Updated January 13, 2022
Reading time: 10 minutes
Chances are, you’ve bought car insurance before.
But have you ever really examined all that goes into purchasing the best car insurance at the lowest price? There are several considerations to make along the way, from types of coverage, the extent of coverage, and driver discounts.
Back in the day, you’d have to call the insurance companies out of the phonebook and try to get a rate over the phone. It could take hours just to get car insurance quotes from a small handful of companies. And it’s hard to know if, at the end of all this research, you actually found the best price.
But, there are many ways that technology has made things easier. From web reviews to online comparison shopping tools like ours here at Insurify, finding the best car insurance rate is no longer a mystery—or an all-day project.
Below is everything you need to know about purchasing car insurance for the best rate.
Already know what you need? Check out Insurify to compare car insurance quotes and find the best rate for you in less than two minutes!
Like most industries, car insurance has its own jargon. Familiarity with the terms associated with your insurance will help you understand your policy and adjust your coverage as needed. Here is a list of the most basic words important in buying car insurance:
A policy is a contract between you and your insurance company that outlines coverages for losses in the event of an accident, theft, or possibly an Act of God.
A premium is an amount you pay for insurance coverage and how often you pay. For example, an insurance premium can be paid-in-full up front or in monthly installations.
A deductible is the specified amount you pay out of pocket before the insurance company pays.
Coverage is the maximum amount of risk or liability covered by the insurance company, usually defined in limits, but also sometimes defined by situation.
A claim is a formal request for coverage in the event of a loss like an accident or hail damage.
Beginning with an idea of what type of company you want to work with will help you further down the road when choosing your policy. Essentially, there are two types of car insurance companies: a huge national carrier or a small local company.
A larger company, like GEICO or State Farm, usually provides top-notch technology and a 24-hour customer service line. However, a smaller company, usually a local brand, typically outperforms larger companies when it comes to customer service and tailored solutions.
Consider what you value most in your car insurance company. Is it customer service? Do you prefer doing everything online? Or is cheap car insurance the absolute determinant? These factors will help you narrow your choices during your search. Having a firm idea of what’s most important to you will also help you evaluate and choose between two companies offering similar products at similar prices.
Insurance companies use a similar set of values when deciding your risk profile, and thus your premium. Consider your driving behaviors, like when and where you drive. These factors, including others, can affect the evaluation of your insurance company.
Here is a list of factors considered by companies:
What you use your car for: If you drive for commuting, you will typically pay more than those who use their car for leisure.
How much you drive: The more you drive, the more likely you are to get into an accident. Conversely, some insurers offer discounts to low-mileage drivers.
Where you drive: Those living in a city, where there are many other drivers, will typically pay a higher premium than those in a less populated area.
Who drives your car: If you have a teenager on your policy, you may end up paying more. The same goes for anyone with a troubled driving history.
Your car is leased or financed: A car with the interest of another party has trickier details. If you owe on a loan and your car is totaled, you will be on the hook for the remaining balance. That’s why it’s a good idea to get gap insurance.
Understanding your driving habits will also help you when deciding how much and which types of coverage you need.
There are many different types of coverage out there. Some coverage is required by the state. Some coverage is optional. Optional coverage will cost more in premiums, but it may be what you need as a car owner.
Collision coverage helps pay for repairs or possibly even replace your car in the event of an accident. This type of insurance is almost always required on financed or leased vehicles.
Comprehensive coverage helps pay for repairs or replace your car in the event of something other than an accident. For example, a tornado, vandalism, theft, or impact by an animal.
Gap insurance is an add-on to your policy and covers the cost of the “gap” between the amount still owed on your vehicle and the car’s actual cash value. For example, your car is totaled while you still owe $8,000 on your loan. However, the car is valued at $6,800, and this amount is what the insurance company pays out. If you’ve purchased gap insurance, the insurance company will also cover the additional $1,200 left on your loan.
Liability insurance covers you in the case of an at-fault accident for the costs of bodily injury and/or property damage. Liability coverage is required in every state but New Hampshire. This requirement is typically called “minimum coverage” or “minimal legal coverage,” and it varies state to state. Bear in mind that you can purchase higher coverage limits than the state-mandated minimum, but it costs more.
Medical payment coverage helps pay for expenses like dental care, nursing services, prosthetic limbs, and even funeral costs related to an accident. Coverage extends to you and your passengers. If you typically have passengers in your car, you should consider purchasing this rider if there is nothing else in your policy to help cover these expenses.
Personal Injury Protection (PIP) is required in 16 states and optional in another seven. It covers a range of expenses related to a bodily injury incurred through an accident. Coverage can include medical bills, lost income, funeral expenses, and essential services. It may even offer a death benefit.
Rental car reimbursement insurance is pretty straight forward. It covers the cost of a rental car in the case that your car is out of service after an accident.
Uninsured driver protection covers medical costs in the event that you were not-at-fault in an accident with an uninsured driver. You may think this would be a rare occurrence, but according to research from the Insurance Information Institute (III), 13 percent of drivers are uninsured—that’s about one in every eight motorists! Some states have a much higher rate. Florida, Mississippi, New Mexico and Michigan all have rates over 20 percent for uninsured motorists.
Underinsured driver protection is also pretty straightforward. It covers you in the event of an accident with a driver who does not have enough insurance to cover your damages.
A good rule of thumb: always purchase enough insurance to cover any damages that would be catastrophic. Cosmetic damage coverage may not be important to your overall financial picture. But, if you typically drive with a larger number of passengers, consider carrying more medical coverage.
Determinations for coverage outside of the state minimum can also be made by considering the cost/benefit or cost/likelihood of needing that service. For example, while many agents suggest cutting extras like roadside assistance or rental car insurance, if you live somewhere where those services are very expensive, like in a large city, it may be worth it.
Often these add-ons are inexpensive, but I can say from experience that there’s nothing like your insurance service sending over someone to unlock your car in the dead of the night at no extra charge.
There are so many ways to get discounts, and insurance companies change up their discounts often. Below is a list of commonly found discounts to help you save money. If you see one that you qualify for, make a note and be sure to ask if this discount is available with your provider.
Active duty or military veteran discounts
Good student discounts (usually for high school or college students with good grades)
Safe driver discounts for people with no at-fault accidents
Driver training discounts, usually only available to young drivers under the age of 21
Low mileage discounts
Bundled discounts for combined auto, home, or renters insurance
Security discounts for having anti-theft devices like an alarm
Safety equipment related discounts, like ones for anti-lock brakes
Auto-pay or paid-in-full discounts
Low emissions or electric car discounts
Customer loyalty discounts for those who’ve been with companies for at least 1-3 years
Consider Insurify’s exclusive rates and discounts
Even if you know your company hasn’t offered a discount in the past, you should still ask. As I said, companies change their promotions often. Also, you never know if you’ll be offered a discount to keep you from leaving.
Now there are several ways that you can compile a list of auto insurance quotes. You can manually call or visit the website of car insurance companies that offer insurance in your state.
Or, you can use a comparison site like Insurify to compare quotes from up to 20 companies in less than two minutes.
Some of the information you’ll be asked for during your quote shopping include:
Your personal information so that your driving record and credit score can be examined
The make, model, and year of the vehicle(s) you’re insuring
Ownership status of your vehicle
Information regarding any other drivers you want to list on your policy
Your marital status
Your job title or employment status
Your education history (the highest degree you’ve earned)
Other information regarding possible discounts like military status, GPA, or safety devices on your vehicle
You can adjust for a higher deductible and play with the numbers to see if you can find a better rate that way as well. You can also adjust liability limits and add-ons to see if any of those options make sense to you and your wallet.
Once you have a company in mind, it’s a great idea to check out some reviews to see what customers are saying about working with your prospective company. You might also check out reviews from employees if the ethics of employee-employer relationships are important to you.
You can find this information through several means.
Look up customer reviews on the Better Business Bureau, Consumer Reports, J.D. Power & Associates, and even Yelp.
Look up employee reviews through a site like Glassdoor.
Look up their records on the National Association of Insurance Commissioners (NAIC) website to see if any complaints, legal issues, regulatory problems, or financial issues have been documented.
Read up on where to find cheap auto insurance quotes and see more reviews for national and regional insurance companies
You don’t have to speak to an agent, and many people don’t. But it might be a good idea if you’re still new to purchasing car insurance. Your agent may be able to suggest options that are not obvious.
Your insurance agent can also answer any of your questions and even offer advice about lowering your rates. Developing a good relationship with your agent will help you in the long run as well. A great agent will reach out to you when new programs are released, and also be more available than a general customer service line.
With Insurify, you have the option of buying over the phone or online via the carrier’s website. Simply click a link and Insurify will transfer your information to the insurance company’s portal.
You’ll need to get a copy of your car insurance policy, which will come in the mail or via email. Review the insurance declaration page, usually the first few pages of the document. It will outline the insurance you purchased, who is on your plan, and how much you’re paying. Keep these documents in a safe place.
You also need to find a good place to keep your up-to-date insurance cards. I store a copy on my phone and a copy in a small file folder in my glove box.
If you’re planning to switch insurance companies, be sure that your old auto insurance policy is canceled. This is equally true if you’re switching in the middle of a current policy or at the end of a policy term. Many come with automatic renewal, so it’s best practice is to double check. And if your policy end date is coming up at the end of six months or a year, shop ahead of time…a lapse in coverage for even a day can make your rates skyrocket.
Lastly, be sure to review your coverage to ensure there are no gaps. Common gaps to consider:
You’ve added features to your vehicle, like a new sound system or wheel upgrades, that makes your car worth more than its Kelley Blue Book value.
You carry enough liability insurance to cover the extra passengers you ride around with on a regular basis. Consider purchasing an umbrella insurance policy to extend your liability coverage.
Depending on your driving behaviors, you may also consider purchasing an accident forgiveness rider to your policy.
Data scientists at Insurify analyzed over 40 million auto insurance rates across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. With these insights, Insurify is able to offer drivers insight into how their car insurance premiums are priced by companies.
J.J. Starr is a health and finance writer with a background in banking, lending, and financial advising. She holds a Series 6, FINRA, and life insurance licensure and a master's degree from New York University. Through her writing, she strives to use her decade of experience to help consumers make sound financial choices. Connect with J.J. on LinkedIn.Learn More