Comparing car insurance can sometimes feel like a complex maze of legal and financial details. You’ll encounter words like “deductible,” “maximum liability,” “comprehensive,” and more. Each of these terms has a distinct meaning within the car insurance world. However, they’re not necessarily the most intuitive terms. To make things more complicated, when you get quotes, you can’t go solely by price. Each company has different coverage limits and perks.
When shopping for car insurance, it’s vital to know how to compare quotes. With this knowledge, you can pick the best plan for you and your family’s needs. Here’s how to choose the right car insurance policy.
Work Backward: What Do You Need Car Insurance To Pay?
One of the best ways to approach comparing car insurance plans is to work backward. Instead of looking at whether or not insurance company A covers what insurance company B covers, first look at what you need and compare auto insurance to that.
The most important question that you will need to answer is how much you can pay out of pocket. If something were to happen to your car, what can you comfortably pay in repair bills? Let’s say you get in a significant car crash tomorrow. How much can you pay out of pocket for the repairs? If you can do $500, then you’re going to want to set that as your deductible on each quote. On the other hand, if you have no problem spending $10,000, then you’ll want the highest-deductible car insurance. If the car isn’t on a loan or lease, you can even decline collision and comprehensive coverage in most places.
Higher deductibles have cheaper rates since the insurance company will need to pay less if something happens to your vehicle.
However, deductibles are not the only out-of-pocket expense you can pay. Medical bills can often be significant. You will also need a rental car when your car is in the repair shop. Insurance companies let you add these extras as part of a plan.
As you look at quotes online, pick a standard set of deductibles and “extras” to ensure partially uniform coverage between each company.
Liability Coverage: How Much Is Too Much?
With the sole exception of New Hampshire, all states require liability insurance. This component of auto insurance pays for other driver’s bills if you are at-fault in an accident. So, if you accidentally run a red light and cause another driver $200,000 in medical bills, the insurance company will pay those instead of the other driver suing you and taking your house as payment (that’s a little exaggerated, but you get the point!).
Liability coverage tends to be most important for people with the most to lose. If you have a house and significant assets, it’s worth the extra money every year to make sure you protect those in the event of a substantial crash. Some auto insurance companies even add “umbrella” insurance, which covers any liability up to a certain amount.
Car insurance companies also list property liability insurance. Insurance companies will pay out this amount for all property damage incurred in an accident. For example, if you have $100,000 of coverage and you run over someone’s fence, the insurance company will pay for the cost to repair the other person’s property.
If you have a home and significant assets under your name, you’ll probably want to select high limits on all liability coverage.
When getting auto insurance quotes, you’re going to want to make sure that they have sufficient liability coverage to shield your assets in the event of a devastating crash.
Comparing Car Insurance
Now that you have a good idea of what deductibles you need and what liability insurance you would like, it’s time to start comparing car insurance!
You’ll need all information pertinent to your driving history. Therefore, you’ll need:
- Personal information: Name, date of birth, driver’s license, marital status, and so on. You’ll also need this information for everyone else that you are planning on putting on your policy.
- Vehicle information: The car insurance company will ask you for VIN, mileage, and expected travel distance each year for every car that you own. You’ll also need to tell the company which vehicles each person will drive as their primary car.
- Your Driving history: Accidents, claims, tickets, and other issues that you have while driving will be a part of the insurance quote application.
Next, go on each insurer’s website (for example, State Farm, Esurance, Allstate, USAA, or any regional insurance company from whom you want a quote). Fill out the required information and, if possible, keep all deductibles and coverage limits the same across each company. If you vary the coverages, then the cost quotes are no longer for equal coverage, and it makes it trickier to figure out which one is the better deal.
After seeing what each company costs, you should also read the reviews. Some insurance companies are “artificially” cheap. They present a phenomenal rate online, but when you go to submit a claim, they find every reason possible to deny, block, or delay it. This kind of insurance is worthless.
Once you see the reviews and better understand how much each provider costs, you’ll be in an excellent position to pick the car insurance quote that’s reliable and fits your budget!
Pick Insurance That’s Right For You
Ultimately, insurance intends to be helpful and provide you with peace of mind while driving. You should feel like, should something happen on the road by accident, you won’t lose everything, and you won’t be on the hook for bills that you can’t pay.
To have this peace of mind insurance, you first need to know what your deductible and desired coverage limits are. Then, you can plug those limits into each insurance company’s website to find the cheapest one that also has a track record of paying out claims.
If you’d like to learn more about this topic in general, check out Sovereign’s post on everything you need to know about insurance and claims!