How to Compare Car Insurance Rates

The choice of which car insurance cover to choose from, appears easy at first until you need to make an  actual choice and then you realize how confusing it can get.

You want to have sufficient coverage on your car to ensure that any third-party person that was injured by your car is  compensated. It’s also important to have comprehensive coverage to ensure your car is covered at all times.

Nonetheless, there are many other factors to look at when choosing one insurance cover over the other. But just as important is choosing your insurance provider. There are lots of car insurance companies offering different levels of insurance.

Even in cases where you’ve identified the insurance cover you’d like to take for your vehicle, you may notice huge price differences among insurers. The only way to ensure that you get a fair quote on car insurance is by comparing car insurance rates.

We break down this process for you so you will know how to go about it.

What should you look for when comparing car insurance policies?

Most states have a minimum car insurance without which you cannot drive your car. Usually, this is the uninsured or underinsured motorist auto coverage. This cover ensures that if your car causes injury to someone else, they are covered. If you’re the victim and have been hit by another driver, then that driver’s uninsured coverage is used to compensate you.

This is the least amount of insurance cover in the auto insurance segment. It won’t protect your car in the event of a crash, collision, or other accident. It’s always important to choose the highest amount of coverage you can afford for your car so that you’re covered from all angles.

Here is how the various auto insurance coverage differs:

Personal Injury Protection

PIP covers your medical expenses following an accident and those of any passengers you may have in the car. PIP applies regardless of whether you’re at fault or not. In some states, every driver is required to purchase PIP coverage so that in case of an accident, they’re fully covered.

Uninsured Auto Coverage

As mentioned above, this caters to your medical expenses following an accident and those of any passengers you may have in the car.

Liability Coverage

Liability coverage caters for any damage you cause during an accident. Damage can be to another driver, passengers or property.

Collision/Comprehensive Coverage.

Collision coverage offers protection against collisions and rollover damages regardless of who is at fault. Comprehensive coverage offers protection from all kinds of incidents, including vandalism, theft, fire, flooding or hail damage. If a tree falls on your car, comprehensive coverage is what ensures you get compensation. As you can see, comprehension protects against both natural disasters and ordinary theft.

The two covers are often sold together. You cannot buy collision coverage if you do not have comprehensive. If you used motor vehicle financing to buy your car, your lender will require you to have comprehensive insurance.

Now that you’ve seen the different types of cover available, let’s look at how to compare the rates of your chosen cover.

How Do Car Insurance Companies Prepare Rates?

Car insurance companies use a broad range of personal information to determine your auto insurance rate. You’ll need to provide the insurer with personal details like your gender, marital status, date of birth and zip code. If you have an existing insurance policy, they’ll need the name of your current insurer.

You also provide car details like the make and model, year of manufacture and VIN. Your driving history, including driving record, a record of any claims you made in the last five years. They also request for your credit score.

The insurer then analyzes all these details to determine your insurance risk. If you are considered a high-risk individual, your quote is likely to be higher.

Factors that may increase your insurance risk include a long record of insurance claims and a poor driving record. The type of car you drive also influences the kind of rate you get.

There is no standard way to interpret these personal details in relation to the insurance rate you get. Some insurance companies may calculate their rate in such a way that even though you may be considered a high-risk individual, you receive a considerably low quote.

This just goes to show that there is a lot that goes into determining the quote. The only way to find out if your rate is high or low is by comparing rates from different insurers.

How to Compare Car Insurance Rates

There are many factors that can lead to variance in car insurance rates. Below are some of the important things to compare among insurers:

  1. Coverage

The coverage is the first thing you look at. Check whether the insurers are all offering the same level of coverage. If one quote seems to be too low, check again. It could be that the insurer is giving a lower amount of coverage.

  1. Cost

Consider the total cost of the insurance cover. Again, you’re comparing the price of a similar coverage but from two different insurers.

  1. Deductible

The deductible is the amount of money you pay in order for the insurance cover to become valid. The higher the deductible you pay, the lower your premiums are going to be. 

  1. Coverage limit

The coverage limit refers to the amount that the insurer pays out in case of an accident. A higher limit means more financial compensation in case of an accident. However, a high coverage limit also attracts a high insurance rate.

You’ll need to decide whether the extra protection a higher limit gives is worth the additional cost. Or whether you want to pay a lower insurance cost and subsequently enjoy lower financial compensation in case of an accident.

  1. Extras

Does the insurance company offer any extra? Some insurers may offer extras at an additional price. Use your best judgment to decide whether they are worth buying or not.

  1. Company

How good is the insurance company’s service? Do they offer 24/7customer support? Check also whether they process claims 24/7, including weekends. These are all things that can impact how good an insurance company’s service is.

Analyze each of these factors well to determine which car insurance rate has the best deal.