Name any auto insurance company in the U.S. and chances are, I’ve probably gotten at least one quote from it. In the case of the top car insurance providers, I’ve probably gotten several hundred from each.
At my old job, I was responsible for reviewing car insurance companies in every state, and we had to collect all our quotes manually. It was dull work, but it taught me some valuable lessons. Here are the key things that hold true across all states and across time.
Every car insurance company evaluates risk differently, and they can give the same driver wildly different quotes as a result. Some companies penalize a driver heavily for a single accident, while others might only raise your premiums by a few dollars per month. Others are hard on young drivers while giving preferable rates to seniors.
Since the algorithms insurers use to calculate premiums are proprietary, the only way to know how much a company will cost you is to get quotes. Generally, you want to get rates from at least three to five top companies so you can compare them. Also, enter your email address on the quote form so you can save your results, or else you’ll have to reenter everything on the form when you want to go back to it.
More discounts don’t always lead to the lowest rates
Some companies like to draw in customers with a laundry list of discounts so it appears as though you’ll score big savings. But this isn’t how it works.
You might qualify for three discounts with one company and only one with the other, but if the three discounts from one company are worth 5% each and the one discount from another is worth 20%, the second company may still be more affordable for you. Unfortunately, few companies tell you exactly how much each discount is worth.
Even if you manage to snag a few significant discounts, you could still wind up paying more with certain companies if they charge a higher base rate. Again, this isn’t something you’re going to be able to work out just by browsing their lists of discounts. You need to get quotes to see what the company can offer you specifically.
Changing the deductible can have a massive effect on premiums
Your deductible and your monthly premium move in opposite directions. Lower your deductible and premiums rise. Raise your deductible and premiums drop — sometimes significantly. Increasing a collision and comprehensive deductible from $200 to $1,000 can lower car insurance premiums by 40% or more with some companies, according to the Insurance Information Institute.
Higher deductibles are generally a good cost-saving option for those who have a decent driving record and don’t anticipate any accidents during the policy period. The obvious drawback to this is that you’ll have larger out-of-pocket costs if you need to file a claim. However, this might not be an issue for you if you can save for the deductible in your emergency fund.
The cheapest companies don’t always provide the best customer service
Price is most people’s top priority when shopping for car insurance, which is understandable. But if you get into an accident, a company’s claims handling becomes really important. If you wind up with a difficult company, you might have to fight for reimbursement and you could wind up with less than what you were expecting.
Oftentimes, the cheapest car insurance companies tend to have worse customer service as rated by independent agencies, like J.D. Power. So if it’s only a difference of a few dollars per month, it’s worth going with the company with the better reputation. However, if money is really tight, you may have to stick to what you can afford.
If anyone knows how dull car insurance shopping can be, it’s me. But I also know how important it is. So set aside some time to really dig into the details of what each company is offering you. And if you have any questions about a policy, reach out to the company directly for clarification before you apply.