10 Tips for Finding the Right Auto Insurance Policy
Well, rest assured — this article is just for you. Not only is car insurance mandatory in nearly every state, it also shelters your wallet when accidents, theft or other losses occur. Auto insurers charge a lot — a full coverage policy costs, on average, about $2,097 a year — and rates are climbing fast (roughly 14 percent year-over-year in 2023). With expenses rising, shoppers are shopping at record levels and switching insurers. Making them correct decisions everywhere is necessary to ensure you receive enough protection for your rainy day and that you are not overpaying for your old laptop. Here are 10 expert-backed tips for choosing the right car insurance policy for you.
1. Determine Your Coverage Needs and Options
Before comparing quotes, determine which coverages and policy limits you want. Auto insurance is not a one-size-fits-all type of thing — the insurance that’s right for you will depend on your own situation, your vehicle and your budget. Understand the two main types of coverage: Liability (often required) covers injuries or damage you inflict on someone else; collision and comprehensive cover damage to your own car (due to accidents, theft, weather, etc.).
There are also optional coverages such as personal injury protection (PIP) or medical payments, uninsured/underinsured motorist, towing/rental reimbursement and gap insurance for financed vehicles. Identify which of these are important for you. For instance, if you have a newer or expensive car, full coverage (collision + comprehensive) will make sense, but for an old car with low value on the market, you can forego those to save on premiums.. If you have solid health insurance, for example, you might not need additional medical coverage in your auto policy.” Map out coverages you have to have and what limits are reasonable given what risk you are exposed to – that is your starting point for constructing the proper policy.
2. Carry Sufficient Liability Coverage (Don’t Just Buy the State Minimum)
You might be tempted to purchase only your state’s minimum required liability insurance to save money, but minimum coverage is often too low to genuinely protect you in a serious accident. State laws specify minimum levels of coverage (for example, $25,000 per person for bodily injury in some jurisdictions), but basic accident costs can far exceed a low policy cap. If you cause a major crash with injuries or multiple vehicles, you’d be responsible for damages beyond your policy’s payout. State-minimum limits often aren’t enough to fully cover a serious accident, according to insurance regulators.
Most experts say you should up your liability limits to at least 100/300/50 ($100,000 per person for injuries, $300,000 per accident and $50,000 for property damage) or higher if you have substantial assets. The upside is that increasing limits on liability coverage typically increases your premium only slightly. So you’re getting a lot more for just a slight cost increase. Making sure you have sufficient liability coverage will protect your savings and property in case the worst happens, and should be a fundamental part of the “right” policy.
3. Shop Around and Compare Multiple Quotes
Don’t go with the first quote you receive — insurance companies’ prices for the same coverage can differ dramatically. Insurers have different guidelines for assessing risk, so one company may rate you hundreds of dollars higher (or lower) than another for the same coverage. In fact, all insurers use their own formulas to set rates, taking into account things like your age, driving record, credit, location and vehicle . This leads to significant variation from company to company in insurance premiums.” It pays to shop around for it: one analysis found drivers could save an average of $910 a year by comparing rates — with 178% difference between the highest and lowest quotes for the same driver profile .
When shopping for coverage, industry insiders generally recommend obtaining quotes from at least 3–5 insurers. Check a combination of national carriers and regional or online insurers. You might reach out to companies directly, utilize online comparison tools or enlist an independent agent to collect quotes. It doesn’t take much time to shop around and you can save so much money while still getting the coverage you really wanted.
4. Compare “Apples to Apples” When Evaluating Policies
When collecting quotes, ensure that you’re comparing similar coverage across the board. What looks like a cheaper offer may have lower coverage limits or higher deductibles, which is not an apples-to-apples comparison. To ensure you’re getting the true picture, ask each insurer you speak to for the same coverages, limits and deductibles.” Respond with the same information about your vehicle, driving history, mileage, etc. In this manner, the same level of protection is portrayed in each quote. “Just make sure to compare apples to apples — coverage, [deductibles], etc.”, one insurance expert tells me.
Check the details of each quote (the declaration page will summarize coverage and limits) to ensure that you haven’t omitted anything important. If one policy covers things like roadside assistance or rental car coverage as an add-on, compare it against another policy that does not. By preparing your requests in a systematic way, you can really tell which insurer is the best deal for you in terms of the package and the coverage. This exercise also will help you avoid nasty surprises down the road — you don’t want to discover that you inadvertently sacrificed coverage just to secure a lower quote.
5. Check the Insurer’s Reputation and Financial Strength
Your auto insurance policy is only as good as the company behind it. A cheap premium doesn’t matter much if an insurer provides poor service or, in the worst-case scenario, can’t reliably pay claims. Set aside time to check the reputation and stability of any insurer you are considering. Make sure the company is licensed in your state and in good standing — you can check licenses through your state’s insurance department (unlicensed companies are illegal and often won’t honor claims) . Then, see how customer service metrics shape up. Many state insurance departments maintain complaint indexes that compare the number of complaints a company receives from consumers to its size.
A high ratio of complaints is a warning sign. You can even refer to third-party customer satisfaction rankings (J.D. Power surveys, Consumer Reports) for insight into claims experience and service quality. Also key is the insurer’s financial strength — you want someone who will pay out even big claims. A.M. Best, Standard & Poor’s and Moody’s are independent rating agencies that rate insurance companies on their financial health.” Seek out insurers with high financial ratings (A or better from A.M. Best, for instance). A financially sound company is more likely to settle claims quickly and won’t leave you in a lurch in a time of need. In summary, do your homework: select a reliable, financially sound insurer with a strong record of customer service, not just the cheapest price.
6. Ask About Discounts and Bundle Policies for Savings
Insurance companies provide all sorts of discounts that can lower your premium — but they aren’t likely to volunteer them, so ask. Typical auto insurance discounts include safe driver discounts (if you have a clean driving record), good student discounts, credits for completing a defensive driving course, low-mileage discounts and others. Many insurers also provide a sizable discount if you bundle multiple policies. For instance, bundling your auto and homeowners (or renters) policy with the same company usually earns you one (typically 5–15% off each policy).
Insuring several cars on one policy typically produces a multi-vehicle discount, too. Some insurers offer affiliations or membership discounts (for alumni, military or professional groups, etc.), so mention any groups you belong to. Same with paying your premium in full upfront or signing up for paperless billing; you might earn small discounts, too . The crucial part is to give your agent or the quote form complete information — you may be missing out on savings you didn’t even know you could have. Expert tip: Don’t hesitate to ask, “Are there any other discounts I might qualify for?” Insurers can then verify every potential program. When you go for discounts in maximum, you often can find the proper coverage at an affordable price.
7. Choose an Appropriate Deductible
Select an Appropriate Deductible
The deductible is the part of a claim that you must pay out of pocket before insurance covers the remainder. That is (collision and comprehensive coverage (and some other optional coverages). When you choose your policy, you must decide how high or low to set your deductibles, and there is a trade-off: Higher deductibles equal lower premiums and lower deductibles equal higher premiums.” For instance, increasing your deductible from $500 to $1,000 may save you a significant dollar amount on your six-month premium. Not having the lowest deductible — which is a common way to save money — means you are agreeing to take on more risk for a less expensive policy. But make sure the deductible is an amount you would be comfortable paying out of pocket if you get in an accident.
Measuring a good deal at the low end is pointless if a claim would push you toward financial ruin because of its over-the-top deductible. A smart approach is to find an equilibrium: pick the highest deductible you would pay out of emergency savings without hardship. That could be $500 or $1,000, or maybe even more, depending on where you sit. Just note that if damage is minor, it won’t be covered if it falls below the deductible, so don’t make the deductible so high that you would never realistically make a claim. And by customizing your deductible to fit your finances, you can manage how much your premiums cost without sacrificing your ability to pay for unforeseen repairs.
8. Consider Usage-Based Insurance or Other Policy Innovations
Usage-based insurance (UBI) programs have become more popular in recent years — these can be an excellent choice for people who have better-than-average driving habits or don’t frequently take to the road. With UBI, the insurer tracks your actual driving habits — mileage, speed, braking, whether it’s daytime or nighttime, and so on — via telematics (simply a smartphone app, or a plug-in device in your car). Very safe (e.g. low hard braking/acceleration) or low-mileage drivers can get substantial discounts compared to the traditional one-size-fits-all rate. In fact, usage-based programs can deliver significant savings if you rarely get behind the wheel or have safe-driving habits.”
A pay-per-mile plan, for example, could be ideal for someone who works from home or has a short commute — you really only pay for the miles you drive, meaning that it’s possible to reduce costs with under-usage drastically. Most of the big insurers now offer UBI programs (Progressive’s Snapshot, Allstate’s Drivewise, State Farm’s Drive Safe & Save, etc.), usually with an initial discount just for giving it a shot, and then discounts at renewal if your driving data is good. Remember not everyone will save — if you drive high miles or unsafe times, UBI may hurt you. And note the privacy trade-offs because you’re sharing data. But it may be worth considering as part of a ticket on the right policy because usage-based insurance is an industry trend that’s growing each year. It can fine-tune your premium to your real risk and possibly reward you with lower rates for good driving.
9. Read the Fine Print and Understand Exclusions
Read through the terms and conditions of any policy you’re thinking about signing up to — and, yes, that means every single page! An auto insurance policy is a legal contract, and you don’t want to be surprised by exclusions or rules you missed. Smart shopper: Inspect what a policy doesn’t cover before buying it. Be aware of exclusions (for instance, some policies may exclude coverage for rental cars, commercial use of your vehicle and custom equipment, except through endorsements). See if there are restrictions on things like OEM vs. aftermarket parts for repairs, or mileage limits if it’s a specialty usage policy. Also check on things like whether roadside assistance or rental car reimbursement is included or available for an additional fee.
Unfortunately, many consumers do not read the full policy and only learn of gaps in coverage when they have to submit a claim – do not make this mistake. Well before your renewal date, dig into the declarations page (which summarizes your coverage, limits and deductibles) and the policy booklet. If something isn’t clear, ask your agent to explain it. Also, buried in the fine print is what you as a policyholder are responsible for — like reporting accidents in a timely way, paying premiums when they’re due, etc. “You should read your entire policy from the first page all the way to the last,” AAA says. Being crystal clear about what you’re getting into will spare you any unpleasant surprises and help ensure the policy genuinely serves your needs.
10. Reevaluate and Update Your Policy Periodically
Selecting the best auto insurance policy is not a task you do one time and forget about it — your needs, as well as the auto insurance market, can shift over time, so it’s smart to review your coverage and shop around periodically. Experts advise soliciting new quotes every year or two for car insurance to ensure that you’re still getting the best deal. Insurance rates do change as companies adjust pricing based on the data they have at their disposal, and you may qualify for new discounts (or see rate hikes) as your life changes. Significant life events — moving to a different state, buying a new car, getting married, adding a teen driver or even an increase in your credit score — should trigger a review of your policy.
Compare your current insurer’s rates with a few others when it’s time for your policy to renew. If your rates crept up year after year, it can pay to switch; shopping from time to time keeps your coverage honest and keeps pricing in line. Also use these reviews to make sure your coverage remains appropriate: for example, dropping collision coverage on an older car, or raising liability limits if you’ve gained more assets. Plenty of consumers save money by switching carriers or changing up their coverage when it comes time to renew, so don’t get complacent. Continuously reviewing your auto insurance means you’ll be protected sufficiently and paying as little as possible to stay covered in the long-term.
Conclusion:
I hope the autocomparisons can help you pay your car insurance: from the point of view of the point of view, it will help you to know how much protection you get with affordable rates. By evaluating your coverage needs, learning about your options, and following these tips — from shopping around extensively to taking advantage of discounts and reading the fine print — you can piece together an insurance policy that protects you on the road without costing you an arm and a leg. Car insurance is one of the largest costs you’ll face and an important safeguard for your finances. Armed with industry insights, factual data and expert advice, you can shop for a policy that is right for your life and provides peace of mind when you’re behind the wheel. Safe driving!
