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How to compare car insurance

Many drivers don’t know how to compare car insurance except by looking at price.

There’s nothing wrong with comparing based on price, but you won’t get the best car insurance unless you know what you can change to make your coverage better or cheaper.

Here is a step-by-step guide on how to effectively compare car insurance quotes and coverage options.

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A quick guide to comparing car insurance

  1. Compare car insurance companies. Get at least three quotes, and consider car insurance companies you may not have heard of.
  2. Use up-to-date-information to account for life changes. Events in your life such as moving or marriage will greatly affect what you pay. To buy, have your vehicle and driver’s license information handy.
  3. Compare coverages and limits.  Make sure the types of coverage and their limits fit your needs and do what insurance has to do: Shield you from financial upheaval. Then compare quotes apples to apples.
  4. Experiment with deductibles. If you have savings to cover them, raising deductibles is an easy way to affect your rates. You should be able to easily get quotes at each deductible level.
  5. Consider potential for big discounts. Some big savings potential from bundling home and auto policies or enrolling in pay-per-mile plans may not be apparent at first.
  6. Compare payment plans. Look for discounts when you can pay in full. Expect fees if you make payments. Consider what types of payment an insurer will accept.
  7. Read the fine print. Look for limitations on who can drive your car and when your coverage is extended to rental cars or new cars.

Compare car insurance companies

These are the top five auto insurers in the U.S. as of 2014, ranked by annual premiums written:

  1. State Farm
  2. Berkshire Hathaway (Geico)
  3. Allstate
  4. Progressive
  5. Farmers

Yet in your state there are probably several hundred more carriers to choose from. The more flaws you have in your risk profile, the more likely you’ll find that rates from different companies vary significantly – sometimes by thousands of dollars. In fact, many top-tier insurance companies don’t insure higher-risk drivers – those who need an SR-22 filing, for example, or who are under age 25 – but instead direct those clients to their subsidiaries.

Don’t limit your search only to companies you know.

We suggest you compare at least three companies, along with looking at a renewal from your current insurer.


Compare potential for big discounts

A company that sells both auto insurance and home insurance wants you to buy both. If your family has more than one car, it wants to insure them all.

Auto and home insurance bundle and multi-car insurance discounts can be substantial.

A slightly more expensive premium from an insurance company that can bundle your auto and home coverage might be cheaper once the discount on both policies is applied.

If you have a teen in the household, the company with the more generous good student discount might be less expensive after the discount is applied.

Almost all companies that offer “pay-as-you-drive” plans such as Snapshot or In-Drive will offer you a 5 discount just for enrolling after you buy a policy. Later, after you have installed a monitoring device, the discounts can range from nothing to as much as 50 percent. These plans can pay off if you are a very cautious and extremely low-mileage driver.


Compare payment plans

Almost all carriers offer the option of payment plans. Typically you will need a down payment of 8 to 33 percent. Expect to pay a fee for the privilege, between $3 and $10 per payment.

Not all carriers accept all forms of payment. Consider whether you will pay by:

Conversely, you can expect a discount for payment in full, usually 5 to 10 percent.


Compare the fine print

If you have black marks on your driving, insurance or credit history, you may be comparing car insurance from what are known as nonstandard companies. They’re known as nonstandard because the policies they sell can have exceptions to “standard” coverages and situations.

The most common are:

Limits on permissive drivers. Standard policies allow you to lend your car to any licensed driver; a nonstandard policy might not, or it might limit how much coverage a permissive driver is given. This is known as a “step-down” provision.

No automatic coverage: Standard policies also insure you behind the wheel of a rental car, up to your limits, and automatically transfer to a new car for a short period. A nonstandard policy might not.

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