying a future claim. If the driver or an associated person has moving violations, e.g. speeding tickets, or accidents within the past three to five years, the insurance company is likely to assign higher risk.

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In addition, the insurance company may use the driver’s credit profile in the underwriting process. Car insurance underwriters believe that high credit scores correlate with safe driving. Understanding how the insurance company assesses the driver’s risk “tier” can ultimately help him save money on car insurance. Author Chris Newbold (“30 Secrets to Saving Money on Your Auto Insurance”) recommends asking the insurance agent or broker to discuss the risk parameters used by a specific insurer.

#3: Discounts. Car insurance companies compete for business in certain markets. For example, if a national insurance company wants to build its presence in a regional or city market, discounts may tempt new policyholders to switch insurance companies. Author Chris David (“100 Creative Ways to Save Money”) recommends paying the annual premium in full, taking and passing a safe driver course, AAA membership or affiliate status with companies or organizations. When in doubt, ask the car insurance company about how to save money on premiums.

#2: Coverage. Where the driver lives determines his minimum car insurance coverage levels. Each driver should assess how much liability or collision coverage he needs. And some seeming small items mean a lot in the event of a car accident claim. For example, if a driver’s policy does not include rental car coverage, the policyholder may soon forget how much money he saved each month on lower premiums.

#1: State-specific ways to save money. Not all car insurers are licensed to sell insurance in every state. A local insurance company may offer great deals to local and state residents. Some non-profit organizations pass along car insurance savings to their members. Contact your state department of insurance about state-headquartered car insurance companies. Research the insurer’s credit rating and assets when offered especially tantalizing car insurance deals. Saving money on premiums is irrelevant if the company defaults on its obligations.

Many policyholders routinely compare car insurance quotes. Financial planners recommend requesting new car insurance quotes every one to two years for identify a less expensive and reliable car insurance provider.