To get the best deal on something, you need to do a little comparison shopping. It’s true whether you’re buying groceries for your family or a new laptop for yourself. It’s also true when you need car insurance.
But some things are easier said than done. Car insurance can be … complicated. If you’re not careful, you might end up comparing two very different policies, and the deal that looks better might not actually be better.
Before you start looking at quotes, you need to know what you’re looking for. Here’s a hint: It’s not just about the premium.
Pay attention to the following issues when comparing auto insurance quotes.
Step 1: Compare Types of Coverage
When we talk about car insurance, we’re actually talking about a handful of different coverage types. Your policy could include all them, or it might only include some of them. This is part of what makes car insurance seem so complicated.
- Liability Insurance: Liability insurance covers third-party property damage and bodily injury or death that you cause. If you rear end the car in front of you, for example, liability insurance will cover the damage to the car you hit, up to your policy limit. Coverage is normally expressed in three numbers. For example, 25/50/25 or 25,000/50,000/25,000 would indicate $25,000 for injury or death to one person, $50,000 to injury or death to two or more people in one crash, and $25,000 for property damage.
- Uninsured Driver Insurance: Even though car insurance is required under state laws, not every driver has it. If an uninsured driver hits you, there’s a good chance that driver won’t have the personal funds needed to pay for your car repairs and medical costs. If you have uninsured insurance, you’ll be covered.
- Underinsured Driver Insurance: Some drivers have insurance, but not very much of it. For example, in California, drivers can carry as little as $5,000 in liability insurance for property damage. But what if your car is worth more than $5,000? If another driver totals your car, you may not be fully compensated. With underinsured driver insurance, you’ll be covered.
- Collision Insurance: Here’s the thing about liability insurance: It covers damage that you cause to other people’s property, but it doesn’t cover damage to your own vehicle. What if you hit another car and damage both cars in the process? Your car won’t be covered without collision insurance.
- Comprehensive Insurance: When we think about car insurance, we tend to think about car crashes, but a lot of other things can go wrong. Your car could be flooded or hailed on. It could be stolen or vandalized. It could be damaged by animals. Comprehensive insurance covers these risks.
- GAP Insurance: Cars depreciate, or lose value, very quickly. If you purchase a car with a loan and with little or no money down, you will probably end up owing more than your car is worth for a while. This normally isn’t a problem – unless your car is stolen or totaled, and the insurance payment doesn’t cover what’s left of the loan. With GAP insurance, you won’t have to keep making payments on a car you no longer have.
- Personal Injury Protection (PIP) Insurance: PIP insurance covers medical injuries suffered by you and your passengers. Remember – liability insurance covers injuries suffered by other people, not you or your passengers.
To keep your costs down, you don’t want to pay for coverage types you don’t need. For example, if you don’t have a loan for your car, you don’t need GAP insurance.
At the same time, you don’t want to give up key coverage types just keep your costs down. For one thing, you may not have a choice. Your state will likely require liability insurance. It may also require PIP insurance, especially if you live in a state that uses a no-fault insurance system. If you’re making payments on your car, the lender may require other types of insurance.
Skimping on insurance can also cost you more in the long run. Let’s say you decide to get liability insurance only. You’re a safe driver, so you don’t think you need more than what’s required by your state. Then a deer runs out in front of you. You hit it, and your car is pretty much totaled. You call your insurance company to file a claim, but you’re told the incident isn’t covered because you don’t have comprehensive coverage.
Insurance covers risks. The more insurance you have, the fewer risks you take on.
Step 2: Compare Auto Insurance Coverage Limits
In addition to selecting the type of coverage you want, you also need to decide how much coverage you want. The higher your limits, the more you’ll pay – but this doesn’t necessarily mean that less is better. You want to make sure you have enough coverage in case anything goes wrong. That is, after all, the whole point of insurance.
Here are some things to consider when selecting your coverage limits.
- Your State’s Minimums: Each state establishes minimum requirements for insurance. These minimum amounts typically apply to liability insurance, but they may also apply to PIP insurance.
- Your Lender’s Requirements: If you have a car loan, your lender may require coverage types and amounts.
- Protecting Your Assets: You can’t go below the minimum requirements set by your state, but you can go higher. While doing so will cost you more, it may be worth it, especially if you have assets to protect. Just think about what would happen if you hit and totaled an expensive vehicle. The damage could exceed your coverage limits – and you could be on the hook for the difference.
- The Deductible: The deductible is the amount you pay out of pocket when you make a claim. A higher deductible will produce a lower premium, but you need to make sure you can actually afford the deductible. For example, let’s say you pick a $1,000 deductible. You file a claim and have to pay $1,000 out of pocket – but you don’t have $1,000. You’re in a bind, one that could have been avoided by going with a lower deductible. Future you will thank present you for picking a deductible you can afford.
Step 3: Compare Available Discounts
Everyone loves discounts. When it comes to auto insurance, discounts can save you a bundle, so they’re worth looking into. Here are a few of the discounts you might find:
- Good Student Discounts: If you’re in school, this is a common discount.
- Safe Driver Discounts: If you have a clean driving record, you might be eligible for a discount. You may also be able to prove you’re a safe driver using telematics apps that rate your driving performance.
- Safe Vehicle Discounts: If your vehicle has safety features that help prevent accidents and theft, you may be eligible for a discount.
- Organization Discounts: Belonging to certain clubs or organizations may qualify you for a discount.
- Full Payment Discounts: It may be cheaper in the long run to pay for the full policy term up front.
Final Considerations When Comparing Auto Insurance Quotes
When looking at quotes, make sure you know how many months the premium covers. For example, the premium quoted may be how much you’ll pay every month, or it may be how much you’ll pay over a six-month term.
Once you know that your quotes are for the same coverage types, coverage limits and term period, you can compare quotes fairly easily. How much you pay will depend on a lot of factors, like your driving record, where you live, how much you drive and what type of car you own. Different insurers calculate premiums differently, however, so one might offer you a better deal.
If something seems too good to be true, it probably is. While a fly-by-night insurance company may offer what seems like a good deal, you need to be confident that the insurance company will still be around when you need to file a claim.
Some insurance companies aren’t even real. They’re scams that will sell you a worthless piece of paper. Don’t fall for these cons. Do a little research to make sure you’re dealing with a legitimate company. You can go online to look for reviews and see if the company has a rating from the Better Business Bureau.
Need an auto insurance quote? Get one here.
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