Car Insurance Quotes: What You Need to Know

Car Insurance Quotes: What You Need to Know
Car Insurance Quotes: What You Need to Know
2021 was a strange year for auto insurance, making 2022 a great time to review the rates you're paying. As the pandemic kept people at home, Americans drove a lot less last year. Miles traveled at the end of March and April nationwide was 50 fewer than a year earlier. Outstanding insurance claims also fell 50% to 60% at the same time, says Kyle Schmitt, vice president and general manager of insurance intelligence at J.D. Power, related to company data.

And because drivers were suddenly spending less time behind the wheel to comply with stay-at-home guidelines, many auto insurers were giving their customers credits or refunds on their premiums. For example, State Farm gave customers a 25% discount between March and May, reducing prices by an average of 11%. GEICO offered a 15% discount to customers who renewed or purchased policies between April 8 and October 7. The USA granted a 20% credit on three monthly premiums and a 10% credit in June and July. Seeing these low prices has caused many to reconsider how much they are paying for auto insurance.

“People made a connection between the use of their vehicle and the cost of insurance during Covid that they might not have made in the past,” says Schmitt.

In other words, you may still be overpaying for auto insurance, or at least paying for coverage you no longer need. And even if there's no pandemic, one of the best ways to lower your auto insurance is to compare quotes at least once a year.

“It's good to do this annually to make sure you get the best price.If you don't shop, you really don't know if you have an opportunity to save money," says Laura Adams, insurance expert and host of the Money Girl podcast.

Rates vary between insurance companies and depend on various changing factors. So if you always want the cheapest premium, you can take the time to compare and shop around.

"People don't search for insurance enough, and premiums vary wildly," says Douglas Heller, insurance consultant and expert at the Consumer Federation of America. "If you don't look around, you may be paying too much of a premium because they don't like something about you that has nothing to do with your driving."

But while it's easy to focus solely on price, it is It's important to remember that there's a lot more to an insurance quote than just how much it costs you, says Heller.You should also be aware of what the policy does and doesn't cover, the limits of your coverage and what your expenses will be if something happens to you or your car.

"Buying the cheapest insurance isn't always the best one if it means less coverage," says Heller.

What is a car insurance quote?

A car insurance quote is an estimate of the price of a policy based on the information you provide about yourself, your car, where you live, etc. Car insurance quotes are only as accurate as the information you provide. The more accurately you are willing to disclose information about yourself, the closer your insurance quote will be to the actual price of a policy.

Insurance companies use the information you provide in a complex, proprietary algorithm to try to understand how risky you are. In other words, they're trying to see how likely you are to make a claim. A car insurance company's primary expense is repairing damaged vehicles, Schmitt says.

Car insurance quotes vary by insurance company, even if you provide the exact same information. Why? Because every insurance company assesses risk differently and certain factors can weigh heavily on one insurance company but not another. Also, the quotes are constantly changing. You can get a car quote today and then get one from the same insurance company in a couple of months, and it might be a little different depending on what happens to that car insurer's data, Adams says.

For example, if an insurance company finds that people living in a certain zip code are making more claims because cars are stolen, they can increase the rate in that area.

"They adjust the offers all the time," says Adams. “There are probably 100 or more different variables that contribute to how you get an offer and what the offer is.And it will vary from company to company, so it's always smart to get more than one quote.

What Factors Affect Auto Insurance Quotes?

"The insurance company will do some research on you," says Adams. "You'll look at things like your mileage record, whether you've had many accidents, your age, and many other demographics."

While rating factors vary by insurance company, according to insurance experts and the Insurance Information Institute (III), there are other well-known factors that affect the price you pay for car insurance.

  • Driving History – A good driving record can help you get a lower car insurance rate. If you've had an accident or serious traffic violation, you'll likely pay more. New drivers may also have to pay more because they take more risks.
  • Type and Amount of Auto Insurance Coverage – The types of insurance you choose, as well as the limits and deductibles you choose for each type of insurance, play a role in the cost of an insurance policy.
  • Location - Where you live plays a role in your auto insurance rate. Drivers living in urban areas, which are considered more vulnerable to vandalism, theft and accidents, are likely to pay higher fees than those living in suburban or rural areas. Also, the place where you park your car, e.g. B. on the street or in a secure garage, can affect your fare.
  • Age: Younger drivers tend to have more accidents than experienced drivers. When there are teenagers or those under 25 on a policy, insurers usually charge more.
  • Gender: In almost all states, auto insurers can set rates based in part on gender, and women typically pay less for coverage than men. According to the III data, men tend to have more accidents, more DUI accidents, and more serious accidents than women.
  • Car Value: The value of your car is an important factor in insurance costs. If you buy a more expensive car, the insurance is likely to be higher since it is more expensive to replace or repair. Insurance companies sometimes offer discounts if your car has high safety ratings or high-tech safety equipment.
  • How much you use your car: Insurance companies take into account how much you regularly drive when calculating a quote. The more you drive, the more likely you are to have an accident. So you're likely to pay more if you drive your car a lot or if you drive it long distances. If you only drive occasionally, you probably pay less.
  • Insurance-Based Credit Score: In many states, insurance companies can use a factor similar to your credit rating called a credit-based insurance score. It's a statistical tool that uses certain elements of a person's credit history to predict how likely they are to make a claim. Some states like California and Massachusetts do not allow this as a qualifying factor.

What information do you need to get a car insurance quote?

In order to obtain an auto insurance quote, either online from an insurance company or directly from an agent, you must provide some personal information. For example, you will be asked for your name, date of birth, gender, address, marital status, social security number, and vehicle information.

You must also provide details of the family members you want the policy to cover. The insurance company or agent may ask you about your driving history, insurance history and credit-based insured value (depending on the state) before providing you with an estimate.

Auto Insurance Terms You Should Know

When you speak to an agent, you may hear them say words like "no fault" and "reduced value" and have no idea what they're talking about. Insurance jargon can be very confusing, but it's not as complicated as it seems. Below are definitions of some of the more common terms used in auto insurance. Think of it like a cheat sheet that you can always refer to if you ever hear an auto insurance term you aren't familiar with.

  • Additionally, insured person or group insured by another party. For example, if you bought a car as a teenager, you most likely have additional insurance as part of your parents' coverage.
  • Fault: You are considered “at fault” if you have an accident caused by your misconduct. It could be with another vehicle or an object.
  • Actual Cash Value (ACV): The cost of replacing your car minus depreciation.
  • Claim: An official application you make to your insurance company for monetary compensation if your vehicle is damaged, or you are injured following an accident. Collision Insurance - Optional insurance that covers your car if it collides with another car or object.
  • All Risk Insurance: Optional insurance that covers damage to your car that is not the result of a collision, such as: B. Theft, vandalism, natural disasters and animal damage.
  • Deductible: The amount you have to pay before your insurance takes effect. Here's an example: Your deductible is $1,000, and you need $3,000 for repairs after a car accident, so you only have to pay the first $1,000 and your insurance company will cover the rest insurance company and that breaks down your premium and details specific to your auto insurance policy, such as.
  • Depreciation: The difference in market value of a car before and after the accident.
  • Exclusions: Anything not covered by an insurance policy, which is usually explicitly stated on a declaration page.
  • Fully comprehensive – Often a combination of liability, fully comprehensive and comprehensive cover is referred to here.
  • Gap Insurance: Optional coverage that helps cover the gap between what you owe on a car loan if the vehicle is damaged or stolen and the car's depreciation in value.
  • Liability Insurance: The minimum type of auto insurance required by the state. It protects you and your property if you are held personally responsible for an accident in which another person is injured or harmed. It does not protect your vehicle from damage.
  • Lien holder: The individual or legal entity that has a legal right to your vehicle. When you finance your vehicle, the lien holder is your lender until the car loan is paid off in full.
  • Limit: The maximum amount an auto insurance company will pay out after an insured accident.
  • Damage: The amount paid by an insurance company as a result of a claim.
  • Personal Injury Protection (PIP) – Also known as “no-fault insurance,” this type of coverage pays up to a certain amount of medical bills and loss of income for you and your passengers in the event of an accident, regardless of who pays you ? Because it is required in certain states like Michigan and Kentucky and optional in other states.
  • Premium: The amount you pay for your car insurance. Depending on your insurance coverage and payment schedule, it may be paid monthly, semi-annually, or annually. Replacement Value (RCV): The cost of replacing your car without deducting depreciation.
  • Total: The cost of repairing the vehicle exceeds its value.

What is the average car insurance rate?

The average premium for liability insurance was $611.12 in 2017, according to the latest data from the National Association of Insurance Commissioners. The average premium for collision insurance was $363.08 and the average premium for comprehensive insurance was $159.72.

This means that the total cost of comprehensive coverage for an average person is over $1,000. However, keep in mind that depending on the state, insurance company, and policyholder, there are dozens of evaluation factors that ultimately determine your personal auto insurance rate.

How to Compare Car Insurance Quotes

There are many ways to get a free car insurance quote. You can go online to an aggregator that pulls up a variety of quotes from different insurance companies. You can go directly to an insurance company like State Farm or Allstate. Getting a car insurance quote from an independent agent or broker can also be a good option when exploring your options.

"You never have to pay a fee to get a quote," says Heller." If someone suggests that you have to pay something over and above the insurance premium after signing up, you should back off."

Auto Insurance Quotes By Phone

Before you even start making the phone call, there are ways to be smarter when buying auto insurance, says Heller. First, you should look at the ratings of the car insurance companies. Pay attention to customer complaints and satisfaction. It's also important to understand exactly how much coverage you want and to discuss the same level of coverage with each company to accurately compare rates.

Schmitt recommends starting with insurance comparison sites and then moving to specific insurers for more detailed quotes. Most companies offer free online auto insurance quotes that allow you to start the process online and then be matched with an agent to complete your quote over the phone. “It's important to get a fair price, but it's also important to think about what you need. Need help determining how much coverage is right for you? Buying insurance from a broker is usually more expensive than online, but you're paying for the service," says Heller.

Online Car Insurance Quotes

Purchasing insurance without the help of an agent gives you more autonomy, but it has some disadvantages. When getting quotes online, Heller says that insurance quote websites don't always show you all of your options.“These websites generally have financial ties to a certain number of companies and will only give you quotes for a certain number of companies based on their own financial ties. And the same is true when you walk into an insurance agent's or broker's office," he says.

The more car insurance quotes you can get for comparison purposes, the better. The experts we spoke to say you should get at least three so you can tell if you're getting a good deal on the coverage you want.

"If you go to a website or ask an insurance agent, you usually don't get a full picture of what's available," says Heller.
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