How to Compare Auto Insurance to Find Your Best Policy

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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 it's 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. 

What Differentiates Insurance Providers?

There are several things that can differentiate insurance providers, including financial strength customer service.

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. Most of the big-name insurance companies advertised regularly fall in the strong-and-above categories.

Tip

It makes sense to look into an insurance company’s financial health before you do business with it.

To find out if an insurance company has good customer service, you can turn to online reviews, ratings agencies, and reported complaints. You can use the NAIC's Consumer Insurance Search to search a company's complaints in your state, as well as sites like J.D. Power that rate insurers based on consumer feedback.

How to Compare Quotes

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.

How to Compare Rates

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.

How to Compare Coverage

You'll also likely want to compare different coverage limits, looking at the same and different insurers. These factors include 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. 

Note

If you've had any recent life changes, such as marriage or a new baby, be sure to mention them 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? Or, how easy is their website to navigate?
  • 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 may be no good if your insurance company goes out of business or struggles to pay claims.

Look for car insurance company profiles online for an overall feel of the company’s structure, financial status, and specialties. Consult ratings, such as Standard & Poor's (S&P), to evaluate the financial viability of insurance companies. For example:

  • 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 your record or your 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 good students, 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. Anything you can do to lower your premium is a good idea.

Some 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.

Frequently Asked Questions (FAQs)

Where can you compare auto insurance rates?

While there are certain sites that make it easy to compare auto insurance rates, you can also do the research on your own. Visit the websites of the insurance companies you're interested in, and make a note of what they offer. Be sure to get quotes in writing; then, compare across different companies to find your best fit.

What sites compare auto insurance?

Comparison sites allow you to compare auto insurance from multiple companies at once. Examples of these sites include SelectQuote and Compare.com. However, some insurance comparison sites may be more interested in lead generation for the brands they work with—sharing the information you input—than in aggregating data and helping you compare.

Why should you compare auto insurance?

Comparing auto insurance can help ensure that you have the coverage you need at the right price. If you select the first auto insurance policy you find, there's a chance that it won't meet your needs. You also may lose out on the opportunity to save some money.