How to Evaluate Auto Insurance Quotes (2024)

Looking at auto insurance company quotes can be confusing, particularly if you do not know how to evaluate auto insurance quotes. In order to accurately evaluate auto insurance quotes, you need a foundational understanding of the different types of auto insurance available and what impacts your auto insurance rates.

Continue reading to learn about coverages and rates when evaluating auto insurance quotes. Once you have this basic information, you can then compare auto insurance options from several different companies before making a purchasing decision.

Concepts Behind Auto Insurance Quotes

Auto insurance has been an industry for almost as long as there has been an auto industry. The idea behind having insurance is that you pay premiums for a company to pay for damages that are the result of an accident.

Learn more: Auto Insurance Premium Defined 

Auto insurance provides you with financial protection from potential bodily injury lawsuits that may place your personal and business assets in jeopardy.

In exchange for an insurance company’s financial protection, they use the money you pay for premiums to make investments and grow their company and keep financial reserves in place to pay for claims made by policyholders.

Insurance companies evaluate potential policyholders based on the amount of risk the company takes on in terms of the likelihood of a customer making a claim and how much money it might potentially cost the insurance company.

Basically, the higher risk you represent statistically to an insurance company, the higher your premiums will be for a policy with them.

When you buy car insurance, it has coverage limits in place as part of the policy. Auto insurance coverage limits are the maximum amount the insurance company will pay for damages for an accident.

Learn more: Does auto insurance pay over the limit of bodily injury to settle lawsuits?.

For example, liability insurance limits are described in your policy by a sequence of three numbers.

If you see the numbers 20/30/40 on your auto policy, it means that $20,000 is the maximum amount that will be paid per person injured in an accident for medical treatment. Read “Do you need medical payment coverage on auto insurance” for more information.

A maximum amount of $30,000 will be paid for combined medical treatment for the entire accident. A maximum amount of $40,000 will be paid for property damage.

Deductibles are the amount of money that you have to pay out-of-pocket for repairs if you make a claim. The higher your deductible amount, the lower your rates are, since the insurance company will have to pay less money for repairs.

Evaluating Forms of Auto Insurance

There are several forms of auto insurance, each with a different purpose:

Liability Insurance

Liability auto insurance is required coverage in 47 states. Liability insurance pays only for damages and injuries to the other driver and their passengers. It does not pay for damages to your car or for injuries you or your passengers receive.

Since mandatory liability insurance limits are very low, it is recommended that you purchase additional insurance if at all possible.

If you do not have enough insurance to pay for all the damage that result from an accident you cause, you can be sued for the remaining balance of costs.

Collision Insurance

Collision auto insurance pays for damages to your car if you are involved in an accident. Collision covers anyone who is driving your car and includes damages for hit-and-run accidents, hitting buildings, guardrails, and fences.

Comprehensive Insurance

Comprehensive auto insurance pays for damages that are not related to collision accidents. It pays for damages that are the result of events such as fires, floods, hail storms, or hitting an animal. It also pays for damages that are the result of vandalism or if your car is stolen.

This article also explains the difference between collision vs. comprehensive auto insurance.

Personal Injury Protection

Personal injury protection insurance is mandatory for additional auto insurance in 14 states. It pays for medical expenses, regardless of who caused the accident.

It pays for medical treatments, hospital expenses, and rehabilitation expenses. It also pays for legal costs and lost wages.

Underinsured/Uninsured Motorist

Underinsured and uninsured motorist auto insurance pays for damages and injuries if the other driver either does not have enough insurance or no insurance. You can find the best underinsured motorist coverage (UIM) auto insurance companies in this article.

GAP Insurance

GAP insurance pays for the difference between your car loan or lease amount and the loss amount paid to you if your car is declared a total loss.

Evaluating an Auto Insurance Quote

When you request a quote for car insurance, there are several things to consider. The first is the type of insurance being offered.

You should get a detailed outline of precisely what is included in the insurance coverage. Also, take into consideration what other benefits are included with a policy such as roadside assistance or travel concierge services.

The next thing to evaluating auto insurance quotes is the insurance company. You can find out information regarding financial stability from rating companies A.M. Best and Standard and Poor’s.

You can also find out customer satisfaction rates from JD Powers and Associates and Consumer Reports.

Finally, you should compare the actual premium rates. You can get premium rates from independent insurance brokers, insurance comparison websites from insurance company websites.

The Final Word On Evaluating Auto Insurance Quotes

Buying car insurance can be confusing initially. However, with some basic understanding of the different types of insurance, it becomes easier to know how to evaluate auto insurance rates and decide what auto insurance coverage you need.

To find the best auto insurance coverage and rates today, use our free quote comparison tool to evaluate auto insurance quotes.