How to Shop for Auto Insurance and Find the Cheapest Rates

Last updated on July 23rd, 2017

Vanessa and I recently bought a car to replace our 1996 Saturn. In the process, we decided to reconsider our insurance coverage in an attempt to cut our monthly premium.

Most individuals (or couples) obtain auto insurance, and then forget about it. As a result, they often stay with the same insurance provider for many years. But shopping around can be extremely rewarding because auto insurance rates are known to fluctuate over time.

The reason that most people don’t bother shopping around is because of the traditional (and tedious) insurance process:

  1. Apply for one quote at a time, filling in all of your personal information
  2. Get aggravated because the pricing and policy features are hidden
  3. Rinse and repeat for each additional insurance provider

Then, after you exit the quote process, you are bombarded with calls and voicemails from Joe the insurance salesman.

A Better Way to Compare Car Insurance Quotes

A new online service website – The Zebra – allows you to compare quotes from more than 200 auto insurers across all 50 states. They provide quotes from more than 97% of available auto insurers using one simple form, and the entire process is done online.

The Zebra updates your quotes in real time as you input information such as automobile make/model, zip code, age, gender and expected miles driven. It will even include bundle discounts if you are looking to insure your home and car at the same time.

After inputting the basics, The Zebra will ask you to choose a coverage level:

  • State Minimum
  • Basic
  • Better
  • Best

Each includes higher amounts of coverage, and of course, a higher premium.

After selecting your desired amount of coverage, you will see quotes from all the insurers available in your state. You can then click a little arrow beside each insurer to see available features and ratings from JD Power and the Better Business Bureau. For example, below is a screenshot showing Nationwide (learn more) and the associated ratings:compare car auto insurance

 

At this point the you can go directly to the insurer to finish the process online, or call one of The Zebra’s licensed agents and purchase coverage over the phone.

The Zebra, which launched at the end of 2013, claims that the average user saves $614 a year through the service. In my experience, quotes are very competitive.

How to Choose the Correct Amount of Insurance Coverage

As I mentioned above, all insurance providers require that you select a certain amount of liability coverage. Liability coverage covers the other driver’s personal injury and property damage in a crash where you’re at fault. It does not cover your own injuries or property damage. You must at least purchase the minimum required by your state, but you can choose higher coverage limits if you desire.

For example, in Texas, 30k/60k/25k is the State minimum auto insurance coverage. That means:

You only need the state minimum to legally drive, but many people opt for additional coverage. The reason is that one bad accident can easily surpass the bodily injury or property damage minimums. If that happens, many states allow the injured individual to seek additional compensation through the legal system.

Do You Only Need Liability? What About Additional Coverage?

Buying only liability insurance is always going to result in the cheapest monthly premiums. Beyond basic liability coverage, there are many additional coverage options:

  • Collision: Unlike liability insurance—which covers the other party’s damages—collision insurance covers your damages should you be involved in an accident.
  • Comprehensive: Comprehensive insurance covers loss and damages to your vehicle unrelated to traffic accidents. Covered events usually include theft, vandalism, weather conditions, and natural disasters.
  • Uninsured and Underinsured Motorist (UM/UIM): These types of coverages protect you should you be involved in an accident with a driver who doesn’t have enough—or any—car insurance. In that event, your own insurance will cover the accident. This is now required in some states.
  • Personal Injury Protection (PIP): PIP covers your medical expenses, lost wages, and funeral expenses if the other party’s liability coverage isn’t enough, regardless of who was at fault for the accident. Some states now require PIP coverage by law.

It’s typically wise to choose uninsured and underinsured motorist coverage. The reason is simple – Many drivers are uninsured or underinsured – and many of them are accident prone.

Personal injury protection (PIP) is really useful to cover lost wages and medical expenses for all passengers inside of your vehicle, and some States require PIP by law. There are some who argue that PIP is unnecessary if each person has medical insurance (and an emergency fund).

Collision and/or Comprehensive coverage is much more expensive than liability only. The value of your car is an important consideration when determining whether you need collision and comprehensive coverage. If you car is older and/or low-value, it may not be worth purchasing these coverages, since the insurance company will only pay up to the estimated fair market value of your car. If your car is newer and/or high-value, having these coverages can save you from paying out significant costs to repair or replace your car.

Other, less common coverages are available as well. Some of these include:

  • Roadside Assistance
  • Towing Coverage
  • Rental Car Coverage

These can be convenient, but also costly. If you have family in the area, or access to another vehicle, you might not need to pay a monthly premium for these add-ons.

Choosing the Correct Deductible

A deductible is the amount towards a claim that you are responsible for out of pocket before your insurance pays out. Collision and comprehensive insurance coverage require you to pay a deductible whenever you claim a loss, and the insurance company often allows you to set your own deductible (typically up to $1,000) . An important note about deductibles is that they occur on each claim made for auto insurance, not on an annual basis like health insurance.

All else equal, a higher deductible results in lower monthly premiums.

You should set the deductible as high as possible, given your situation. If you don’t have cash stashed away to pay the higher deductible in case of an accident, raising your deductible isn’t the wisest move. If you have the funds available, raising your deductible will result in significantly lower premiums. Remember, insurance is a risk protection tool that is meant to protect against high severity, low probability events. If you rarely get into an accident, you want to minimize your monthly premium cost.

Conclusion

The Zebra is a great tool for comparing car and auto insurance. You can take it a bit further and compare Zebra quotes to personalized quotes from individual insurers. With that information, you can choose a reliable, low-cost insurer that fits your needs.

After you’ve made your choice, don’t let inertia take hold. Comparison shop for new rates every year because insurers constantly change their policies and rates.

Comments
  1. Reply

    We’re always looking for ways to save on our auto insurance, and I think that being able to find the right deductible like you said would be helpful. I didn’t know that an auto insurance deductible isn’t annually like a health policy, but is rather a deductible for each claim. I’m going to have to keep that in mind while my wife and I are trying to decide on an auto insurance deductible we’re comfortable with! Thanks for the info!

    • Carol
    • April 5, 2017
    Reply

    Do you have any recommendations for someone that does not own a car? That is, if you plan on borrowing a family member’s car once in a while when in town?

      • Jacob
      • April 5, 2017
      Reply

      The owner’s insurance covers any guest drivers (as long as you have their permission to drive the car).

    • daniel
    • March 16, 2017
    Reply

    Thanks for mentioning that there is a statewide minimum liability level. I forgot.

    • Zachary Tomlinson
    • January 25, 2017
    Reply

    I appreciate that you pointed out the differences between insurance types. I think that is important to recognize and take into account when finding the right auto insurance. I’m anxious for my mom because she still drives, and her insurance probably wouldn’t cover anything if she were in an accident.

    • Burt Silver
    • December 28, 2016
    Reply

    Thanks for mentioning that there is a statewide minimum liability level. That is a good thing to know for anybody shopping for insurance. My wife and I have gotten by with the bare minimum of insurance for years now and we have finally decided to spring for something will a little more coverage. All of this information should help us a lot!

  2. Reply

    I appreciate the information on finding the cheapest auto insurance rates. I agree that it is so easy to shop one time for insurance and then just to forget about it, even though you could save a lot of money by switching. My cousins are looking at getting insurance for their new car, I will be sure to share these tips with them and use them for ourselves.

    • Dave Anderson
    • November 30, 2016
    Reply

    I am getting auto insurance, but i want to know how to find the best deal. I did not know that there were websites that can help you compare auto quotes. I thought i was going to have to go into a ton of different insurance companies and sit down with someone to compare rates. But now that i know that i can do it online, it makes it a lot easier.

  3. Reply

    Your advice on choosing the correct deductible was very helpful. I like what you said about setting your deductible as high as possible, so that your monthly rate is less. I really like the idea of a low premium, so this is great advice!

    • Scott
    • November 11, 2016
    Reply

    Thanks for this useful article. Auto insurance can seem pretty complicated. I like that you remind us that the deductible is applied to each accident, and not on an annual basis. I can see how this could cause some confusion. My brother just bought a car is currently comparing auto insurances. He should definitely read this article so that he can be educated on how it works.

    • Kate Hansen
    • September 22, 2016
    Reply

    Thanks for your tips about choosing the correct amount of auto insurance coverage. I never knew you had to select an amount, but it’s nice to know that you only need the state minimum to legally drive. I’ll probably go with this for now until I figure out if I need any more coverage.

    • Jackie Oliver
    • September 1, 2016
    Reply

    I would love to find a way to save money on our auto insurance! Between my husband and I we have a really good record, so I think that we could be saving a lot of money. I like your idea of comparing all of the prices in one place, so you can see ever all at once. That is so convenient, and I won’t have to spend of time researching different companies.

  4. Reply

    It’s funny that you say that couples will often forget and stay with the same provider. We have always had the same insurance, and would just continue with our days. We will definitely have to shop around and see if we can save a little. Thanks.

  5. Reply

    I find I have to switch insurance carriers every year to two years in order to continue to get the best rates. They just tend to increase rates at a steep pace after you are a customer. Very frustrating.

      • Jacob
      • July 22, 2016
      Reply

      Agreed. Punishing loyal customers is such a crazy practice, but common to auto and home insurance.

    • Tobias Armstrong
    • July 15, 2016
    Reply

    I had no idea that there were so many different types of car insurance. Or at least levels of it. For most of my life I’ve only been aware of liability insurance, but I’m pretty sure that’s because my parents were paying for my insurance for a long time. It seems like comprehensive is probably the best coverage, but will probably cost the most as well. The more you know, the better off your decision is going to be though. Thanks for sharing!

  6. Reply

    Thanks for the post, as I completely agree. Insurance is a necessary evil, but you should not simply pay month after month without comparing to save rates. The companies are in it for the money, so regardless of how loyal you are to them, at the end of the day it’s about their bottom line. So, it should be the same way for you, you are paying for the service, so it’s only fair you should find the best and most affordable one out there. I typically try to change it around yearly to see what’s out there and who wants my money the most.

    • Peter Clark
    • July 12, 2016
    Reply

    A couple of thoughts from a former insurance agent and agency claims specialist:

    How much liability coverage should you buy? Cover your assets. Some insurance companies will push 100/300 liability limits for everyone. If your fresh out of (or still in) college and/or don’t have the assets to protect, why are you paying for excess coverage. (An exception would be for those with high incomes and few assets.) On the other hand, if you have a nice nest egg, it seems ridiculous to save $100/year by getting state minimum liability insurance.
    I once helped a seasoned doctor with a claim who’d insisted on lower liability limits and then hit a bicyclist. He was at fault. He could have easily lost everything (except for the relatively paltry amount that his liability insurance covered).

    In many states, PIP is known as MedPay. This is one coverage I would encourage others NOT to waive. The biggest reason being, MedPay/PIP always pays first, regardless of who is at fault in an accident. In absence of this coverage, you could be stuck with medical bills piling up because insurance companies will not generally pay ANY bills until they have a settlement agreement. If you don’t have medical insurance (or a healthcare sharing ministry), then I recommend increasing this limit substantially as the cost to go from 10k PIP to 100K PIP (for the companies that offer higher amounts), is often a pittance.

    A lot of people have towing coverage on their phone plan or credit card. So you may not need that. Not a bad purchase if you are prone to running out of gas, locking keys in your car, leaving your lights on, or drive a vehicle that is prone to breaking down… and don’t feel inclined to calling friends or family to help you out in those situations.

    A note on comprehensive coverage. You don’t have to have both comprehensive AND collision coverage. If you live in an area with a high chance of hitting animals, or if you are leaving town and your vehicle parked for a few weeks (and want to insure against theft), you may want to add comprehensive coverage. It is (generally) much less expensive than collision coverage. (You can also call and turn coverage on and off. I used to call and put comp/collision on my vehicles- just while on a road trip.)

    Last note (with three lessons): Last year, we had a young driver run a red light and total our minivan. It was in the middle of the night and the only witnesses were the occupants of our vehicles. By the time the other party’s insurance company got the driver’s statement, he had changed his story and said we had run the red light! (Lesson 1) So while I could be the best driver in the world, and as such, only want to buy liability insurance, I still would have been on the hook. Coverage is not determined by who is at fault- but, rather, who is determined to be at fault BY THE INSURANCE COMPANY. Police reports are only one piece of the puzzle and are sometimes at odds with the insurance companies liability determination. (Luckily, the passenger in his vehicle stated otherwise and the company did end up accepting liability.)
    Lesson two: The value of our vehicle was apx. $8k. In California, the state minimum liability for property damage is only 5k! (This seemed so absurd to me that I thought the claims agent was lying. We’d traveled to California on vacation and all other states where I’d lived it is much higher.) Again, if we’d only had liability coverage, 5k would have been the max payout for our 8k vehicle. This is usually a non-issue, but is risky if you are driving a vehicle in a state with minimum liability limits lower than the value of your vehicle or in cases where you are hit by an uninsured driver.
    Lesson 3: Our insurance company low-balled us on the appraisal (~$7000). I gave them requested comparables, but they still didn’t adjust the offer. I know of others who simply take the companies to small claims court or get an attorney. Luckily, we were able to find a comparable vehicle for sale from a private party that was cheap enough to cover the cost with the settlement check. But that experience made me feel less good about the ’15 minutes that had saved me 15% or more on my car insurance’. So the savings on the front-end could be met with cost on the back end should there be a claim!
    Here is a JD Power and associates study showing claims satisfaction across companies. Unfortunately, many of the big names don’t rank much higher than my ‘cut-rate’ insurance. http://www.jdpower.com/ratings/study/U.S.-Auto-Insurance-Claims-Satisfaction-Study/679ENG

    Thanks for you awesome blog. Keep up the great work!

      • Jacob
      • July 12, 2016
      Reply

      Great thoughts Peter, and I truly appreciate the input.

    • Barbara Turnham
    • July 11, 2016
    Reply

    A follow up to my last comment which has not been posted yet. I tried Zebra and got two quotes only but someone just called to say they could put me in touch with insurers by phone. If I wanted to do that I am perfectly capable of getting a list of insurers in the area and calling them. I had expected this would be a shortcut with a list of companies/quotes like you get flights on Kayak but just got a couple. Not useful in my opinion but just for them to get your info and market.

    • Barbara Turnham
    • July 11, 2016
    Reply

    I will try Zebra but having been with Geico for several years (around 40!) with few claims they are apt to display accident foregiveness and not take away the good driver discount for relatively minor accidents. That is one benefit we have found with staying with them and they were generous with their payout when our car was totalled by another Geico policy holder.

    • Kristen
    • July 7, 2016
    Reply

    I read somewhere not too long ago that switching insurance companies with any frequency negatively affects your rates. I have no clue how true this is. Insurance always seems like one of those products that’s just shy of being scammy and like there’s some secret formula or database that only the insurance companies are clued into. So, I wouldn’t be surprised if they were adjusting rates in this way–however ethical or legal it is. Any thoughts about this?

      • Jacob
      • July 9, 2016
      Reply

      Hi Kristen,
      Switching insurance should very rarely result in higher rates. The only time that would might apply is if you have a loyalty discount for maintaining the same insurer for several years. That said, there have been studies that prove insurance companies very rarely reward loyalty, and you can often get a bigger discount by shopping around, as discussed in my post.

  7. Reply

    Jacob, I have sticked to my auto insurance for three years, and I am planning to change as I don’t maximize the use of it. Thanks for letting me know how to find a more reliable, low-cost, personalized insurance. Zebra sounds a cool app to try!

      • Jacob
      • July 3, 2016
      Reply

      No problem, glad you found it useful.

  8. Reply

    My auto insurance payment for several years has been $0.00! As a court interpreter, I lived downtown in San Antonio, Texas, right next door to my workplace & when I went to UT-Austin for grad school, I had access to a free UT shuttle bus from the apartment building to classes & also free bus rides on city buses. I made liberal use of The Dog at student rates for more long-distance travels, and later, I moved next door to UT and walking distance from my part-time job as an interpreter in the Municipal Court system. Here in Taipei, Taiwan, public transport abounds & the price is always right (I just rode a free hospital shuttle bus on the freeway from Point A to Point B)! Hooray for an automobile-free existence since the 90s! 🙂

      • Jacob
      • July 1, 2016
      Reply

      Great points. We would much prefer biking or walking instead of driving. Much healthier and cheaper.

    • MarredCheese
    • June 30, 2016
    Reply

    I just tried this and figured I’d report in. Unfortunately, all the options it came up with are more expensive than what I’m currently paying Geico, which didn’t even make the list for some reason. Bummer.

      • Jacob
      • July 5, 2016
      Reply

      You win some, you lose some. That’s why I recommend comparing Zebra to personalized quotes. The best rates seem to vary by location and policy limits.

 

Leave a Comment