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How To Compare Auto Insurance Rates

By: Jack NeradPublished July 27, 2021

We’re pretty certain you didn’t just roll out of bed on a Saturday morning and say to yourself, “Dude, I’ve gotta look at my car insurance today.” Typically, consumers think about their car insurance when their life is changing in a significant way. Maybe you got a raise and are considering buying a new car to reward yourself. Maybe you’ve been going over budget on monthly spending and are looking for a way to cut expenses. Maybe you just got a policy renewal notice that jogged your memory. As tempting as it is with car insurance to just “set it and forget it,” personal finance experts suggest that you look at your car insurance options at least every two years. And of course, you almost have to look at them if things change — you got married, you got a new car, or you have a child who is reaching driving age.

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Once you decide to pay attention to your auto insurance and compare rates, a helpful exercise is to learn what car insurance is required in your state. If you have insurance, you might find out you are paying for more than is required and/or you are paying for the wrong kind of coverages. One simple way to learn what levels of car insurance are required in your state is to do a web search in your favorite search engine for “[your state] department of insurance.” The National Association of Insurance Commissioners website is another resource for determining the minimum level of required coverage for your state. Most states require that you have liability coverage for property damage and bodily injury. The required amounts vary depending on your state. You should be aware the minimum legal requirements are frequently too low to adequately protect you and your assets. You might also want to add coverage for risks like collision damage that often are not required at all.

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While you need to learn about what your state requires in terms of car insurance, the car insurance companies you contact will need to learn about you. Car insurance is definitely not a one-size-fits-all product. Insurance companies will want to learn who you are, where you reside, and, to an extent, how you live your life. Your insurance rates will be determined in part by how risky they think you are to insure. To get a handle on this, most insurance companies will need some personal info about you that you probably don’t want to share with just anybody — your birthdate, Social Security number, driver’s license number, driving record, employment, and current insurance coverage if you have any. They will also need very specific information about the vehicle(s) you want to be covered in your policy. In some instances, insurance companies will want to gain information about your credit history and your credit score. The good news is you don’t have to give up all this information to do a basic rate check.

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As you get into your car insurance rate research, it is helpful to understand some basic car insurance terms and coverage types. Typically, people purchase several types of coverage. Most states require that motorists carry liability coverage. That protects you and your assets by making payments to anyone outside your policy who is injured, dies, and/or experiences property damage as the result of a traffic accident in which you are at fault. If another driver caused the accident, their liability coverage should make certain you get paid. Collision insurance pays for damages to your own vehicle arising from a collision in which you were at fault. Comprehensive insurance covers damage occurring from other causes, like a tree falling your car, for example. The “deductible” is the amount that you agree to pay before insurance coverage kicks in. For instance, if you have a $500 deductible, you pay the first $500 of any damage and the insurance company pays the rest up to the limit of the policy.

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As you prepare to compare auto insurance rates, it is helpful to set a baseline for coverage. Without doing that, it is impossible to compare rates fairly. A simple way to go about this is to compare rates on what has come to be regarded as “typical coverage.” Referred to as “100/300/100” liability coverage, it offers bodily injury coverage of $100,000 per person and $300,000 per accident, and it covers property damage up to $100,000. Many insurance professionals and financial advisers consider this the minimum amount of insurance coverage you should carry. It might not be enough coverage to protect you and your assets, but it does give you a level-playing-field basis for comparison. Note, too, that this looks at liability only. It does not include comprehensive or collision coverage. In many instances, you will find it smart to include those types of coverage in your overall package.

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Once you have all these preliminaries taken care of, you are ready to do some actual rate comparison. The easiest way to go about that is to go to one of the many online insurance comparison websites. Many of them enable you to get “instant quotes” and see quotes from several potential insurance providers displayed side-by-side. Of course, you will be required to enter at least some personal information before you can receive meaningful quotes. You should also be aware that some of the comparison sites might favor a particular insurance company or companies — most often because they are compensated by them. Some insurance companies offer price comparisons with other insurers on their websites. Whether the comparison is being offered by a third-party website or an insurance company itself, it is valuable to know that some insurers might be intentionally left out of the comparison for one reason or another. If you want to do a thorough job of shopping, we recommend you look at rates on several third-party comparison sites and several individual insurers’ websites.

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Beyond comparing rates online, another very intelligent step in comparing auto insurance rates is talking to one or more insurance agents. As you would imagine, the typical insurance agent is very well versed in all the nuances of auto insurance, nuances you will miss if you simply do an online comparison. Some agents handle the insurance products of a number of companies. Others handle the insurance products of one provider. You can locate agents by doing a search engine inquiry for “car insurance agents near me” or seek the local agent of a large insurance company from its company website. The third-party insurance sites will often connect you with an agent as well. Once you’re talking with an agent, don’t simply ask about rates but also feel free to pepper her or him with any questions you might have about insurance coverage and your personal situation. You will get valuable advice and be able to gauge the agent’s customer service skills.

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One thing to keep in mind is that car insurance is not only about price. The lowest-priced provider might seem like a bargain if you never submit a claim or want a question answered. But that lowest-priced provider can be a real problem if you want to get your claim resolved, your car fixed, or ask about adding a new driver or changing coverage. To get a handle on which insurance companies offer both excellent service and appealing rates, read customer reviews and look at the insurance company ratings and complaint histories that are available on many state government insurance websites. You can do the same thing in checking out the service records of individual insurance agents and brokers. Your relatives, friends, and neighbors — all of whom are insurance company customers — are valuable anecdotal sources of information about insurance companies and insurance agents as well. A local auto-body shop could also offer potentially valuable information about insurance companies.

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Once you have done the comparative shopping that has led you to consider a particular insurance provider, it is time to work with the company to structure coverage that will meet your needs. This includes the types of coverages you will purchase — liability, collision, and comprehensive — and the amount of coverage you need in each category. You might also decide to add other coverage like “uninsured motorist” that protects you if you are involved in an accident with someone who does not have insurance. This is also the time to look for discounts and money-saving opportunities like “bundling” your car and home insurance. Many insurance companies offer a wide variety of discounts, including those for “safe drivers” and “low-mileage drivers.”

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The Internet and your smartphone can be invaluable aids to comparing auto insurance rates. An amazing amount of information is available at your fingertips. You need to understand what coverage your state requires you to carry, and you need to have your personal information available so the quotes you get will be meaningful. You should check out insurance rates on more than one third-party comparison site and individual insurance company sites. Having done that, you are well-advised to talk with an insurance agent, broker, or member of an insurance company’s sales team. Customer service is as important as price. Your car insurance is also designed to protect you, so make sure it is tailored to match your needs.

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