Guide: How to Shop for Auto Insurance

Difficulty: Medium Time Required: 2–3 hours of research and comparison

Most drivers overpay for auto insurance by $300–800 annually because they don't shop around or understand what coverage they actually need. Insurance companies count on customer inertia—people who don't compare rates every 1–2 years pay significantly more than new customers for identical coverage. This guide shows you how to compare quotes, understand coverage options, find discounts, and get the best price on car insurance.

What You'll Need

Materials:

• Current auto insurance policy documents
• Vehicle information (year, make, model, VIN)
• Driver's license number
• Driving history for past 3–5 years (accidents, tickets)
• Current mileage and estimated annual mileage
• List of all drivers in household

Prerequisites:

• Valid driver's license
• Vehicle you own or are financing
• Current insurance policy to compare against
• 2–3 hours to request and compare quotes
• Basic understanding of liability and coverage types

Step-by-Step Instructions

Step 1: Understand the coverage types you actually need

• Liability coverage is legally required in most states—it pays when you cause damage to others.

  • Bodily injury liability covers medical bills for people you injure.
  • Property damage liability covers vehicles/property you damage.
  • Minimum state requirements ($25,000–50,000) are dangerously low—aim for $100,000/300,000/100,000.

• Collision covers damage to your car in accidents.

• Comprehensive covers theft, vandalism, weather, and animal strikes.

• Medical payments cover your medical bills regardless of fault.

Step 2: Review your current policy and identify what to change

Pull out your current policy documents and note your coverage levels, deductibles, and premium. Identify areas to adjust:

• If your car is worth under $3,000, consider dropping collision and comprehensive (you'd pay more in premiums than the car is worth).
• If you have high savings, increase deductibles from $500 to $1,000 to lower premiums.
• Check for coverage you don't need like rental car reimbursement if you rarely drive.

Step 3: Gather all necessary information before requesting quotes

You'll need this for every quote:

• Driver's license number
• Social Security number
• Current address
• Vehicle VIN (17-digit code on your registration)
• Current odometer reading
• Estimated annual mileage
• Details of all drivers (names, ages, license numbers)
• Accident and ticket history for past 3–5 years Having this ready speeds up the quote process significantly.

Step 4: Request quotes from at least 5–7 different insurers

Get quotes from a mix of sources:

• Direct insurers (Geico, Progressive, State Farm)
• Independent agents who compare multiple companies
• Online comparison sites (Compare.com, The Zebra) National companies, regional companies, and online-only insurers often have dramatically different rates for the same coverage. More quotes mean better chance of finding significant savings.

Step 5: Compare quotes with identical coverage levels

Don't compare a $100,000 liability policy from one company against $300,000 from another—you're comparing different products. Standardize coverage across all quotes:

• Same liability limits
• Same deductibles
• Same optional coverages Create a spreadsheet listing each company, their 6-month or annual premium, coverage levels, and deductibles. This apples-to-apples comparison shows true price differences.

Step 6: Ask about all available discounts

Insurers offer 15–30 different discounts but won't always apply them automatically. Ask specifically about:

• Multi-car discount (insuring 2+ vehicles)
• Bundling home and auto
• Good student discount (students under 25 with B average)
• Defensive driving course discount
• Low mileage discount (under 7,500 miles annually)
• Paid-in-full discount (paying entire 6 months upfront)
• Paperless/autopay discounts
• Affinity discounts (alumni associations, employers, professional groups)

Step 7: Check insurance company ratings for claims service

A company with rock-bottom prices but terrible claims service will frustrate you when you need them most.

• Check ratings on J.D. Power, Consumer Reports, and AM Best (financial strength)
• Read reviews about claims process on sites like Consumer Affairs A company rated 3/5 stars that's $200 cheaper annually might cost you that in stress and delays when you file a claim.

Step 8: Adjust deductibles and coverage strategically

• Raising your deductible from $250 to $500 saves 15–30% on collision/comprehensive premiums
• Going from $500 to $1,000 saves another 10–20%
• If you have emergency savings to cover higher deductibles, this saves $150–400 annually
• On cars worth under $3,000, drop collision and comprehensive entirely—if you total the car, insurance pays maybe $2,000 minus your $500 deductible Better to self-insure and pocket the $400–600 annual savings.

Step 9: Review and re-shop your policy every 12–24 months

Set a calendar reminder annually to get new quotes.

• Your rate can increase 10–20% at renewal for no reason other than you didn't shop around
• Loyalty doesn't pay with insurance—companies offer low "new customer" rates then slowly increase them
• Spending 2 hours shopping every year saves $300–600 annually
• Even if you don't switch, quotes give you leverage to negotiate with your current insurer

Common Mistakes to Avoid

• Carrying only minimum state liability limits: State minimums ($25,000–50,000) are woefully inadequate. One serious accident can exceed these limits in seconds, leaving you personally liable for hundreds of thousands. If you cause an accident that injures someone requiring surgery and weeks in the hospital, bills easily reach $150,000+. Carrying $100,000/300,000/100,000 liability costs only $15–30 more per month but protects your financial future.
• Choosing insurance based only on price: The cheapest quote might come from a company with terrible claims service or a reputation for denying valid claims. Your insurance needs to actually pay when you have an accident. Read reviews about how companies handle claims. A company that's $200 cheaper but fights every claim will cost you far more in time, stress, and out-of-pocket expenses.
• Not asking about discounts proactively: Insurance agents won't necessarily offer every discount you qualify for—you have to ask. Most people miss out on $200–500 annually in available discounts simply by not asking about good student discounts, defensive driving courses, alumni associations, professional group memberships, or low mileage. Go through a checklist of common discounts and ask about each one specifically.
• Keeping collision/comprehensive on old cars: If your car is worth $3,000 and your collision/comprehensive premium is $500 annually with a $500 deductible, you're paying insurance for a maximum payout of $2,500. After 5 years, you've paid $2,500 in premiums for maybe zero claims. Once your car's value drops to 5–6 times your annual collision/comprehensive premium, drop that coverage and self-insure.
• Not bundling home and auto insurance: Bundling typically saves 15–25% on both policies. If you're paying $1,200 for auto and $1,000 for homeowners separately ($2,200 total), bundling saves $330–550 annually. Even if the company isn't cheapest for each individual policy, the bundle discount often makes them the best overall deal. Always get bundle quotes before buying policies separately.

Pro Tips

• Pay your premium in full if possible: Most insurers charge 5–10% more if you pay monthly instead of in full. On a $1,200 annual premium, paying monthly costs $1,260–1,320 ($60–120 extra). If you can cash flow the full amount every 6 or 12 months, you save this fee. Set aside 1/12 of your premium monthly in savings so you have the lump sum ready.
• Take advantage of usage-based insurance programs: Programs like Progressive Snapshot or Allstate Drivewise monitor your driving via smartphone app and offer discounts for safe driving habits (no hard braking, no speeding, limited night driving). Discounts range from 10–40% depending on your driving. If you're a safe driver, this saves $150–400 annually just for using an app.
• Request a higher liability limit quote: The jump from $100,000/300,000 to $250,000/500,000 liability often costs only $40–80 annually—worth it for the massive additional protection. The jump to $500,000 or $1,000,000 through an umbrella policy costs $150–300 annually. If you have significant assets to protect (home equity, savings, retirement accounts), higher limits prevent losing everything in a serious accident.
• Improve your credit score to lower premiums: In most states, insurance companies use credit-based insurance scores to set rates. Poor credit can double your premiums compared to excellent credit for identical coverage. Improving your credit score from fair (650) to good (720) can cut premiums by 20–40%, saving $240–600 annually on a $1,200 policy.
• Ask about diminishing deductible programs: Some insurers reduce your deductible by $50–100 for every year you go without a claim, eventually reaching $0 deductible. This rewards safe driving and makes future claims cheaper. Not all companies offer this, but it's worth asking about—over 5 claim-free years, this can save $500+ on your next claim.

Related Skills

• How to Save Money on Monthly Bills
• How to Create a Monthly Budget
• How to Choose a Cell Phone Plan
• How to Build an Emergency Fund