How to Compare Car Insurance Companies to Lower Your Rates

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The insurance industry is huge and there are many companies who are competing for market share. It is important to compare car insurance companies. However it is also really difficult to differentiate between the many companies that are offering car insurance because they often look similar. How do you know which company would best fit your needs? When reviewing insurance companies; try to determine the strengths and weaknesses, coverage differences and policy terms.

Companies are often rated based on their financial strength. Many top insurance companies have extremely strong ratings. It is good to check the ratings of all the companies before you determine the right choice for you.
  • Rating System Used for Insurers:
  • Triple A: Extremely Strong
  • AA: Very Strong
  • A: Strong
  • BBB: Good
  • BB: Marginal
  • B: Weak
  • CCC: Very Weak
  • CC: Extremely Weak
  • R: Under Regulatory Supervision
  • NR: Not Rated

There are many websites that offer car insurance company profile comparisons. Looking up a profile can provide the feel of a company’s performance and structure. You will also be able to learn about company niche specialties which will also help you determine the best fit for your needs.

Make a Scorecard

A good way to compare car insurance providers is to make your own scorecard. Try to compare the following information to determine what your future experience might be like:
  • Price: This is perhaps the first thing on a person’s mind when it comes to searching for auto insurance. Track all the prices that you are quoted from insurance companies to determine what the best deal is.
  • Knowledge: If you are talking to an agent over the phone, does he or she seem to be able to explain all of the parts of a coverage? Are they trying to rush you through the buying process?
  • Friendliness: Are the insurance agents friendly, patient, and courteous with your inquiry or do they seem to be annoyed?

Compare Coverage Levels

As you are aware, not every insurance company offers the same insurance coverage. There are many optional features, different deductibles, and varying coverage levels. While you are comparing car insurance companies make sure to check for service fees, car rental options, liability coverage, medical coverage, and collision coverage. These are all important factors in determining whether a policy is the right fit for you.

How to Compare Car Insurance Companies

Check the Policy Term

As you are comparing insurance companies, pay close attention whether your insurance policy will lock you into a six month or a one year policy. Usually a year policy decreases the price of your premium and also guarantees that your rates will not go up. Purchasing a six month insurance policy might also be a good option especially if you are expecting a ticket to be dropping off, or if you are turning 25 years old. Both of these would decrease your insurance premiums, so a six month policy might be a good option.

One good thing about shopping for car insurance is that you can change carriers at any time. By comparing insurance companies you will be able to determine what the best options are for you. Try to discover important information about coverage levels, policy terms, and customer satisfaction while you are comparing insurance companies.

Remember to Study the Fine Print When Comparing Car Insurance Companies and Quotes

Car insurance companies or more accurately, short-term insurance companies, abound in what is a very competitive market. The market has become so fiercely competitive that some car insurance companies have entered niche markets where they specialise in particular sectors of the market, e.g. car insurance for female drivers, whereas others offer all sorts of incentives to retain their customers.

Car insurance companies are operating in a very volatile market as insurance contracts are by nature short term. As such, the main issue to them is to retain customers and build up a loyal user base, thereby protecting cash flows and profits. It is in this regard, that most of them will offer some incentives to retain their clientele. These offers are mainly centred along no claim bonuses in the form of rebates offered after a set period of no claims on your policy – usually three years. Because the actual cost of these policies to their customers are the main reasons for them shopping about for the best price, either on entering an agreement or at the end thereof, actual premiums are also pretty competitive. The catch is often in the fine print of a contract, so premium comparisons and incentives offered are important to the customer, but as important is to read the fine print. It is in the fine print that hidden costs are contained – such as excess payments on any claim made. These payments vary wildly from insurer to insurer and could be rather hefty.

Something to consider, however, is that monthly premiums are affected by the size of the excess payment. The larger the excess payment, the lesser (normally) the monthly premium. Who may drive the car, what age they are and whether the vehicle is used for business purposes, are all factors that could have an influence on the monthly premium and excess payment. Clearly the type of car you drive, the model, the year of manufacture and whether the car has been modified are important issues, and affect the monthly premium charged. How and where your car is stored also has an effect on monthly premiums. Take note that should you skip a premium payment, the policy will cease to have an effect, and you will be left without any insurance protection and your credit record might also suffer as a consequence.

Car insurance companies calculate their policies on such issues as the car you drive, its value (you can insure for replacement value or market related value),where you live, whether the car is housed in a closed garage, your age, driving experience, whether you use your car for business travel and so on. These are all risk factors to the insurer and the greater the risk the greater the premium and often the required excess payment by the claimant will be. Car insurance companies will often be prescriptive on the repair of any accident damage in that they will nominate who may repair your car.

The important issue is to research the market for the best prices, but also to study the fine print in making sure that not only you get the best deal, but that you understand the risk issues from your side. It is one thing to pay as little as possible on the monthly premium but to be bitten in the bum on the excess payments applicable to your policy.
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