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UPDATED: Mar 13, 2020
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In this day and age, most people who are looking for car insurance will start their search on the Internet. Whether you visit a particular insurance company’s website or use a comparison site, using the Internet is a lot easier than the old methods of calling different companies or visiting their offices. You might wonder then if you were to type the word “insurance” into a search engine what are the top sites you would see?
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A Google search of the word insurance reveals the top three websites belonging to Progressive, Esurance, and Safe Auto, which are all insurance companies. Competing search engine Yahoo give you the top three sites of Geico, Car Insurance Rates.com, and State Farm, which are two insurance companies and an insurance comparison site.
The bottom line is that there are different ways to rate and compare insurance companies and sites, and your top three will be different from those of other people.
Comparing Car Insurance Companies
It’s not enough to just go on a website and look at car insurance companies. You need to know what you’re comparing, also. Before you can even look at the insurance premium amounts, you need to make sure that all the variables between the insurance policies you are comparing are the same, or at least similar.
There are many variables to compare between insurance coverage offers including the:
- Cost of the coverage
- Type of policy
- Dollar amount of coverage provided by the policy
- Amount of the deductible
- Amount and type of discounts and payment options available
Another factor that should not be overlooked is the insurance company itself as they are not all created equal.
To compare car insurance companies, you should make a list of the factors that are important to you and make sure that they are configured the way you want them to be on each policy you look at. As long as each policy you look at has all the important factors right, you can compare their costs fairly, more or less.
Types of Auto Insurance Coverage
One of the first decisions to make when selecting auto insurance policies to compare is the type of coverage. Most drivers will want liability insurance for bodily injury and property damage, which will pay for damages and injuries to other property and people involved in an accident that you cause.
In no-fault insurance states, drivers also often carry personal injury protection (PIP) insurance to cover their own medical expenses. According to this website, Insureonline.org, this coverage is required by law in some states.
Collision is another popular type of insurance coverage which covers damages to your own car in the event of an accident, even if there is no driver at fault or if the accident is your fault. An article on Generation X Finance explains that a lender often requires collision if you bought your car with a car loan.
Comprehensive insurance takes collision insurance a step further and covers damages to your car if it is lost or damaged by a fire, vandalism or even if it is stolen. Basically, it covers bad things that happen to your car that don’t involve a collision. Uninsured and underinsured motorist policies can help protect you if another driver who does not have adequate insurance to cover your expenses hits you.
Most insurance coverage will include at least one of the policies mentioned above and often coverage will include a combination of several different types of policies. Some other add-on coverage that people sometimes like to get would be towing insurance or rental car insurance.
Whatever type of coverage you are interested in, you need to make sure that the coverage types are identical or at least very similar between insurance quotes that you compare, otherwise it is not a fair comparison.
Amount of Coverage
For each type of insurance policy, you will be given a choice of a dollar amount of coverage. In the case of liability insurance, there is often a state minimum requirement, but if you have many assets to protect, you will probably want considerably more.
In the case of collision or comprehensive auto insurance, the dollar amount of the coverage should come close to matching the replacement cost of the car. With that in mind, there comes a point when this type of insurance is no longer cost effective, namely when the insurance premiums cost more than the value of the car.
If you have a car loan, the lender will often set minimum requirements for the total amount of coverage as well as the type. As with coverage type, you need to be certain that the dollar amounts of coverage are comparable when comparison-shopping for auto insurance.
The size of your deductible is a major factor in determining what kind of price you will be quoted for auto insurance. After an accident, you would have to pay whatever amount your deductible is out-of-pocket before the insurance pays their portion.
The relationship between the deductible and the premium is that your premium tends to be lower if your deductible is higher and the reverse is also true.
It can be tricky to choose the right size for your auto insurance deductible. Most people either set it too high to save money on premiums, only to get burned when they have an accident, or set it too low and pay premiums that are higher than they need to be.
A good rule of thumb is to set your deductible amount at the highest amount of money you could afford to comfortably pay out-of-pocket in an emergency. When comparing insurance offers, make sure the deductibles match.
Most auto insurance companies offer discounts, but they don’t all offer the same discounts, nor the same amounts or percentages for discounts. Many insurers will offer discounts for having multiple policies or insuring multiple cars with them. They might also offer a loyalty discount for staying with them for many years. Sometimes comparison-shopping may reveal that you’re better off staying with the company you’re already with for car insurance.
You might be able to qualify for a discount based on military service, membership in a club or professional organization, or even for working in a particular profession. You may be able to get a discount by having a good grade point average if you’re a student, and you might also get one for taking a driver safety course.
Just about every insurance company will give you a discount on auto insurance for having a safe driving record or having a car with many safety features.
When comparing insurance offers, it’s not good enough to just look at the bottom line or the list of discounts. Most companies will not automatically check to see if you qualify for certain discounts, so you need to ask.
If for example, one company gives you a 5% discount for having served in the military and you don’t see that discount listed on a different company’s offer, just ask the second company if you qualify, you may be pleasantly surprised. The discounts do not have to match between the companies you compare, but you have to be sure that each company is figuring every discount you qualify for into their quote.
Payment Options for an Auto Insurance Policy
You might not think that the way you pay for an insurance policy can affect the premium quoted to you, but it can. According to A.M. Best, most insurers will offer a choice of monthly, annual, or semi-annual payments, but insurers may charge interest on insurance that is paid less frequently.
Some insurance companies may also offer discounts for automatic or electronic payment, so that should be kept in mind when comparing policies. Another thing to keep in mind is that no matter what payment plan you take, you will be penalized if you don’t pay on time.
The Insurance Company
If you watch television or view Internet ads even a little bit, you can probably name five or six car insurance companies off the top of your head. Unfortunately, good advertising does not always equate to a good insurance company. There are a few good ways to figure out which of the companies you are considering buying car insurance from will actually be there when you need them.
In any business, longevity is a good thing, so one way to evaluate an insurance company is by looking up how long they have been in business. This can sometimes get complicated, however, because insurance companies tend to buy each other out, spin off new companies and change their names often, so you might have to do a lot of research.
Reviews are among the best ways to evaluate a product or business, and auto insurance is no exception.
Recommendations and reviews from friends, family members and other people you trust are ideal, but not always feasible or relevant. Failing that, you can check out consumer reviews of the auto insurance companies you are considering by using the website of the Better Business Bureau.
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