Car insurance

Car Insurance Buying Guide
Car Insurance Buying Guide
Finding the Policy That’s Best for You

In our recent survey of ConsumerReports.org subscribers, only 10 percent of 19,000 who compared car insurance premiums found that they would save money by switching insurers. That doesn't mean shopping is a waste of time. But it's only one way to save on auto premiums, which are buffeted by a slew of variables, including rising costs, credit-based insurance scores, uninsured motorists, and corner-cutting repairs.

Some cost factors are beyond your control, but there's still plenty you can do to cut your premiums for the auto coverage you need. For more on the hidden cost of car insurance check our recent report: The Truth About Car Insurance, plus see our Insurance Center for ways to save money on other types of insurance.

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Why It Pays to Shop Around

The factors that help determine your car insurance premium are constantly changing. Maybe you’ve had an at-fault accident, or perhaps your financial picture and credit-based insurance score has improved. Different insurers reward or penalize you differently for such changes, which can result in significant variations in the premium you’d pay to different competing companies.

You can turn price-hike headaches into savings opportunities by periodically searching for a better deal. Shopping around can help offset price increases caused by cost factors you can’t completely control.

Rising Costs
Auto-insurance premiums have skyrocketed since 2014, up nearly 12 percent, which is also 12 times the rate of inflation. If your income is still treading water in today's economy, car insurance is taking a bigger bite out of your household budget.

Credit-Based Insurance Scores
If the 2008-2009 recession and weak economic recovery hurt your credit-based insurance score, you could be paying more for your insurance than necessary, thanks to most carriers' use of credit scores in setting premiums. Even with a clean driving record, car owners can pay hundreds of dollars a year more for insurance if they have anything less than the best credit score. These scores are secretly calculated by each insurer using methods that produce very different scores than the familiar FICO score.

Uninsured Motorists
Unemployment and underemployment, and high premiums have also contributed to an estimated 30 million consumers driving without insurance. That could shift some or all of their liability costs to you.

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In the Driver’s Seat: Taking Control of Your Policy

Here's how to take back control over how much you pay for this unavoidable household expense.

Do a Rate Check Every 2 or 3 Years
Shopping smartly can help you get the coverage you need for less. By looking beyond just a couple of insurers, you'll have a better shot at savings. You should also shop the market whenever your personal circumstances change, say, if you marry or you need to add a teen driver to your policy. Ask your current insurer what the change will mean for your policy, then shop for a better deal. Before getting quotes, dig out a copy of your current policy as well as records of any at-fault accident claims and moving violations. You'll be asked for this information every time you request a premium quote.

Pick a Top-Rated Insurer
Saving money is not only a matter of finding the lowest premium. An insurer can charge less in premiums but cost you more overall if you get in an accident, by lowballing loss estimates or hassling the repair shop to cut corners. It can also unfairly jack up your premiums after an accident.

Beyond price, many consumers also weigh service, reputation, and agent access. We surveyed 64,872 ConsumerReports.org subscribers who filed a claim between 2011 and 2014. Eighty-eight percent of them were highly satisfied with the handling of their claims. Check our Ratings to find out which groups won customer kudos.

Set the Deductible Right
A higher deductible reduces your premium because you pay more out of pocket if you have a claim. Hiking your deductible from zero to $1,000 can cut your premium on collision by up to 47 percent, or more than $1,000, depending on which state you live in. If you have a good driving record and haven't had an at-fault accident in years, or ever, opting for a higher deductible on collision might be a good bet. Just make sure you can afford to pay it if your luck runs out.

Review All Your Coverage
Liability coverage pays for bodily injury and property damage that you cause in an accident. Don't get caught short by reducing your liability limits to the state minimums. Buying more coverage might seem like an odd way to save, but if you have a costly claim, your personal assets may be at risk. Buy standard 100/300/100 coverage, which pays for bodily injury up to $100,000 per person and $300,000 per accident, and property damage up to $100,000. If you have a high net worth, boost bodily injury even further.

• One of every eight drivers today may be uninsured, according to the Insurance Research Council. Protect yourself by buying uninsured/underinsured motorist protection with the same limits as your liability coverage.
• Consider cancelling your collision and/or comprehensive coverage when the annual cost equals or exceeds 10 percent of your car's book value. Otherwise, you could end up paying more over time than you would recoup for repair or replacement of your damaged, stolen, or totaled vehicle.
• If you have another car that you can use while your vehicle is being repaired, forego rental-reimbursement coverage. Dump roadside assistance if you have an auto-club membership that's a better deal – or if it comes as part of you car’s warranty.
• Review your personal-injury protection and medical-payments coverage: Forget it if you have good health coverage; keep it if you don't or if your usual passengers might not be well insured.

Watch Crash Repairs Closely
Claims payment is where the rubber hits the road in car insurance. Your insurer might push you to use shops in a direct-repair program (DRP) or use cheaper replacement parts, rather than the original equipment manufacturer (OEM) parts. Tests by Consumer Reports and others have found that some non-OEM parts fit poorly, are more prone to rust and corrosion, don't always meet federal safety standards, and may not provide good protection in a crash.

The Truth About Discounts
Discounts are sales pitches that lure in lower-risk drivers, but the actual dollar savings may not be that much, or that consistent. When we scrutinized student driver-training discounts, we found they were worth only $63 in annual savings, on average nationally; however, the good-student discount won our hypothetical family an average savings of $263. If you're unmarried, bundling  auto and home insurance yields an average savings of just $97 a year. Single drivers with anti-theft car equipment saved only two bucks a year.

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Insurance Costs by Credit Score

Rates shown are the average new-customer premium for adult single drivers with a clean driving record and poor, good, or excellent credit. We compare these to the average premium for a driver with excellent credit and a driving while intoxicated (DWI) conviction. Here's how the numbers play out in Connecticut, for example. Learn more by reading our special report on car insurance.  

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Control Your Cost Factors

Maintain a Good Credit Score
Most car insurers use credit-based insurance scores to help set your car insurance premiums. All states except California, Hawaii, and Massachusetts allow this practice. In general, lower scores produce higher premiums, but the impact varies unpredictably from insurer to insurer, because carriers use various rate-setting formulas. So start shopping if your insurer hiked your rate in the absence of any ticket or at-fault accident that might explain the increase; a change in your secret score may be the culprit.

Most important, if your finances have been adversely affected by the slack economy, military deployment, divorce, job loss, death of a family member, medical problems, identity theft, or other factors out of your control, ask your insurer for an extraordinary life circumstances exception. If the insurer grants your request, a poor insurance credit score won't be used against you to jack up your rate.

Report Reduced Mileage
A major cost component in auto insurance is miles driven per year. The average is about 12,000. But if you've changed jobs and commute fewer miles, the lower mileage might translate into lower premiums. A new job that's only 6 miles closer than your old one could reduce your annual commuting miles by 3,000 and cut your annual premium by $50. Let your insurer know if you've retired or lost your job; your reduced driving could knock 5 to 10 percent off your premiums.

Choose Your Car Wisely
Vehicle damage is the biggest cost component for auto insurers. So your premiums will vary by auto model. When comparing models, ask your car dealer to show you the "Relative Collision Insurance Cost Information Booklet," produced annually by the National Highway Traffic Safety Administration, or download the PDF here. The Highway Loss Data Institute also posts data on collision, bodily injury and property-damage liability, and other types of losses by vehicle make and model. Or ask your insurer for premium quotes on the different vehicle models that you’re considering.

Manage Teenage-Driver Risk
Adding a teenager to your policy can hike your costs by 90 percent, on average nationally. But the average increases we found for our model 55-year-old married couple with a 16-year-old boy or girl driver added to the family policy varied by state, from a low of 16 percent in Hawaii to a high of 159 percent in North Carolina. Some insurers charged our sample married couple as much as 250 percent more for adding a 16-year-old driver to the family policy; others charged a lot less.  

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Brands

Car insurance purchased through various American Automobile Associations around the U.S. may be underwritten by one of three carriers that we rate, Auto Club Enterprises Insurance Group, Auto Club Insurance Association, or AAA Northern California, Nevada & Utah Insurance Exchange.
Allstate, the nation’s 3rd largest private auto insurer, ranks toward the bottom of our ratings. It provided “very good” claims satisfaction and “average” satisfaction for price and service, in our subscribers’ judgment. The Good Hands People also charged the highest premiums when we compared five major insurers on the average new-customer rate for male and female single drivers ages 25, 35, 65, and 75 with excellent credit and a clean driving record in 23 states where all five companies are market leaders.
Amica is a low-cost standout with our subscribers and has consistently earned positions at the top of our ratings at least since 1999. As a mutual insurance company, Amica returns a dividend to its customers each year, which has typically amounted to a 20 percent rebate on premiums.
Geico, listed in our ratings under its corporate name, Berkshire Hathaway, is the nation’s 2nd largest private auto insurer and provided “very good” claims and price satisfaction and “average” satisfaction for service, in our subscribers’ estimation. Its premiums were about in the middle when we compared five major insurers on the average new-customer rate for male and female single drivers ages 25, 35, 65, and 75 with excellent credit and a clean driving record in 23 states where all five companies are market leaders.
New Jersey Manufacturers Insurance Company is highly rated by our subscribers overall and for claims, price, and service satisfaction. But NJM coverage is only available to residents of New Jersey and Pennsylvania if they or their spouses are employed by specific private companies and government agencies in New Jersey.
Progressive, the nation’s 4th largest private auto insurer, provided “very good” claims and price satisfaction and “average” satisfaction for service, according to our subscribers. But it had fairly high premiums when we compared five major insurers on the average new-customer rate for male and female single drivers ages 25, 35, 65, and 75 with excellent credit and a clean driving record in 23 states where all five companies are market leaders.
State Farm, the nation’s biggest private auto insurer, rated middling overall, in the view of our subscribers, but it provided “very good” claims satisfaction and “average” satisfaction for price, and service, by our subscribers’ assessment. Its premiums were about in the middle when we compared five major insurers on the average new-customer rate for male and female single drivers ages 25, 35, 65, and 75 with excellent credit and a clean driving record in 23 states where all five companies are market leaders.
USAA is a low-cost standout with our subscribers and has consistently earned positions at the top of our ratings at least since 1999. To qualify for coverage, you must be among the 60 million people who are members of the U.S. military, honorably discharged veterans, or the descendents of USAA policyholders.
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