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Automatically renewing your current insurance policy might be easy. Still, you could leave money on the table by not shopping around – or by shopping around and going with the first quote you receive.
Case in point: Annual rates for drivers with good credit can range from $1,381 to $2,509, depending on the insurer. That’s a difference of more than $1,100, according to CarInsurance.com.
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“You want more than one opinion [to be sure] that you’re getting the right insurance,” says Howard Goldberg, vice president of the customer solutions center for Plymouth Rock Assurance, which provides car and home insurance in six Eastern states.
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What the first quote might not tell you
Fees and exclusions are two things many consumers overlook, which can lead to an unpleasant surprise when the final policy price quote is delivered and it’s higher than the initial quote. The first quote could come with fees that aren’t charged by other companies. Some of the most common fees are:
- Installment payment fees
- Credit card payment fees
- Broker fees
- Fees for unneeded riders, such as accidental death
Granted, not everyone can afford a year of car insurance in advance. But if paying in installments is essential, factor fee-free payments into your criteria for a new carrier. Likewise, there’s no reason to pay a broker fee when fee-free options are available online and in person. And you should never pay for more coverage than you need.
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Policies may also come with exclusions, which means they won’t pay claims in certain instances. Common exclusions include:
- Unnamed or unlicensed drivers
- Use of personal vehicle for business purposes
- Custom vehicle parts
- Travel outside the U.S.
If you drive a custom vehicle, travel frequently to Mexico or Canada, or have a home business that requires using your car, make sure the quote you receive includes the appropriate coverage.
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How to use the first quote to find better deals
The first quote you receive can provide a good base for judging others.
“You should start with what you’re paying for insurance today,” says Stothard Deal, TransUnion’s vice president of strategic planning for insurance. If the first quote is significantly different from your current rate, that is a clear indication that you can benefit from shopping for new coverage.
As you compare quotes, look for the following:
- Premium. This is your cost to buy a policy. While important, premiums should be reviewed in the context of the factors below.
- Coverage limits. Policies can include liability, comprehensive and collision coverage, each with its own coverage limit.
- Deductibles. The deductible is how much you pay out of pocket when filing a claim, typically for comprehensive or collision insurance. Generally speaking, the higher the deductible, the lower your premium.
- Discounts. Insurers offer various savings that can lower premiums. However, depending on the discount and carrier, they can vary from less than 5% to 25% or more.
Ensure you provide the same driver and vehicle information to each company. Also, as you compare quotes, confirm that the coverage limits match and see if discounts are comparable.
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How to shop for car insurance like a pro
Start by using an online calculator that instantly gives you a rough estimate of what you can expect to pay based on your age range and state of residence.
You’ll get a more accurate quote from a car insurance comparison website by providing more detailed personal information and links to insurer websites for a final quote. Or, if you’re a stickler for details, you can get quotes from individual insurers.
You can consult an independent insurance agent if you don’t want to do the work yourself. In that case, you only need to provide your information once, and the agent gathers quotes from multiple companies. However, ask about broker fees before working with an agent.
Even after you find coverage, don’t forget to periodically seek new quotes. An annual review is always a good idea, but you may also want to shop for car insurance whenever your circumstances change, such as moving to a new location or purchasing a new vehicle.
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