Auto Insurance

Auto Insurance: A Practical Guide to Comparing Coverage

Auto insurance can look simple when the decision is reduced to a monthly price, but two quotes can differ substantially in liability limits, deductibles, physical-damage coverage and optional protections. A useful comparison starts by making the coverage as similar as possible and then evaluating price, insurer, service and policy terms.

What does auto insurance cover?

An auto policy is a package of coverages rather than one universal product. The exact coverages available and required depend on your state, insurer and circumstances.

Liability coverage

Liability coverage generally helps pay for injuries or property damage for which an insured driver is legally responsible, up to the policy limits. States commonly require some form of financial responsibility, but minimum limits vary.

Collision coverage

Collision generally addresses covered damage to your vehicle from a collision, subject to the policy terms and deductible. A lender or lessor may require physical-damage coverage even when state law does not.

Comprehensive coverage

Comprehensive generally addresses certain non-collision losses such as theft, vandalism, weather events or animal impacts, subject to exclusions and a deductible.

Uninsured and underinsured motorist coverage

UM/UIM coverage may help when an at-fault driver has no insurance or insufficient insurance. Requirements and available forms vary by state.

Required coverage vs. coverage you choose

Legal minimums are a starting point, not a recommendation for every driver. The amount and type of coverage that fits a household depends on assets, vehicle value, financing requirements, risk tolerance and the financial loss the household could absorb.

What affects car insurance rates?

Insurers use underwriting and rating factors permitted in the applicable state. Depending on the insurer and jurisdiction, factors may include driving history, location, vehicle characteristics, vehicle use, household drivers, selected coverage and limits, deductibles, prior insurance information and other permitted rating variables.

Because insurers can weigh factors differently, the same driver can receive meaningfully different prices for similar coverage. That is one reason comparison shopping can be useful.

How deductibles change the comparison

A deductible is the amount you are responsible for on a covered loss before the applicable insurer payment. Collision and comprehensive commonly use deductibles. Higher deductibles can reduce premium, but they also increase the amount you may need to pay after a loss. Compare quotes using the same deductible whenever possible.

How to compare car insurance quotes

• Use the same drivers and vehicles. Inconsistent application information makes comparisons unreliable.
• Match liability limits. Compare the same bodily-injury and property-damage limits.
• Match deductibles. A $500 deductible and a $1,000 deductible are different products.
• Match optional coverage. Rental reimbursement, roadside assistance and other options can change price.
• Check the insurer and policy. Review exclusions, conditions, payment terms and claims/service considerations.
• Verify discounts. Discounts vary by company and eligibility.

When should you shop for auto insurance?

Renewal is a natural time to compare, but shopping can also make sense after a move, vehicle change, household-driver change, material mileage change or other event that changes your insurance profile. Avoid creating a coverage gap when changing insurers.

Auto insurance rules are state-specific

Minimum requirements, no-fault rules, UM/UIM requirements and other insurance rules differ by state. Use our insurance guides by state as a starting point and verify current requirements with the applicable state insurance regulator.