Car Insurance Buying Guide

Every insurer uses a different pricing formula in creating the premium it quotes you. As a result, you’ll find competing carriers charging different amounts for the same or almost the same coverage. By shopping periodically, you have the potential to save with your current carrier, or with a new insurer that’s just as good or better.

Here are some key factors that could affect your premium:

Driver profiles, driving history, and car type. If you’ve seen your premium rise of late, it could be because you’ve added a newer or more expensive car, begun insuring a teen driver, or been involved in an at-fault crash.

Credit history. A number of insurers will price a policy higher for a driver with less-than-stellar credit, using a “credit-based insurance score.” Insurers maintain that credit history is a good predictor of insurance claims, and they price their policies accordingly. (Several states, including California, Georgia, Hawaii, Massachusetts, Oregon, and Utah, either prohibit or restrict the use of credit-based insurance scores.)

External conditions. These include local weather trends that increase the likelihood of claims and result in higher rates. For example, if damaging storms in your area have generated lots of car-insurance claims, your company may apply to your state’s insurance regulator for an across-the-board rate increase to reflect its increased exposure to that risk.

Take Control of Your Policy

In our recent survey of Consumer Reports members, 22 percent told us they’d switched insurers in the past five years. Of those, 62 percent said they’d found a better price. And 77 percent of switchers were highly satisfied with their new carrier.

That suggests there’s good reason to shop periodically. To get off the stick, you may have to set aside worries that a new carrier will drop you or raise your premium more quickly than your old insurer when you file claims. Insurers and consumer experts told us that’s not necessarily true. And if you’re a good driver, it shouldn’t be a concern.

In fact, your loyalty as a customer may not net you much in discounts. Thanks to “price optimization,” a computer-based pricing practice that’s legal in 30 states, insurers can mine data collected about the shopping behavior of consumers to predict the price sensitivity of a group of consumers, or perhaps even an individual. While your carrier may offer you a loyalty discount of 10 percent, it could use price optimization to raise your price 30 percent because the data shows you won’t bolt.

Check Rates Frequently

Shop for coverage whenever your personal circumstances change—say, you marry, insure a teen, reduce your commute, or add a car to your policy.

Ask your insurer how much the changes will cost or save you. That includes asking for an adjustment to your coverage to reflect your car’s depreciation; insurers don’t necessarily do that without your prodding.

Compare the resulting premium with what other carriers will charge. For comparative prices, try more than one car-insurance search engine, and also consult an independent agent. Two of our top-rated insurers, Amica and USAA, show up only on the insurance search engine Compare.com.  

Pick a Top-Rated Insurer

Don’t just gravitate toward the lowest premium. Look, too, for a carrier that provides fair and fast claims settlements; offers great nonclaims customer service; helps you review your policy thoroughly; and proactively offers help and advice. You’ll find these judgments on 53 insurers in our ratings.

To create our ratings, we surveyed 90,352 CR members in the fall of 2018 about their car insurance. They provided us with 107,572 reports on their experiences with car insurance companies. (CR members’ experiences are not necessarily representative of the U.S. population.)

Don't Skimp on Liability Coverage

Every state but New Hampshire requires drivers to have at least minimum coverage. It’s wise to go far beyond these minimums if you can afford to do so:

Liability insurance. This pays for bodily injury and property damage that you cause to someone else in a crash. Buy more than the legal minimum even if you don’t have much in assets to protect; depending on your state, a portion of your wages could be garnished in a judgment against you. A more protective level of coverage is $100,000 per person, $300,000 per incident, $100,000 for property damage. For even greater protection, buy an umbrella liability policy, which extends coverage for both your car and home, and offers additional protections as well.

Uninsured motorist coverage. In many states, this coverage is optional. But with 1 in 8 drivers going without car insurance—a statistic that has remained fairly constant for more than two decades—it’s a worthwhile buy. It pays medical bills for you and your passengers after a crash caused by an uninsured, at-fault driver. Why get it in a no-fault state, where your company pays regardless of who’s at fault? Because it reimburses for lost wages after a crash. Uninsured insurance also covers you and your household as pedestrians, and in hit-and-runs.

Underinsured coverage. More people are taking just minimum liability coverages to save money. This protects you if you have a crash with one of them.

Seek Savings on Other Coverages

Collision insurance, which pays for car repairs, and comprehensive insurance, which covers damage or theft to your vehicle, are two coverages to focus on to reduce your premium. You also may be able to forgo other coverages to save further.

Set the deductible right. Raising your comprehensive and collision deductibles to $1,000 from $500 can shave, on average, 11 percent off your premium, says research by the search engine The Zebra. Just make sure you can afford to pay the deductible if your luck runs out.

Cancel collision and/or comprehensive on older cars. Consider dropping one or both when those annual premiums equal or exceed 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.

Forgo rental-reimbursement coverage. If you have another car you can use while your vehicle is being repaired, you don’t need to buy this. And skip roadside assistance if you have an auto-club membership that’s a better deal—or if it comes as part of your car’s warranty.

Review 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.

Pursue discounts. They can include breaks for bundling home, auto, and umbrella policies with the same carrier; taking a safe-driving course; letting your carrier know about your low annual mileage; and reporting your teen driver’s good academic average, typically a B or better.

Take These Steps to Save More

Keep your driving record and credit clean. Both have an impact on price. For the best rates you’ll need to have at least three years of clean driving.

Choose your car wisely.
Premiums will vary by auto model. When comparing models, ask your insurer for premium quotes on the different vehicle models that you’re considering.

Assign the right driver to the right car. Ask the agent who the principal driver should be for each car. Basing those matchups on individuals’ driving records and car values might save you money. Pairing a lower-value car with the driver who commutes the longest distances, for instance, may cost less than giving that driver the higher-value car.

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