How to Compare Car Insurance Premiums for the Best Deal

By Jessica Bosari
After 13 years in personal and commercial insurance, Jessica Bosari now writes about personal finance, car insurance, risk management and related topics. Since 2008, she has been simplifying complex ideas through engaging articles for her readers.

How to Compare Car Insurance Premiums for the Best DealWe all like saving money, some of us more than others. And when it comes to necessities like car insurance, no one wants to pay more than they have to. One of the best ways to save on car insurance is to compare car insurance premiums from several companies before you buy, but the figure at the bottom of the page doesn’t tell the whole story. Here’s what you should know about comparing rates before you commit to buy.

Gotcha’s To Watch For

When you shop for car insurance, you’ll get a few quotes, all urging you to focus on the bottom line – the annual premium you’ll pay if you buy that policy. But the numbers don’t always add up to the best deal. When you review quotes, it’s important to watch for these “gotcha’s” so they don’t get you:

  • Check the policy limits – When you fill out that form to request a quote, you put down the coverage limits and deductibles you have now. But that doesn’t mean your quote will show those same limits. It’s common for quotes to change the coverage limits or deductibles to present you with a more appealing premium, so be sure the quote includes the same specifications you entered when you asked for one.
  • Make sure all drivers are listed – A company could “accidentally” leave that high-cost teen driver off the quote, making the premium look lower than it should be.
  • What’s the policy term? – If you get a ridiculously low quote and the coverage checks out, make sure you look at the policy term. Many companies will send quotes for a six-month term to make the premium look much lower than it really is.

Whenever you get a cheap insurance quote, take the time to think about why it costs less. Look at the rate charged for each type of coverage, the drivers covered and the length of the policy. Then look at the discounts offered. Every company offers a different mix of discounts. These could make a big difference in the premium you pay, so if you see a discount offered at one insurance company, ask the other companies about a similar discount they might provide.

Where to Get Quotes

You’ve no doubt seen the countless websites offering car insurance quotes. You can use these if you like, or you can call your agent and ask for quotes from a few different companies. You can also approach companies directly via their websites or on the phone. However you get your quotes, don’t forget to compare them with your own insurance company’s best rate. How will you know what the best rate is? You’ll have to call your company, tell them about the lower insurance quotes you received and see if they can beat the price. You’d be surprised how often they can do it.

The New York Times’ Tara Siegel Bernard wrote a piece about Arizona retiree Thomas Mitchell and how he got his insurance company to drop his car insurance premium by more than half. All he did was get a quote from another insurance company that was half his current cost and call his insurance company to tell them about it. Not only did his insurance company drop their price, they beat the competing quote, saving him $1,330 a year on his premium!

Mr. Mitchell was pleased and excited about the huge drop in cost, but he also smelled a rat. How long would this poor man have overpaid for his car insurance if he hadn’t called? That kind of a rate drop shows that his company was price gouging him in the first place. It’s the perfect example of why you should always shop around for a better insurance rate every year without fail.

Insurance companies don’t have to tell you when you qualify for a better rate, even though it seems common sense that they should. Bernard spoke with J. Robert Hunter, director of insurance at the advocacy group Consumer Federation of America. He told her, “If you shop for insurance, it is quite easy for one insurer to be half the price of another, even in the same group of insurers. It is very difficult to be sure you have the best price.”

Don’t Just Consider Price

Comparing premiums is the best way to identify the best price, but it doesn’t necessarily get you the best insurance policy. Be sure to check ratings for the insurance companies you shop and take the time to check their complaint ratio at the National Association of Insurance Commissioner’s website. The premium savings at companies with higher than average complaint rates might not be worth it. Because most complaints stem from claims, and claims are usually much more expensive than the annual premium, you could end up losing a lot more from a poorly managed or inappropriately denied claim than you would save in premiums.

Other good sources for information on customer service include the Better Business Bureau’s website, city-data.com forums for your area, and various consumer complaint websites. Don’t forget to ask people you know as well. They can tell you which companies have treated them fairly.

Weigh reviews carefully, considering which ones are valid complaints and which ones can’t be helped. Consumers tend to complain about things outside of an insurance company’s control because they don’t’ understand how insurance claims and pricing work. The negative reviews you find should include rebuttals from the insurance company. If they haven’t taken the time to defend their customer service, they probably don’t care much about pleasing customers.

Shop Around with Confidence

Armed with this information, you should be able to compare car insurance premiums with confidence. Once you have quotes in hand, with customer service information on each company, you can call your insurance company and give them a chance to beat the price. This is the best-possible outcome, because it lets you save money without taking a chance on another insurance company that you might not like.