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Apples to Apples: Comparing Auto Insurance the Right Way

June 9, 2015
Auto Insurance, Insurance
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If you’ve ever compared car insurance prices online, this might be a familiar experience: You plug in all your information and the rate you’re shown is much, much lower than what you’re currently paying. You call the new insurer to buy the coverage, the agent asks a few questions, and the next thing you know, the rate they’re offering has gone up by $500 per year.

But if you go into the quoting process knowing how to compare car insurance companies, you’re much less likely to be surprised by your final rate.

Not all coverage is created equal

There’s no use in getting excited about your new, low car insurance quote if it’s only for the state minimum coverage and you want $100,000 worth of bodily injury liability per accident.

Your coverage limits, deductible and extra coverage options — like roadside assistance or comprehensive and collision insurance — will all pump up the quote you receive. If you currently have $30,000 worth of bodily injury liability per person and $100,000 per accident, with $30,000 worth of property damage liability and a $500 collision and comprehensive deductible, make sure your quote reflects that before moving forward. Comparing auto insurance by using exactly the same coverage levels is key.

Car insurance discounts will vary

Discounts also play a major role in your insurance premium, especially if you’re insuring multiple cars or are able to bundle auto and home insurance policies together. Ask an agent to get the specifics and to make sure you’re getting all possible discounts.

While there are common discounts, like price breaks for antilock brakes and insuring multiple cars, other discounts can be oddball. For example, if you’re a Liberty Mutual customer, you may be able to get discounts if you’ve just graduated or moved, which you’ll lose if you switch to Allstate or State Farm. But remember to examine your final price, not the discount itself — if you start at a higher base rate from an insurer, a larger discount may not actually garner a lower rate.

You might also be able to save money by comparing auto insurance that’s sold through the insurer’s partnership with your employer or college alumni association.

Common discounts can also yield different savings among companies. Travelers’ good student discount is worth up to 8% off of your young driver’s premium, whereas State Farm’s is worth up to 25% off. But again, look at the final price, not the discount number.

Also look at the fine print of how to qualify for discounts. Geico’s safe driver discount requires drivers to have gone accident-free for five years, while Allstate’s Premier discount only requires three years without a violation or accident.

Some companies may be a better fit than others

Moving from one insurance company to another may not be the best idea — even if the price is right — if your current company has a great reputation for customer service and the new one doesn’t. Check out the new company’s ratings for customer service and claims processing through sites like J.D. Power and Associates. Your state insurance department may also have information about complaints against specific companies and agents.

Certain companies cater to specific consumers. For instance, if you’re in the military and have insurance through USAA, you may want to stick with it because of its military-specific services.

It’s not final until it’s final

Once you know what premium you’ll pay at another company, you can make an educated decision about whether to switch. Don’t cancel your old policy until you have your new documents (and insurance card) in hand.

NerdWallet’s car insurance comparison tool can help you compare quotes quickly.

Alice Holbrook is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @alicenerdwallet.

Image via iStock.