Shopping for car insurance can be confusing. Two insurance companies may offer very different prices for what appears to be the same vehicle and driver.
The cheapest quote, however, is not always the best choice. Coverage limits, deductibles, exclusions and optional protections can make a major difference when you actually need to file a claim.
Here is what you should look at when comparing car insurance quotes in the United States.
Why Car Insurance Quotes Can Be So Different
Insurance companies calculate premiums based on their own pricing models and assessment of risk.
Depending on the insurer and applicable state rules, factors such as your driving history, location, vehicle, coverage choices and other information may affect what you pay.
This is why getting quotes from several insurers can produce very different prices.
According to the National Association of Insurance Commissioners (NAIC), consumers should compare quotes using the same coverage types and limits and provide the same information to each insurer.
Compare the Same Coverage
A $90-per-month policy and a $140-per-month policy cannot be fairly compared if they provide different levels of protection.
When requesting quotes, pay attention to:
- Liability coverage limits
- Collision coverage
- Comprehensive coverage
- Uninsured/underinsured motorist coverage
- Personal Injury Protection (PIP), when applicable
- Deductibles
- Rental reimbursement and roadside assistance
- Other optional coverages
Auto insurance requirements vary by state. Most states require at least a basic level of coverage, but consumers can often purchase coverage above the legal minimum.
Understand Liability Coverage
Liability insurance generally helps pay for injuries or property damage you cause to other people in an accident, subject to your policy limits.
States establish their own minimum insurance requirements.
However, choosing only the minimum required coverage could leave you responsible for additional costs if damages from a serious accident exceed your policy limits.
Consider your financial situation and how much protection you would want if you caused an expensive accident.
Collision vs. Comprehensive Coverage
These two coverages protect your own vehicle in different situations.
Collision coverage generally covers damage to your car resulting from a collision with another vehicle or object.
Comprehensive coverage generally covers certain non-collision events such as theft, fire or weather-related damage.
Neither is generally required by state law, but a lender or leasing company may require them if the vehicle is financed or leased.
Pay Attention to the Deductible
Your deductible is the amount you are responsible for paying toward a covered loss before insurance pays according to the terms of the policy.
For example, imagine your covered repair costs $4,000 and your collision deductible is $1,000. You would generally be responsible for the first $1,000, while the insurer would cover the remaining eligible amount.
Higher deductibles can generally reduce premiums, but they also increase the amount you may need to pay out of pocket after a claim.
Choose a deductible you could realistically afford.
Ask About Discounts
Before accepting a quote, ask which discounts are available.
Depending on the company, discounts may be available for factors such as bundling multiple insurance policies, insuring multiple vehicles, certain driving records or participation in eligible driving programs.
Available discounts vary widely among insurers.
This is another reason that comparing several companies can be worthwhile.
Don’t Choose Based on Price Alone
Price matters, but it should not be the only factor.
Look at the coverage limits, deductibles and exclusions associated with each quote. You may also want to check whether the insurer and agent are licensed in your state and research how the company handles claims and customer complaints.
Your state’s insurance department can help verify whether an insurer is properly licensed.
The NAIC specifically recommends obtaining coverage information and quotes in writing and asking questions about exclusions, available limits, deductibles and required coverage before purchasing a policy.
How to Compare Car Insurance Quotes Step by Step
Start by deciding which coverages and limits you want.
Then request quotes from several insurers using exactly the same driver, vehicle and coverage information.
Once you have the quotes, compare more than the monthly premium. Look closely at deductibles, liability limits, collision and comprehensive coverage and optional benefits.
A slightly more expensive policy may provide significantly more protection.
Final Thoughts
Comparing car insurance quotes is about finding the right balance between price and protection.
Use identical coverage limits when comparing insurers, understand your deductibles and make sure you know what each policy does and does not cover.
Car insurance laws and required coverages vary by state, so always verify your state’s requirements before purchasing a policy.
Taking a few extra minutes to compare the details can help you avoid c