Shopping for car insurance online can save you time and money, but it pays to be prepared. Before you compare quotes, determine the type and amount of coverage you need, get some background information on potential insurers and gather the details carriers will require from you.
If you're replacing a car insurance policy you may want to keep the same coverage, but if this is a new policy you need to meet at least your state's minimum insurance requirements. You may also want to consider optional coverages, so learn about the different types of car insurance and what they cover before you begin to compare insurance companies.
In most states, you are required to carry bodily-injury liability insurance to cover others' injuries if you cause an accident. The coverage pays for:
- Medical expenses
- Funeral expenses
- Loss of income
- Pain and suffering
- Your legal defense if a lawsuit results from the auto accident
Policy limits for bodily injury liability are per person and per accident. For example, $50,000/$100,000 means that the maximum payout per person is $50,000 and the maximum payout for all people injured in one accident is $100,000. This coverage may also be written as 50/100.
Bodily injury liability does not cover your injuries. For your injuries to be covered, you would need personal injury protection (PIP) or medical payments (MedPay).
The cost of a car accident can be much higher than what your insurance will pay out if you have only the minimum coverage mandated by state law. Unless your income and assets are minimal, for instance you do not own a home or have much savings or investments, buy at least $100,000 per person, $300,000 per accident, as advised by the Insurance Information Institute (III).
Property-damage liability insurance is also mandated by most states and covers repair or replacement of other people's cars and property. State minimum limits average about $15,000. The III recommends you buy at least $30,000, as most new cars cost more than $15,000.
Some states also require uninsured and under-insured motorist coverage, while in others it is optional. If you're hit by someone who leaves the scene, or by someone who's inadequately insured, uninsured-motorist and underinsured-motorist coverage kicks in. It pays for the medical, rehabilitation, funeral, and pain-and-suffering costs for you and for the passengers in your car. This coverage also insures your household members as pedestrians. Typically it is a good idea to buy this coverage at the same limits as your bodily-injury liability coverage.
PIP, often known as "no-fault," covers medical, rehabilitation and funeral costs for you and your household members, as well as some lost wages and in-home care in the case of an accident. Unless your health and disability coverages are bare bones, buy the minimum required.
You may also want to consider collision and comprehensive coverage, which are optional as far as state law is concerned. However, if you leased or bought a car with a loan, the financing company likely will require you to have both. Collision coverage pays to repair or replace your car after an accident. Comprehensive pays if your car or its contents are stolen, or if your car is damaged by fire, water or other perils. It also covers the damage if you hit an animal or a flying object hits your car.
Check the background of potential insurance companies
Before you start comparing car insurance quotes, check to see if the insurers you're considering are financially stable and have a good reputation for customer service.
"What you value should also be part of your decision-making criteria," says Alicia Charles-St. Juste, vice president of sales and client services for Amica Mutual Insurance Co. in Lincoln, R.I. "Before making a final decision, give some thought to what you appreciate most from an insurance company. Is it the online service features, the ability to speak with someone directly about your policy or is it simply the peace of mind of knowing that, should the need arise, the company will be there for you?"
The National Association of Insurance Commissioners (NAIC) recommends that when you compare insurance companies you take the following steps:
- Check your state department of insurance to find out if the company is permitted to sell insurance in your state.
- Check with an insurance rating service such as A.M. Best or Standard & Poor's to find a grade or rating for the company and an analysis of its finances so you can feel confident that a potential insurance claim will be paid.
- Check for complaints against the company with NAIC's Consumer Information Source. You can also check the Better Business Bureau and your state insurance department.
"Many people think auto insurance is the same from one company to the next and the only differentiator is how much the policy costs," says Charles-St. Juste. "In today's competitive marketplace, companies are setting themselves apart by offering services and products that appeal to a variety of customers. So it's important that shoppers select the company and the product that best meets their insurance needs."
Online car insurance quotes comparison checklist
Once you know what coverage you need, gather the following information to request a car insurance quote, says Charles-St. Juste:
- Name, birth date and driver's license number of all drivers to be covered.
- Make and model of each car to be covered.
- Driving history, including accidents and driving violations, of all drivers to be covered by the policy.
Now you can begin collecting online car insurance quotes. Request rates from at least three different insurers, following these tips:
Compare the same coverage. Not only should you ask each insurance company about a policy with the same limits, you should also determine which optional insurance coverage, if any, you want. For example, some companies offer insurance coverage for a rental car while your car is being repaired or for roadside assistance.
Decide on your deductibles. One of the best ways to save on car insurance is to raise your deductible for collision and comprehensive insurance, but remember that if you have a claim, that deductible will be your out-of-pocket expense to repair or replace your car. If you have more than one claim you'll have to pay the deductible each time. Make sure when you compare car insurance quotes online that each quote has the same deductible.
Ask for discounts. Car insurance companies offer a slew of potential discounts. Make sure you are aware of all the discounts that apply to you and then ask if the insurer limits the total discount amount a driver may earn. Pick the discounts that add up to the maximum amount allowed.
According to NAIC, some of the most common ways to qualify for a discount include:
- An accident-free driving record
- Low mileage; driving your car rarely or only for short distances
- Anti-theft devices
- Anti-lock brakes, airbags and other safety devices
- Good student discount for drivers under age 25
- Mature driver discount for drivers between 50 and 65 years of age
- Bundling your auto insurance and home insurance with the same company
- Insuring multiple cars on the same policy
- Completion of a driver education class
Insurance companies have different ways of measuring risk so when you compare car insurance online you can find a range of premiums. Just make sure you're comparing the same policy and that you've checked the financial stability of each company along with its reputation for customer service before you make a final choice.