How to Compare Insurance Companies for the Right Fit

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Insurance companies often look similar, so how do you know which is the best company for you? Price is, of course, a top consideration, but the cost is just one aspect to consider. Start by knowing your potential insurance company's strengths and weaknesses, compare coverage terms, create a scorecard, and don't forget to check the policy term. It's worth your while to compare insurance companies to find the best fit. 

Standard and Poor’s rating system will give you an idea of an insurer’s financial strength. They use a report card-style grading system, and in-between ratings exist. For instance, an A+ rating is teetering on the strong and very strong borderline.

Most of the big-name insurance companies advertised regularly fall in the strong and above categories. It makes sense, though, to check into an insurance company’s financial health before placing your business with them.

Compare Coverage

Not every insurance carrier offers the same insurance coverage. Different deductibles might be available, and optional bells and whistles may vary with different insurance carriers.

For starters, get quotes from at least three different insurers so you get a feel for the going rate. If you have a few points on your driving record, you might actually find cheaper rates with a company that specializes in higher-risk drivers.

Experiment with different policy variables to see how this affects the quoted rates you get. You can vary coverage limits, including the amount paid out per accident per person, deductible, and the types of insurance carried. If your car is an older model, it might not be worth it to carry the "comprehensive and collision" type of auto insurance. It may cost more than paying out of pocket if your car were damaged or totaled, especially if its replacement value would only be a few thousand dollars. 

If you've had any recent life changes, such as marriage or a new baby, be sure to mention this when getting quotes. 

Make Your Own Scorecard

Most of the time when shopping for insurance, you do not have a lot of information to go on for each agency. Make a scorecard to track customer service and price so you can get a better handle on what your future experience might be like with any given agency. A few items on your scorecard might include:

  • Friendliness: Does the insurance agent taking your information seem to be friendly and courteous or annoyed and grumpy?
  • Knowledge: Does the insurance agent explain optional coverage, or does it seem like they are rushing you through the process and cutting corners?
  • Response Time: Do you get a quick call back with a price, or do you have to call the agency back begging for your quote?
  • Price: Price is always on everyone’s mind when it comes to insurance; note the prices quoted by each insurance carrier.

Check for Financial Stability

Your car insurance is no good if your insurance company goes out of business or has a history of not paying out all of its valid claims.

Look for car insurance company profiles online. A profile can give you an overall feel for the company’s structure and financial status. Profiles can also give you good information on individual company specialties. Any snippet of information can help you determine if a given company is a good choice for you. 

You'll likely see these ratings used to evaluate the financial viability of insurance companies:

  • AAA: Extremely Strong
  • AA: Very Strong
  • A: Strong
  • BBB: Good
  • BB: Marginal
  • B: Weak
  • CCC: Very Weak
  • CC: Extremely Weak
  • R: Under Regulatory Supervision
  • NR: Not Rated

Lock in a Good Rate

The length of a policy matters, and it fluctuates more on a car insurance policy than on other types of insurance. When comparing insurance companies, note whether or not you are going to be locked into a six-month or year-long policy.

With a yearly policy, your rates cannot go up for an entire year. Of course, your rates cannot go down either, so if you have any big events during the year such as a ticket dropping off or a 25th birthday, it's time to get new quotes since you are free to change carriers anytime you wish. 

Review the Fine Print

During the quoting process, ask agents about extras that come with your policy, and verify whether they add any additional cost. For example, are other people covered when driving your car? If you go out and buy a new car, is it automatically covered? If you rent a car, are you covered under your policy or would you need to buy additional insurance from the rental agency?

If you already have extras such as an additional rider on your current policy that specifies that you receive all OEM parts if you are in an accident (vs. aftermarket parts), take that coverage into consideration when comparing other insurance companies. If OEM parts are important to you, it is important to know not all companies offer OEM parts for repairs.

Other things to look for include towing limits, car rental limits, and different types of service fees, such as a finance fee for paying in installments rather than in one lump sum. These variances may be small, but when added together they can make a considerable difference overall. The main concern should be being aware of the differences, so you are not surprised at the time of a claim.

Don't Forget Discounts

Most car insurance companies offer some types of discounts, such as those for senior citizens, good drivers, and customers who bundle other types of insurance, such as homeowner's or renter's coverage with their auto insurance.

While other discounts might not be advertised, it still pays to ask each insurance company for all of the possible discounts they offer when you're getting quotes. Some give discounts after you complete a defensive driving course, while others offer PPM, or pay-per-mile insurance. 

Most insurance companies will also give you a discount if you pay for a six-month or 12-month policy upfront, but if you need a payment plan, compare the fees across companies. Also, consider whether each company takes credit cards or only accepts debit, and whether or not you're required to have payments automatically taken from your account if you use their payment plan.