What to Look for When Comparing Auto Insurance
Whether you are renewing your auto insurance or considering a new policy, here are eight key factors to take into consideration in comparing auto insurance policies and rates:
- Coverage
- Deductibles
- Limits
- Terms and Conditions
- Discounts
- Additional Benefits
- Customer Service and Company Reputation
- Premiums
Comparing Types of Auto Coverage
Individual state laws, such as Michigan, mandate different minimum auto insurance coverages. Minimum coverages are not always sufficient to protect you if you’re in a serious accident.
The types of auto insurance coverage to review and compare include:
- Liability – Pays for damage or injuries you caused to another driver, passengers, or property (which usually means another vehicle) while driving your car.
- Collision* – Pays for damages to your car in an accident you cause with another car, in an accident caused by someone driving another car, and in accidents caused by hitting anything other than another car, such as a fence, wall, or pole.
- Comprehensive* – Pays for the actual cash value of your car if it is stolen, vandalized, or damaged by a collision with an animal (such as a deer), severe weather (such as flooding), explosions, falling objects, riots, and civil disturbances. Note: Collision and comprehensive coverage are frequently bundled together.
- Personal injury protection (PIP) / Medical payments (Medpay) – Pays for you and your passenger’s injuries resulting from an accident.
- Uninsured/underinsured motorist – Pays vehicle repairs and injuries if an uninsured or underinsured driver hits you; can also provide protection if you get hit as a pedestrian.
*Your car’s value is one of the biggest factors auto insurers use to determine the cost of collision and comprehensive coverage. The potential payout from a collision or comprehensive claim decreases as the value of your vehicle decreases over time.
Comparing Deductibles
Typically there is a deductible, usually anywhere from $100 to $1,000, an amount you have to pay out-of-pocket before the insurance company starts to pay.
The higher the deductible, the lower the premium. How do you know whether to opt for a low or high deductible? The general rule of thumb is you don’t want a higher deductible than you could reasonably pay in the event of a loss.
You aren’t required to have the same deductible for different types of coverage. For example, you could set your collision deductible higher than the comprehensive deductible if you’re more concerned about damage from a car accident than from extreme weather or theft.
If you have a car lease or loan, the deductible is sometimes automatically set below a certain amount. That’s because the lessor or lienholder wants to ensure you keep the car in good condition, and if you set your deductible too high, you may not be able to pay it and get the vehicle repaired.
Note that if the cost of repairs is less than or not much more than the deductible, don’t file a claim. Filing a claim can raise your rates, even for an accident you didn’t cause, so you only file a claim if the cost of repairs is significantly more than your deductible.
No matter what deductible amount you choose, make sure you can afford to pay your deductible in the event you need to file a claim. Otherwise, you may not be able to complete the necessary repairs.
Comparing Limits
No auto insurance policy pays for everything and anything. Always evaluate the coverage limits of different policies to understand how much the insurance company will pay in the event of a claim. Ensure that the limits align with your assets and potential liabilities.
Compare Terms and Conditions
Carefully read the terms and conditions of each auto insurance policy you are comparing. Pay particular attention to exclusions, limitations, cancellation policies, and any other important details that may affect your coverage and financial exposure.
Compare Discounts
Compare the discounts offered by different auto insurers for potential rate savings. Types of auto insurance discounts include:
- Safe driver
- Monitoring Apps
- Student driver
- Multi-policy
- Safety features of your vehicle, such as crash-resistant doors or daytime running lights
- Anti-theft system
Additional Benefits to Consider
Some auto insurance companies offer additional benefits such as roadside assistance, rental car reimbursement, cracked windshield replacement, or accident forgiveness. Compare these extra perks to see which auto insurance policy provides the most value for your needs.
Review Customer Service & Reputation
Read customer reviews about the auto insurance company to consider their overall reputation in the industry. In particular, look for reviews on how easy it is to file and settle claims efficiently and in a timely manner.
Comparing Insurance Premium Rates
When comparing the premium rates of different auto insurance policies, take into account both what best fits your budget and provides the coverage you need. Be wary of extremely low premium rates — cheap auto insurance often indicates hidden fees and/or insufficient coverage.
Shop Around
If this all sounds a little confusing, you’re not alone. This is where an independent insurance agent can help. Your local Kentwood and Byron Center, MI insurance agent works for you, not the insurance companies. We work with over 20 insurance providers to get you better rates, better service, and better coverage.
It pays to shop around. Not only to get the best price but to get the coverage that fits your needs, vehicle, and financial situation. And it pays even more to have your Compass insurance agent do the shopping for you. Because we save Kentwood and Byron Center, Michigan on average about $800 annually.