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June 3, 2022 by BestCarInsurance.com

What should you look for when comparing auto insurance companies?

For starters, you’ll want to compare auto insurance carriers by looking at basic coverage. “Basic coverage” here means the minimum coverage that your state requires, and most states require some form of coverage. In states that mandate auto insurance, you’ll typically need bodily injury and property damage coverage at least, together known as liability insurance.

Liability insurance is listed in this format: XX/XX/XX. This refers to the dollar limit in thousands per accident.

So if a policy lists “25/50/25” coverage, it means it covers up to:

  • $25,000 in bodily injuries, per person, per accident;
  • $50,000 total for bodily injuries per accident; and
  • $25,000 in property damage per accident

In a car accident, liability insurance covers damage to the other car along with bodily injuries for the people in the other car. It doesn’t cover damages to your own car or injuries for you or the people in your car.

Some states also require personal injury protection, which is a way to cover other expenses related to a car accident, such as medical bills or lost wages.

When doing auto insurance comparison shopping, first consider what you need to meet your state’s requirements, if applicable. Then think about how you use your car. Ask yourself these questions when comparing quotes from auto insurance carriers:

  • About how often do you drive?
  • What do you use your car for, primarily?
  • Are you the only driver, or does a spouse or teen need to use the car, too?

How much you pay for car insurance depends on things like where you live, your driving history, how often you drive and where you park your car. For example, working parents with kids in school might log more mileage every year, on average, than a single person who works from home.

You’ll need to figure out what kind of driving you do so you can get an accurate quote and compare the appropriate rates.

Additional Features

Beyond the basics, you’ll want to find the best auto insurance that meets your specific needs. Whether you’re a stellar driver with a clean driving record and good credit history or, well, not, you need coverage that fits your situation and budget.

That might include extra features, like:

  • Mileage-based policies. If you don’t drive much, then you may benefit from getting an auto insurance policy that’s based on low mileage. Some companies offer this kind of “pay per mile” program specifically for people who don’t drive often, such as people who work from home.
  • High-risk policies. For people with tickets, other moving violations and DUI convictions, auto insurance might be harder to get – but not impossible. If this applies to you, you’ll need to look for an auto insurance company that offers high-risk policies, which are designed not just for drivers with a bad driving record but also anyone who might be a higher risk to insure (such as new or teen drivers). High-risk policies will cost more, but they may be your best bet for decent coverage depending on your driving history.
  • Accident and/or claims forgiveness. Accidents can drive up the cost of your auto insurance premium, so avoiding them altogether is the best way to save money. But that’s not always possible. Fortunately, some auto insurance carriers offer accident or claims forgiveness options that may help reduce your premium after a certain time period without any claims.
  • No penalties for claims. Speaking of claims, car insurance companies differ in how they handle them, especially when it comes to raising rates. Some carriers might increase your premiums for speeding tickets, for example, while others only do it for accidents. If you’re concerned about rates going up because you file claims, look for companies with more lenient policies on how they apply penalties or rate increases.
  • Rental reimbursement. Do you have a backup for when your car’s in the shop? After an accident, you might be stuck without a ride. Rental car reimbursement is an added feature that can help cover the cost of a rental vehicle while your car’s getting repaired due to an accident.
  • Roadside assistance. If you’re not up to scratch on emergency vehicle problems – like flat tires, a dead battery or running out of gas – then consider a policy that comes with 24/7 roadside assistance. The cost and time savings of having someone available to help out in a pinch will more than make up for the extra cost (if there is one).

Here’s how some of the nation’s top auto insurance carriers compare on the features outlined above:

Popular Features by Auto Insurance Carrier1

Company Low mileage policies High-risk policies Accident forgiveness No penalties for claims Rental reimbursement Roadside assistance
AAA/Auto Club yes yes yes possibly yes yes
Direct Auto no yes no no yes yes
Farmers no yes yes no yes yes
National General yes yes no possibly yes yes
Nationwide yes yes yes no yes yes
State Farm yes yes no possibly yes yes

1 Based on individual carrier websites and web search as of May 2022; information subject to change
2 Terms and conditions for no claims-based penalties vary by insurer
3 Mileage-based policy is available for commercial vehicles
4 State Farm customers with lengthy history (9+ years) may qualify for accident forgiveness

Note that some of these policy features may include additional fees or surcharges.

Cost

There’s really no way to give you an average for how much car insurance costs, though you might come across plenty of lists with averages if you do a search for it. But even these are usually based on very specific criteria, like a 40-year-old woman in Nebraska with good credit driving a 2017 Toyota Camry.

Auto insurance rates depend on a lot of factors, including, among other things:

  • Where you live
  • Your driving record
  • Your credit history
  • How you use your car
  • Details about your car

Your car insurance company matters, too. When comparing auto insurance companies, make sure you’re looking at the same features and benefits across different carriers. You always want to compare apples to apples. Plus, some companies offer more or better discounts than others. That’s going to depend on what you qualify for and the company itself.

In general, though, you can typically find discounts for:

  • Bundling different policies together
  • Having good credit
  • Having a clean driving record
  • Being a good student
  • Insuring multiple vehicles
  • Paying your premiums in full up front
  • Paying monthly premiums via automatic bank draft
  • Using telematics

Telematics is also called “usage-based insurance.” It’s essentially a program that tracks your driving in exchange for a discount when you drive safely. Not every carrier offers it, but the ones that do have different programs, like an app or a device that plugs into your car.

Some companies might also raise your rate if you’re not a safe driver, though, so keep this in mind when you’re comparing rates from different auto insurance carriers.

Here are some of the more common discounts offered by different insurers:

Common Discounts by Auto Insurance Carrier1

Company Bundling Good driving history Good student Payment-related Multi-vehicle Safe driving program
AAA/Auto Club yes yes yes yes yes yes
Direct Auto yes yes yes yes yes yes
Farmers yes yes yes yes yes yes
National General yes yes yes yes yes yes
Nationwide yes yes yes yes yes yes
State Farm yes yes yes no yes yes

1 Based on individual carrier websites and web search as of May 2022; information subject to change

2 Payment-related discounts vary by insurer but might include discounts for paying your premium in full up front, using auto bank draft for monthly payments and/or enrolling in paperless billing

Reputation

Finally, don’t discount an auto insurance carrier’s reputation as being completely subjective. It’s true that some people have better experiences than others. Your best friend might love a company that your mom will never use again, for instance. But you should keep an eye out for consistent bits of information that come up again and again. Consider:

  • How easy (or not) it is to file a claim
  • How a company handles the claims process
  • Customer service and roadside assistance support
  • A company’s overall reputation

Comparing auto insurance rates online isn’t always clear cut because a lot of the marketing language looks the same. But if you do some digging and compare the features you want, you’ll start to weed out carriers that won’t work for you. With dozens of carriers on the market, chances are you’ll find one that covers what you need at a price you can afford.