After deciding on the amount of coverage you need, the next logical thing to consider is the amount of money you’ll have to pay to get that amount of coverage.

 

Ultimately, every auto insurance company can give you your desired amount of coverage; but they more than likely will offer you that coverage amount at different prices. The comparison of coverage amount to price is what determines how much of a “deal” you’re being offered. This should be the main deciding factor when comparing offers from different companies. There are other factors, such as customer service and claims resolution, which may steer you towards buying car insurance from a particular company; but we believe you should consider those other factors after getting the best deal on the amount of coverage you want.

 

Let’s take a look at some of the factors that can affect how much you’ll pay to get the coverage you want.

 

Factors affecting Price

 

There are many different factors that are used by insurance companies to determine how much to charge you. And each insurance company may use a different combination of factors to determine your price or premium.

 

The factors that insurance companies may use to determine your price can include:

 

• Deductible Amount – higher deductible amounts lead to lower premiums; while lower deductibles lead to higher premiums.

• Driving History – a good driving history leads to lower premiums; while bad ones normally result in higher premiums.

• Age – insurance companies may classify very young and/or very old drivers as “high risk”; high-risk drivers generally pay higher premiums.

• Gender – insurance companies may classify females as “safer” drivers, while men are considered more “risky”; high-risk drivers generally pay higher premiums.

• Marital Status – married couples are considered more responsible and less risky; lower risks normally result in lower premiums.

• Amount of Household Residents Covered – more people on the policy typically result in higher premiums.

• Credit Score – a high credit score normally results in a lower premium; while lower credit scores result in higher premiums.

• State – each state has its own “minimum required” amount of coverage; higher required amounts lead to higher premiums.

• Area(urban/suburban/rural) – urban areas, such as cities and towns, may be considered more risky than rural areas due to higher traffic; higher risks lead to higher premiums.

• Vehicle Type – sedans may be classified as safer to drive; while sports cars are seen as more risky; higher risks lead to higher premiums.

• Vehicle Year – older cars carry higher risks than newer ones; higher risks lead to higher premiums.

• Vehicle Use – it typically costs more to insure a vehicle used for business than one for personal use.

 

To some people, the ways in which insurance companies choose to perceive these factors may seem a bit unfair or unjust. And so we must clearly state that we are not saying that insurance companies use all or any of these factors listed above in any specific way. We are simply indicating how industry trends typically view these factors.

 

Another factor that could affect your price is if you add any of the “Other Coverages” to your policy. These include coverages such as Rental Reimbursement and Towing/Roadside Assistance. These optional coverage types are added or bundled to your main coverage but typically come at an additional cost. We decided to not include these in the list of factors above since they should be optional and so you get to determine if that factor affects your price and not the insurance company.

 

It’s very important for us to reiterate that most insurance companies won’t inform you of the factors used to determine your price/premium. And that each company may use a different combination of factors, as well as weigh the influence of each factor on your price, differently.

 

This is the main reason why you may receive different prices from different insurance companies for the same or similar amount of coverage.

 

It is also the reason why you need to seriously consider every single car insurance company available, from large national companies to small local car insurance companies.

 

In the retail business, when a small store is able to price a product cheaper than a larger supermarket, it may be a cause for concern. Is the product fake? Is it damaged? Is it expired or old stock? That’s because the logic governing how things normally work in the retail supply business is pretty simple; the bigger you are the more money you have to buy in bigger quantities. And so large supermarkets have the buying power to purchase in larger bulk quantities at cheaper rates; hence the reason why they can normally offer the product cheaper than smaller stores.

 

But the business of selling car insurance doesn’t work like that since it isn’t governed by that same logic. That’s primarily because the product being sold is a service and not something physical you can source in bulk quantities. That means there isn’t a clear buying-power advantage for larger car insurance companies and so that puts most companies in the industry on a more level playing field. Because of this, it is possible for smaller insurance companies to legitimately offer better deals than bigger ones; primarily based on the combination of factors they use to determine your price.

 

The car insurance industry is super competitive and the companies within are often seen as gamblers playing a game of risk. Some smaller companies may take a greater risk to insure you at a lower price in order to increase their customer base. There’s nothing wrong with this and it shouldn’t discourage you from choosing a smaller insurance company.

 

Keep in mind that you are protected since a car insurance policy is a legally binding contract between you and the insurance company. And so ultimately, the risk and obligation to have the money needed to repair your car is solely with the insurance company and not you, regardless of the size of the company. So don’t be afraid to shop around and entertain offers from any legitimate car insurance company, big or small.

 

Car Insurance Quotes

 

A car insurance quote is an estimated price put forward by an insurance company for providing you with a specified amount of car insurance coverage. It is only an estimate and not your premium (final price); although it most often ends up being the same or very similar.

 

The value of the quote normally changes based on the amount of coverage you choose; often with higher prices for higher coverage amounts.

 

When getting quotes from insurance companies, be prepared to provide a lot of information about yourself, other household residents, and your car. As this information is what is used to determine your quote.

 

You can request a quote from an insurance company online or in-office.

 

Offer Comparison Tool

 

Generally speaking, there are two main types of shoppers for car insurance, those with a specific price point in mind and those with specific coverage levels in mind.

 

For both, we have created our Offer Comparison Tool (OCT), which is designed to make comparing quotes as easy as possible. You will have all the information needed right in front of you to easily decide on which offer is best. 

 

There is an Offer Comparison Tool available for each state. For illustration purposes, we’ll use the OCT for the state of Alabama to show you its various parts. Click on Alabama OCT and it will appear.

 

The first page on the OCT is the “Coverage Information” sheet, which contains all the relevant information about coverage in that state.

 

Starting at the top left corner, the first information provided is the State Minimum Required Amount of coverage.