Comparing Auto Insurance: Tips on What to Look For in a Quote

In order to find the most beneficial and cost-effective auto insurance policy, it is wise to compare rates of several companies before you buy.  Here are some tips to help you find your way around this sometimes-confusing purchase.

Consider the following points to help you compare insurance quotes.  It’s not just about price. 

•    Understand your insurance needs.  You should analyze what coverages are essential for you (such as those mandated by your state, liability insurance, medical payments) and those that are optional that would be good to have if you can afford it.

•    Analyze the deductibles. There is an inverse relationship between the deductible and your auto insurance rate. The higher the deductible, the lower the rate and vice versa. Therefore, if you compare two policies that have the same annual premium but one has a higher deductible, the policy with the higher deductible is charging a higher rate.

•    Compare apples to apples. While comparing auto insurance rates and prices from different insurance companies make sure that the policy offers similar benefits. The best way to do this is to choose a policy that covers one's insurance needs. Then, look for what additional benefits it offers without an increase in policy price. This will help you to identify the most cost-effective policy.

•    Research the insurance companies’ financial standings. A very low auto insurance rate from an insurance company that is not financially sound is tantamount to potentially paying your own insurance claim. You want an insurance company that is financially stable and is going to be around when you need them.  Check with A.M. Best for the highest rated companies.

•    Look for good customer service and accessibility. Choose an insurance company on the basis of its credit history and claims repayment record.  Do they have a call center to handle claims calls?  A network of agents and payment facilities to assist you? Ask about turn around time for claims settlements. Consider accessibility. Having a low auto insurance rate is great for the pocketbook but if you are unable to access the claims department or the underwriting department when you need them, then selecting the lowest rate might not be the best solution. Many insurance companies allow policyholders to add and delete vehicles and change coverages and deductibles over the Internet or over the phone. If such features are important to you, factor that into your comparison

•    Review underwriting criteria.  Insurance companies base auto insurance rates on criteria such as driving record, number of years driving, age of driver, marital status, where you live, number of miles driven per year, and a host of other criteria.  Make sure the underwriting information for each policy you are considering is comparing the same information.  Incorrect underwriting information may inflate your auto insurance rate.

•    Review premium payment options.  While this does not direct affect your auto insurance rate, it does affect your cash flow.  Some companies allow their policyholders to pay monthly, while others want payments quarterly or semi-annually.  Is there a charge for paying monthly?  A discount for paying up front?

Once you have all the information you need, you can make an educated decision on what company and policy is best for you and your family.  And don’t forget—you should review your policy needs annually and make any changes that make sense.  You do not necessarily need to stick with the same insurance carrier.  Rates may change as your needs change, so do your comparison shopping often, about every couple of years, to be sure you are getting the best rates for your circumstances.