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.

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.

"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.

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.

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.

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.

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."

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.

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.