Have you ever watched an auto insurance commercial and wondered if you could be getting a better deal? You're not alone. Luckily, comparing car insurance quotes is easier than it's ever been, thanks to online information and tools. We've talked to experts to get insider advice on finding the best auto insurance rates, so our guide will show you where to look — and what to look for — to get the policy that's right for you.
Why You Need to Compare Quotes
Car insurance isn't a one-size-fits-all endeavor. Rates will vary dramatically depending on your location, type of vehicle, driving history and driving habits, among other factors. Each company has its own set of policies and incentives it uses to set rates, so the ideal company for your single neighbor may not be the best company for you and your teenage children clamoring to borrow the car.
In the chart above, which shows insurance premiums in Alabama, you can see rates vary quite a bit for each driving profile. And while one company might provide cheaper rates than its competitor for one group of drivers, for another it might be more expensive. Your age, your gender, your vehicle and your driving record will likely dictate which company and policy is right for you—so it pays to shop around.
How to Compare Quotes from Car Insurance Companies
Whether you shop online, over the phone or in person, the Insurance Information Institute recommends comparing quotes from at least three companies. Before you start crunching the numbers, however, do your homework and consider what types of coverage you need, as well as how much. You can start by looking here to find the minimum required by your state, but chances are you'll want to add to that.
What to Compare
The key to comparing car insurance quotes is to be sure you're comparing apples to apples. There are lots of different types and levels of coverage, as well as various factors that may push your rates higher or lower.
Here are some basic parameters you'll want to define, making sure you keep them the same when comparing quotes from different companies:
Required of all drivers, liability insurance is often summarized as three numbers, such as: 100/300/50. This means the company will cover up to $100,000 per person injured in an accident, up to $300,000 per accident, and up to $50,000 in property damage. Premiums typically increase as the limits go up, but it's not always in direct proportion: you may be surprised at how little it costs to raise your liability limits.
Optional coverage is also available. Drivers with newer cars might want to add on collision and comprehensive insurance, for example. What about a policy that covers rental costs or protects you from uninsured motorists?
Be sure you're comparing quotes with the same payment schedule. The premium may be annual, semi-annual or monthly. Some companies offer discounts if you pay up-front for the year.
Insurers often offer several different deductible levels. Increasing your deductible can reduce your premium between 15 and 40 percent, according to the Insurance Information Institute. Just be sure the deductible is low enough that you can afford the out-of-pocket costs in the event of an accident.
What Information Will You Need to Get a Car Insurance Quote?
As you start shopping, be prepared to answer a lot of questions. This is how auto insurers assess your level of risk. Resist any temptation to withhold negative information; if you hide something, it could disqualify you from coverage in the case of an accident. Here are some common pieces of information you'll need to have on hand to get a quote.
- Driver's license number
- Birth date, gender and marital status
- Your credit score (some states do not allow insurers to ask for this)
- Where you live and store your vehicle
- Make, model, year, license plate number and vehicle identification number (VIN)
- Odometer reading
- If car is financed, the name of the lender
- Safety features, such as air bags or anti-theft devices, that may lower your premium
- Years of driving experience
- Number of moving violations, accidents and claims you've had in recent years
- How you use the vehicle (commuting, business use), and average annual mileage
- What kind of coverage you want, and what limits you want on the coverage
- The name of your current insurer (if any) and policy number
Ask the carriers about any other discounts their company offers, such as a good driver discount, a good student or defensive driving course discount, a discount for bundling your homeowners policy and auto insurance and discounts for age or for belonging to certain groups, such as the AAA or AARP.
Getting Quotes: Is it Better to Shop Online or Use an Independent Agent?
You can buy auto insurance through an independent agent who sells policies for a number of companies, or buy it directly from a specific insurance company.
The best method depends on what you're most comfortable with, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association (RMIIA). "If you are technologically savvy, you may be comfortable buying online — many companies have very good customer service online. But if you're the type of person who likes to have your own financial adviser advising you, you may prefer an agent."
Here are a few of the pros and cons of each method:
Shopping Online / Directly through a Company
It's fast—many insurers provide online quotes within minutes.
You can access the Internet from home, on your own time.
Some insurers don't provide quotes online, and if you rule them out, you may miss the best option.
Unless you are skilled at Internet research, you may overlook some good deals.
Using an Independent Agent
Agents have a broad knowledge about many different insurance companies and plans, and can often advise you on the best one for your individual circumstances.
Agents can act as independent advocates for you in the case of problems with claims.
Because agents sell policies for many companies, some of them may not be as well-versed in any one company's policies as a dedicated company agent, and may miss cost-saving options.
Because agents work for commission, some may steer you to a policy that pays a higher commission.
What to Do After You Compare Quotes
Once you've compared quotes and decided on a company, it's time to submit an application. Some insurers allow you to apply online, while others will connect you with an agent to complete the process. Even if you do fill out an application online, make sure you know how to contact an agent for personalized help if you have follow-up questions.
Remember, a quote is just an estimate of your premium, based on the information you provided. Insurance companies will also conduct their own research, and it could affect the actual amount you pay. Don't assume the numbers on your policy will be the same.
Your contract should explicitly state what you're getting and the final price, so review it carefully before signing. And, keep your list of potential insurers on hand, in case the final contract doesn't suit your needs.
Choosing the Best Auto Insurance Company
To sort through the many companies offering auto insurance, start with your state's Department of Insurance, says Robert Hunter, Insurance Director at the Consumer Federation of America (CFA). "Most of these departments have websites that will offer a buyer's guide. These guides contain prices from major carriers and will also provide a variety of consumer profiles. Find the profile that's closest to you and then check the prices in your neighborhood."
Of course price is important, but it's not the only factor to take into account. Once you have a list of companies and initial quotes, you may want to dig a little deeper into the company's track record before signing a contract. A discount rate is no bargain if the company is bad about paying claims or provides lousy customer service.
To find reputable companies with good service records, Hunter recommends checking companies' consumer complaint scores, available at the National Association of Insurance Commissioners website.
"The score is a ratio that reflects the number of complaints per 100 customers. Drop the ones with the worst scores and pare the list down to three or four companies. That should leave you with a list of companies with pretty good service and prices. Once you've done that, price the actual policies and compare them."Robert J. Hunter
Finally, consider anecdotal reports from friends and family, or consumer reviews on sites like Yelp. These can give you a first-person perspective, especially on individual agents or local offices of national companies.
Tips on Getting Good Insurance Quotes
Our experts have a few additional tips for getting the best insurance rate:
Review your policy and competitors' rates every few years
Hunter says a common mistake people make is that once they have a policy, they stop looking at alternatives. Part of insurance companies' calculations, he says, may include how likely you'll be to shop aggressively for a better policy. "They'll raise the rate on people who aren't comparison shoppers," he says. "If you stay with them for four or five years, they will start raising your rates. It's sort of a loyalty surcharge."
Even if your company's prices haven't increased, keep in mind that others may have decreased. Also, circumstances change. If you move to a new state, have recently retired or your child goes off to college, check to see if you're eligible for a better deal.
Pay attention to the real costs
Don't be swayed by "savings" that really aren't. Hunter says, "There are some companies that advertise that 'we have lots of discounts,' but they start out with a high price and after lots of discounts they still have a pretty high price. You really have to look at the bottom line."
The same holds true for deductibles. Choosing a higher deductible can save you money on your premium, but do the math to figure out if it's worth the risk in the long term.
Research the claims process
Companies that do not process claims quickly and fairly can cost much more even if they offer cheaper premiums. Ron Fredrickson manages the Consumer Advocacy Unit of the Oregon Insurance Division and hears a lot of complaints about claims. "The calls we get in consumer advocacy are generally when someone's rates go up because of a claim," he says. It's typical for companies to raise premiums after an accident, but some go up more than others. "We recommend you research that ahead of time, to find out what will happen when a claim takes place," he says.
Many auto insurance companies list information about their claims processes on their websites, but you can also consult with an insurance agent or broker to find out more. J.D. Power also ranks auto insurance companies each year on claims satisfaction; this information can give you a better idea of how happy current customers are with their insurance companies.
Don't forget customer service
Most of us purchase insurance hoping we'll never need it, but when you're shopping, it's a good idea to assume that you will. In addition to ensuring that you've got the right type of insurance, think about how a company will treat you in the event of a claim. "Consider their customer service," says RMIIA's Carole Walker. "Remember, the type of customer service you get when buying insurance is probably the type of customer service you'll get when filing a claim."