Top Tips to Choosing the Right Car Insurance for You

The right car insurance protects you after an accident, but choosing the right policy involves more than just finding an affordable rate. You want to make sure you have the right amount of coverage and that you’re comfortable with your deductibles (compare deductible amounts before choosing).

NerdWallet recommends comparing rates from multiple insurers. This will help ensure you’re getting the best deal on something that is required by law.

Know Your Needs

The first step to finding the right car insurance is understanding what you need. This will help you determine how much coverage you need and what kind of protection works for your budget. It will also allow you to narrow down potential providers and work with them to make sure you get the coverage you need.

The most basic form of car insurance consists of the minimum liability coverage required by your state. This is typically enough to protect your finances in the event of a major accident, although you can double it for an extra few dollars a month. You can also choose from a variety of other coverages, such as uninsured motorist or personal injury protection coverage. However, you should always balance the value of those policies against their cost.

When determining your needs, consider your budget, driving record, and the type of car you drive. You should also remember that most insurance companies will look at your credit history and demographic information when calculating your rate. While this is not the case in all states (California, Hawaii, Massachusetts, Michigan, Oregon, and Washington restrict the practice), it is common for most carriers.

You should also keep in mind that a single at-fault accident can significantly raise your premiums, and you might want to consider adding collision or comprehensive coverage to your policy. This is a good idea especially if your vehicle is more expensive or if you’re considering buying a high-performance vehicle. Finally, you might want to investigate pay-per-mile options like Metromile or Allstate Milewise. This could save you money if you don’t drive your vehicle a lot. However, it’s important to note that these policies often do not provide the same level of coverage as traditional options.

Know Your Limits

Most states require you to carry a minimum level of car insurance to drive. However, you should consider how much of that minimal amount you actually need and consider optional coverages like medical payments (MedPay) and uninsured motorist property damage (UMBI).

These are often sold together as a bundle or you can purchase them separately, depending on your state. Bodily injury coverage pays for the other party’s medical, legal and funeral costs if you are at fault in an accident. Limits typically range from $15,000 per person to $250,000 per accident, with the middle number usually being recommended. The second number is for property damage coverage and pays for the other vehicle or vehicles if you are at fault in an accident.

Choosing higher limits will increase your premium. So, you will need to decide how much of a risk you want to take and work with your agent to find the right balance.

It is also important to consider your savings when deciding how much coverage you need. If you have a sizable emergency fund, you may be able to afford a lower coverage amount or even choose a higher deductible to save on your monthly premium.

You should also be familiar with your policy’s deductible and coverage amounts so that you know what to expect when filing a claim. If you’re unsure, ask your agent to explain the coverages and their limits to you. Also, look at third-party customer satisfaction ratings, complaint numbers and financial strength to gain a deeper understanding of how your carrier performs. Then you can make a more informed decision when shopping around.

Shop Around

While state and lender requirements help you determine how much car insurance you need, it’s important to do a bit of research on your own to make sure you are getting the right amount of protection. It’s also worth looking into optional coverages that could make your life easier in the event of an accident or other calamity, such as collision waivers that waive your deductible in the case of an at-fault crash or comprehensive coverage that covers damage to your car from certain causes, according to CNBC Select.

While most insurance companies consider similar factors when pricing policies, each one has its own “secret sauce,” so two companies may charge wildly different rates for the same driver. It’s worth comparing quotes to ensure you are paying a fair price for something that protects your most valuable asset.

In addition to cost, you should look at the payment options and terms of the policy. For example, does the company allow you to pay monthly instead of upfront? Some insurers even offer no down payment auto insurance, which is a great option for drivers who are buying a new or used vehicle.

A good way to comparison shop is by working with an independent agent or broker who can get you quotes from multiple national and local insurance providers all in one place. However, it’s important to keep in mind that agents and brokers often have incentives to sell more coverage, which can lead to a more expensive policy than you need. Fortunately, online shopping services can provide you with unbiased, side-by-side comparisons that let you find the best value. Be sure to ask about any discounts that may apply to you, such as loyalty or safe-driving programs and telematics insurance, which can save you money based on how well you drive, such as braking, cornering, and mileage.

Know Your Deductibles

The deductible amount is an important factor in how much you pay for car insurance. It is your responsibility to pay the first portion of any claim, and it affects your premium (the amount you pay monthly for car insurance). Choosing a higher deductible can save you in some cases, but only if you can afford to cover a high cost out-of-pocket. You should consider the amount you have in emergency savings or other assets and how often you expect to file a claim.

Insurance professionals recommend you choose a deductible level that is within your budget constraints and your tolerance for risk. If you have a large emergency fund, a higher deductible may make sense for your situation.

Some insurers may offer a variety of policy options, limits and deductibles to allow you to tailor a plan that meets your specific needs. Be sure to compare these options when shopping for quotes, especially if you are considering different coverage amounts and deductible levels.

Other factors that can impact your insurance costs are your credit history and driving record. Many companies use your credit score to calculate your rate, and improving your credit could save you money. If you don’t drive a lot, consider investigating insurance options like pay-per-mile policies, which could also save you money. And if you drive responsibly and have few claims, your insurance rates should decline as time passes. These are general guidelines, but your exact costs can vary significantly by provider and state. NerdWallet’s car insurance comparison tool provides you with quotes from top national and regional insurers, based on policy options, consumer complaint data, financial stability ratings and more.

Know Your Options

It’s important to consider your options when shopping for car insurance. You want to find a policy that fits your needs and offers the best value. On average, car insurance costs vary widely from company to company, and it is possible to save hundreds of dollars per year by comparing prices.

When choosing an insurer, you should also take into account factors like credit history, claims handling reputation and financial stability. It’s a good idea to find companies that are known for attentive customer service, fast claim handling and strong financial standing (our Policygenius reviews of the top insurance carriers take these into account).

You should also determine what kind of coverage you need. You’ll need to know your state’s minimum coverage requirements, but you might also want to think about comprehensive and collision coverage to protect against certain kinds of damage to your vehicle. And if you’re looking to cut the cost of your premium, you may be able to reduce the amount of coverage you need by choosing a higher deductible (the amount you will pay out of pocket for each claim before the carrier kicks in).

Once you’ve decided what kind of policy you need and have an idea of how much it will cost, it’s time to shop around. You can start by contacting your current insurer or other independent agents, or you can get quotes online at any number of sites that offer multiple quotes with a single form. When comparing prices, be sure to use the same coverage limits and deductibles so that you’re evaluating apples-to-apples. Also, be sure to check out any discounts that might be available to you. Some insurance companies offer safe-driver discounts, and others might offer perks for drivers who use their telematics devices to track their driving habits.