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Auto Insurance Quotes, Explained
First-time car owners often feel overwhelmed when they shop for the best auto insurance. Car insurance quotes can help you navigate the process, outlining the types of coverages a policy offers and how much you can expect to pay.
You can get car insurance quotes online for free in just a few minutes, so there’s no reason not to gather a few to compare. Don’t just look at cost, though. While low-cost car insurance should definitely be a priority, you shouldn’t sacrifice important coverage to save a few bucks.
To help you request and compare auto insurance quotes, this guide will help you learn about terminology, state insurance requirements and the factors that might impact your premium. Then, you can request auto insurance quotes online to compare the coverages, discounts and rates insurers have to offer.
What is a car insurance quote?
An auto insurance quote is an estimate, based on your personal information, of how much an insurer will charge you for a car insurance policy.
Quotes are important because insurance rates can vary across companies. When shopping for car insurance, get as many quotes as possible to avoid overpaying.
If you’re in the market for a new car, get insurance quotes based on the make and model of the automobile you plan to buy. Even if you’re not car shopping, you may also want to get car insurance quotes to find a new carrier. If you’re not happy with the cost of your premium or the service your current provider or agent offers, get quotes from other companies to find the coverage and rate that suits you.
What goes into a car insurance quote?
Insurers determine your car insurance rate based on many factors, which typically include:
- Types and amount of coverage: Motorists who own older vehicles often only purchase the insurance coverages required by law. However, folks who lease or finance their cars must generally carry more coverage, as required by the leasing agent or lender. Some drivers carry the state-required liability coverage plus optional coverage for maximum protection. If you’re looking for affordable car insurance, pick and choose your coverages carefully. Each coverage you choose will add to your insurance rate.
- Age: Insurance companies base rates on the amount of risk they incur by insuring your vehicle — and you as a driver. Statistically, older, more experienced drivers cause fewer accidents. Typically, young drivers under 25 pay the highest rates.
- Gender: Statistically, men cause more accidents than women do. Consequently, insurers often charge higher rates to male policyholders.
- Credit score: In most states, insurance providers can use your credit history as a factor in setting your premium rate. Statistically, people who have poor credit file more insurance claims. Drivers with excellent credit often receive the most favorable rates, if they have a clean driving record, while people with bad credit usually pay
substantiallymore for auto insurance.
- Driving record: Drivers with a history of at-fault accidents or traffic violations pose a higher risk for insurers. To offset the risk, insurance providers charge higher rates to drivers with poor driving histories.
- Location: Where you live can impact your insurance rate for many reasons. If you live in an area prone to car theft and vandalism, you can expect to pay a higher car insurance rate. Likewise, if your city has a high rate of traffic accidents per capita, your carrier may charge you a higher premium.
- Make and model of vehicle: The type of car you drive plays an important role in the price you’ll pay for car insurance. Electric, luxury and sports cars usually cost more to insure because they’re expensive to repair or replace. If you’re car shopping, a more modest vehicle can generally help you score low-cost auto insurance.
- Annual mileage: The more you drive, the more you risk having an accident and filing an insurance claim. To keep your insurance rate low, avoid living behind the wheel.
Underwriting guidelines vary by insurer. One provider may consider your credit score a highly important rating factor while another may place more importance on your driving record. For this reason, get insurance quotes from several companies.
Nearly all states require you to carry minimum levels of bodily injury and property damage coverage, but the amount of required coverage varies by state. For example, Alabama drivers must purchase at least $25,000 in property damage liability coverage, while California drivers must only carry $5,000. Some states also require other types of coverages, like personal injury protection and uninsured and underinsured motorists. The more coverage your state requires, the higher your insurance premium.
[ Read: How Much Car Insurance Do You Need? ]
What is the difference between an insurance quote and a policy?
Auto insurance quotes provide an estimate of how much the insurance company will charge you for a policy. A policy is the written contract between you and the insurer, which details the types and amounts of coverage, when the provider will and will not pay a claim, how to file a claim, the term of coverage and premium cost.
To obtain a policy, you must enter into a contract. The process of purchasing a car insurance policy varies by insurer. Some carriers enable you to request a quote and purchase a policy online. Others require you to sign a contract in person at a local agency. Some providers also allow you to request a quote and purchase a policy over the phone.
How and where can I get car insurance quotes?
Insurance companies operate in many ways, making it easy for you to shop the way you like. Generally speaking, here are your options for obtaining car insurance quotes:
Directly through a major insurance carrier
These are the household insurance names you know, like Geico and Progressive. Generally, these big insurance providers offer you a few options:
- In person: If you like to do business in an office setting, you can find companies that operate local agencies, like State Farm and Allstate.
- Over the phone: Many insurers also offer the option of requesting a quote and purchasing a car insurance policy over the phone.
- Online: Most major car insurance carriers offer auto insurance quotes online. Online quote apps ask a series of questions about you, your location, the type of automobile you drive, how you use your vehicle and how much you drive each year.
Online quotes vary. Some generate a quote online within a few minutes, while others send your information to an agent for a callback or follow-up email. A few insurance providers even enable you to purchase a car insurance policy online at the end of the quote process. Some insurers also provide online quotes using mobile apps.
There are pros and cons to working with an agent or completing the process online. While working with an agent will generally take more time, you also get access to an expert who can answer all of your questions. If you choose to work with an agent, ask them about the available discounts so you can get low-cost auto insurance.
Through an independent insurance agent
Two types of agents sell auto insurance policies. Some agents (called captive agents) work directly for the insurance company, while others work independently. Independent agents often sell policies for several insurance carriers, which can make it easier for you to receive multiple quotes
, without visiting several agencies.
Through an insurance broker
Insurance brokerages also sell car insurance policies for several providers. Many brokers operate over the phone or online. An online brokerage can provide quotes from multiple insurers, often within just a few minutes.
Regardless of how and where you shop for auto insurance, it’s always important to get as many quotes as possible.
What information should I have handy to get a free auto insurance quote?
This varies slightly from insurer to insurer, but you’ll usually need the following information to get car insurance quotes:
- The name of the registered vehicle owner
- The name of any drivers you plan to add to the policy
- Driver’s license numbers for any drivers
- The year, make, model and vehicle identification number (VIN) for your vehicle
- Your average annual mileage
- Whether you lease, finance or own your vehicle
- Where you will park the car most of the time (usually your address)
- Information about the auto insurance you’ve had up to this point (e.g., carrier name, expiration date)
- Your driving history (e.g., tickets, accidents, license suspensions)
- The type and amount of coverages you want
Choosing the best auto insurance coverage for you
There are a few things to consider when comparing car insurance quotes, even if your highest priority is affordable car insurance.
Price is just one consideration when choosing car insurance. After getting quotes from several insurers, sit down and compare the details. You might assume the quotes you’ll receive will include all the same coverages, but that doesn’t always happen.
Meet your state’s required coverage levels
The vast majority of states require certain levels of liability insurance. This coverage picks up the tab if you injure someone else or damage someone’s property while you’re behind the wheel.
To find out how much liability coverage your state requires, review our guide.
Compare the same coverage amounts
All quotes you request should include the same amount of coverage. For example, if your state requires you to carry $20,000 in personal property liability coverage, all your quotes should reflect that amount. Likewise, all quotes should include other required coverages, like PIP or uninsured and underinsured motorist. Compare the price for each of these coverages, particularly the cost of liability coverage.
If you requested quotes for a policy with additional coverage options like collision and comprehensive coverage, compare those individual rates. Also, compare collision and comprehensive deductibles. Many insurers set a default deductible of $1,000, but others may set the standard deductible at $500. Compare the cost differential between coverages and deductibles across all quotes.
Compare included options
Look for the inclusion of additional coverages that you didn’t request. For instance, a quote may include roadside assistance or rental car reimbursement coverages at no cost. If you see no-cost coverages, that can be a bonus for you because many providers only offer them as riders. Quotes that don’t include these coverages often provide pricing information if you choose to add them to your policy.
[ For You: How to Switch Car Insurance Companies ]
Compare which, if any, discounts each insurer applied to your quote. Insurance companies offer all types of discounts. You could land a discount for safe driving, taking a defensive driving course, owning a home and making good grades in school, for example. Policyholders who qualify for multiple discounts can often save up to 25% on their car insurance premium.
Decide which company offers the best combination of price and coverage. The best policy isn’t always the cheapest one. Auto insurance protects your valuable assets, so don’t skimp on coverage to save a few bucks.
How much should my auto insurance coverage cost me?
Whether you’re looking for low-cost car insurance or you want a robust policy to give you the best protection on and off the road, this is a question you’ll likely ask.
It really depends on how much coverage you buy, what type of car you drive, your history as a driver and more. To get a ballpark idea of how much you’ll pay, check out this overview of the average cost of car insurance by state. If you’re wondering how to get the most affordable car insurance, check out this roundup of the best cheap car insurance providers of 2021.
Terms to know when applying for a car insurance quote
Before you can shop for car insurance, you need to know a few industry terms. Insurance jargon isn’t just shop talk; terms carry legal meanings that define the protection you’re buying. Here’s a list of some of the most important terms you’ll likely encounter.
When you research the insurance coverage your state requires, you might see three numbers. These three numbers represent the amount of liability coverage you must purchase, in thousands of dollars.
The first number signifies the amount of bodily injury liability coverage you need to pay the medical bills of one person in an accident. The second number indicates the amount of bodily injury liability needed to cover the medical expenses of more than one injured person in one accident. The third number represents the level of property damage liability coverage you must buy.
In this example, the state requires $25,000 in bodily injury coverage to pay the medical expenses of one person, $50,000 in bodily injury coverage for the medical expenses of more than one person and $25,000 worth of property damage coverage.
Bodily injury liability
When you cause a traffic accident, this type of coverage pays the medical expenses of the other driver and their passengers.
To receive money from the insurance company following a covered loss, you must submit a formal request, called a claim.
For instance, if a rock breaks your windshield, you will file a claim asking for money to repair or replace it, according to the terms of your policy.
This type of coverage pays to replace or repair your car after a covered road accident if you were the at-fault driver. If not, the other driver’s liability coverage should cover the bill.
This type of coverage pays to replace your automobile if it’s stolen. Comprehensive coverage also pays to repair or replace your car if it’s damaged in a non-collision calamity.
For example, if vandals key your car door, you can file a comprehensive coverage claim to pay repair costs. Likewise, if a tree falls on your car when it’s parked, your comprehensive coverage will help pay to repair it.
Most car insurance policies have a deductible, the amount you must pay out of pocket following a covered loss.
Generally, you won’t pay a deductible to use your liability insurance, but you will for collision or comprehensive coverage.
For instance, if a collision causes $5,000 in damages to your car, and you have a $1,000 deductible, you can file a claim for $4,000.
Medical payments coverage
When you’re at fault for an accident in which you or your passengers sustain injuries, your medical payments coverage can help pay your medical bills.
Personal injury protection
Like medical payments coverage, PIP pays the medical expenses of you and your passengers following a covered accident. PIP pays regardless of who is at fault and covers funeral expenses and lost wages.
Property damage liability
This type of coverage pays to repair or replace another driver’s car when you cause a traffic accident. Property damage liability also pays for other types of property such as fences and mailboxes.
Also referred to as rate, your premium is the amount you’ll pay for a car insurance policy. Premiums are expressed in a dollar amount and term length. For instance, you may purchase a six-month policy for $500.
Also called endorsements, riders are additional or optional coverages. For instance, you may add a rider for OEM parts, which would pay to repair your automobile using original manufacturer parts.
Uninsured and underinsured motorist coverage
If a negligent driver with no or insufficient auto insurance collides with your car, this type of coverage helps pay your medical bills and car repair costs.