How To Find the Best Car Insurance + Compare Rates

When my auto insurance policy term ended last year, I shopped around for rates before renewing my coverage. This wasn't because I was unhappy with my insurer; I do this every year, and you should, too.

When I got new car insurance quotes, I found I could switch over $100 on the same coverage by switching to another auto insurance company.

Not shopping around could have cost me a lot, and the same thing could happen to you. To make sure you aren't wasting your hard-earned funds, read on to learn how to compare car insurance rates and find the best policy. Before shopping around, make sure you have the right information and know your coverage needs, which will make it easier to compare auto insurance policies and quotes.

5 steps to compare car insurance quotes

You can compare car insurance quotes online with a comparison site or by getting quotes from individual companies.

Because so many factors affect your premiums, make sure you're comparing "apples to apples." In other words, don't just pick an insurer based on price alone. Follow these steps to compare car insurance quotes.

1. Get the right information

Part of my job requires me to get car insurance quotes regularly, so I can attest that most insurance companies want a lot of information when you ask for a price. They're trying to learn what kind of driver you are and how much risk you present.

It's much faster to get car insurance quotes when you already have all the information you need. This includes:

• Your driver's license number: Insurance companies want this information to find out about your driving record.
• Details about your driving history: A typical car insurance quote tool will ask things like how long you've had your driver's license and whether you've ever had an accident or gotten a ticket.
• Your Social Security number: While providing this is usually optional at the quote stage, it can help you get more accurate quotes since your credit history can affect your rates. You'll need to provide it when you sign up for a policy anyway, so have it ready.
• Your vehicle identification number (VIN): Again, you usually don't have to provide this for a simple quote. But if you don't, you'll need a lot more information about what make and model of vehicle you have and which specific features are installed. I don't know things like the trim level or safety devices my car has, so it's much easier to provide my VIN number and let the insurer gather this information automatically. Plus, your insurer will likely ask for it when you apply.
• Factors that could affect eligibility for discounts: This includes things like whether you're a good student, a military member, a federal employee, or have recently taken a defensive driving course.
• Personal details about others in your household: Auto insurance companies want to know about everyone who could potentially drive the car since they'll likely be responsible for covering their damages, too.
• Information about your current insurance: Unless you're a new driver looking for car insurance for the first time, insurers will want to make sure you're currently covered. A lapse in coverage can be a major red flag since driving uninsured is illegal (not to mention a costly mistake for you).

2. Decide how much car insurance coverage you need

Understanding exactly how car insurance works will help you know how your chosen coverage type, features, and limits will affect the price.

You can look at your current policy to see what you already have, but you should always take the time to think through what protections you want. Some common types of coverage include:

• Liability insurance coverage: Bodily injury liability pays if you hurt others, while property damage liability pays if you cause property damage. Most states require this kind of coverage.
• Collision coverage: This pays if you get into a crash — whether or not you're at fault — and you need to fix or replace your own car. It may be required if you're financing or leasing your car.
• Comprehensive coverage: This pays for losses not caused by a crash with another vehicle, such as if your vehicle is vandalized or stolen, damaged by extreme weather, or damaged by an animal. You also might be required to carry comprehensive coverage if you finance or lease.
• Personal injury protection (PIP): Some states require this. It pays for minor injuries — no matter who was at fault — for crashes in states that follow no-fault insurance rules. It also covers other expenses, such as lost wages if you miss work.
• Medical payments coverage: This would pay for your medical bills following an accident. It differs from PIP in that PIP covers more costs while medical payments coverage only extends to medical bills.
• GAP insurance: This covers the difference between what your car is worth and what you owe on your auto loan. It's important because many people owe more than their car is worth (which is all their insurance would pay if the car was stolen or declared a total loss).
• Rental car reimbursement: If you get into a wreck and your car needs to be fixed or is totaled, it often takes some time to get back on the road. Rental car reimbursement pays for you to have wheels in the meantime. When I was in a collision years ago, my rental car coverage paid for a replacement car for three weeks while my claim was sorted.
• Roadside assistance coverage: If you don't have a AAA membership or a similar plan, you may need this kind of coverage if you get into a tough situation on the road and need a rescue.

Minimum coverage requirements

You get to decide what kind of coverage you want and how much insurance you need, but your state sets minimum limits for liability coverage, which you can find on your Department of Insurance or DMV site. However, you may want more than the minimum, and your lender may require specific coverages, such as collision and comprehensive.

Bodily injury liability coverage

Many states require you to carry at least $15,000 per person for bodily injury liability coverage or $50,000 per accident. But you might want a lot more.

For example, if you only have $15,000 per person in liability injury coverage, even a pretty minor injury you cause to others is likely to exceed your coverage limits. You could be personally responsible for paying losses above those limits. I want to protect my assets, so I have $250,000 in bodily injury liability coverage per person and $500,000 per accident — much more than required.

Property damage liability coverage

Some states set property damage liability coverage limits starting at $5,000 per accident, but many require at least $15,000. Again, this is a judgment call based on how much you're comfortable paying for car insurance.

Deductible

Finally, you have to decide on a deductible, which is what you'll pay out of pocket for a covered claim. If you have a $1,000 deductible and cause $5,000 in damage, your insurer would pay you $4,000 for repairs, and you'd pay the other $1,000.

I chose high deductibles because I've saved up a car repair fund and I'd rather not pay higher premiums. But if you couldn't come up with a few hundred or thousand dollars after an accident, a lower deductible may be better for you, even though it increases your policy cost.

3. Look for potential car insurance companies

Once you know what you're looking for, it's time to decide which companies to get quotes from. You can search online to browse companies of all sizes, including big insurers with solid reputations and smaller regional insurers. Some insurers to consider getting quotes from include Progressive, Nationwide, State Farm, USAA, GEICO, and Travelers.

Try to put together a list of at least three to five car insurance companies to get quotes from so you can make the most informed decision.

4. Submit quotes online

After making your list of companies, you can visit their websites to get car insurance quotes. You can also use quote comparison sites where you input your information once and get prices from multiple companies.

Most insurers let you adjust your coverage options so you can see how much different levels of protection will cost you. For example, here's what a GEICO quote looks like. You can change the coverage options in the drop-down menus, and your price will change in real-time.

5. Compare quotes and policy options

Finally, you should look at each quote from the insurance companies and see what they charge for the coverage you've chosen. When you're comparing, always confirm that you have the same coverage types, deductibles, and policy limits so you can make an accurate assessment of which is cheaper.

Also, consider what kinds of add-ons and discounts each company offers. For example, some insurers offer military discounts, but others don't. Some provide new car replacement coverage so you can get a brand-new vehicle if yours is totaled. If these add-ons are important to you, find an insurer that offers them.

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Factors that affect auto insurance rates

When you shop around for car insurance, understand which factors affect the rates companies offer you. Here are some of the things that drive car insurance quotes.

Your deductible

A deductible is an amount you pay out of your pocket before your insurer pays for the rest of a covered claim. A lower deductible means your insurer is more likely to have to pay more money, so it results in higher premiums.

Amount of coverage

The more car insurance coverage you buy, the more risk you transfer to your insurer and the higher the price you'll pay for your policy.

Your driving history

Good drivers pay less for auto insurance. Drivers with accidents, speeding tickets, DUIs, or other past problems pay more. The more risk you present to an auto insurance provider of making a claim, the higher your car insurance costs.

Location

There's a higher risk of accidents and auto theft in urban areas, so premiums are often higher in urban rather than suburban or rural locations. Car insurance rates also vary widely by state. For example, the average cost of full coverage car insurance in Michigan is $3,817, while the average cost of car insurance in Ohio is $1,014 for the same coverage.

Driving habits and car storage

The more you're on the road, the higher the chance that an accident will occur.

Similarly, cars stored in garages are less likely to be stolen or vandalized, so vehicle storage affects your premiums.

Age, gender, and marital status

You'd be surprised how many statistics go into car insurance quotes. For instance, your risk of an accident typically decreases as you age because you get more driving experience and often become more responsible. However, your rates might increase again when you reach your senior years.

Statistically, women have a reduced chance of accidents and high-risk behaviors such as impaired driving, so they often pay less for auto insurance.

Married people are also statistically less likely to be involved in a car accident, so they generally pay lower premiums than single people.

Vehicle features

The more safety features and anti-theft protection your car has, the less the chance you'll make a claim. Premiums might be lower due to added protections.

Your credit

Drivers with a solid credit history have a statistically lower chance of auto insurance claims than drivers with poor credit, so they pay less for insurance coverage. Not all states can use your credit history to determine car insurance rates or deny coverage.

As you can tell, only some of these factors are within your control. And each insurer has different methods of weighing these factors and setting prices, which is why we strongly recommend you compare car insurance rates with several companies.

How to pick the right car insurance company

As you get quotes, remember that you don't just want to find the cheapest auto insurance — you want to find the best car insurance. This means that you want to:

• Pay a fair price.
• Work with an insurer that has a solid reputation for handling claims.
• Find a company that makes your policy easy to manage, ideally by offering a user-friendly mobile app and website.

You can research each insurer's reputation by checking the National Association of Insurance Commissioners (NAIC) complaint database to see if the company has an above-average or below-average number of complaints. For example, here's the NAIC report for State Farm.

You can also refer to the J.D. Power U.S. Auto Insurance Study and the J.D. Power Auto Claims Satisfaction Study to see how your insurer compares to others regarding customer satisfaction.

Tips for getting lower car insurance rates

While shopping around can help you save money on car insurance, there are also other ways to lower your cost. Some of the steps you can take to reduce your premiums include:

• Maintain a safe driving record: An accident history or tickets on your record results in significantly higher premiums. If you get a ticket, see if you can challenge it or complete a driver training class to avoid or remove points from your record.
• Claim all the discounts you can: This can include steps such as taking a defensive driving course, bundling policies, signing up for paperless statements, and so on. Ask your insurer what kinds of discounts are available to make sure you aren't missing out on any savings you're entitled to.
• Consider participating in telematics programs: These involve downloading an app or installing a device that lets your insurer monitor your driving so you can get discounts for driving safely.

Which car insurer is the cheapest?

The cheapest car insurance company depends on your individual driving history and overall situation. Insurers use different methods for pricing coverage, so the only way to find the lowest-priced policy is to shop around for quotes from multiple insurers. You'll also need to consider that your policy type, features, limits, and deductibles will factor into the pricing.

How do I get the lowest car insurance rates?

To get the lowest car insurance rates, practice safe driving habits and avoid accidents or tickets. Shop around for coverage and get several quotes to see which insurer charges people like you the least amount for a policy. Finally, be sure to ask about any discounts you may be entitled to.

Does my credit score affect my car insurance?

In most states, insurers are allowed to take your credit history into account. They will assign you a credit-based insurance score that affects the rates you pay for your coverage.

Bottom line

Whether you're buying a new car or your policy is simply up for renewal, you should always shop around for insurance before you buy a policy so you don't overpay for auto coverage. Remember to gather as much information as you can, get accurate quotes, and pay for the protection you need from a company you can trust. That way, your insurer will be there for you in your time of need. Consider checking out the best cheap car insurance companies.

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