Auto insurance: How to shop for a new policy

By: Clark Howard

Updated:

The beginning of a new year is a great time to shake the dust off your budget and look for some areas where you can save big bucks.

Car insurance is one of those things where you could be paying more than $1,000 annually than you need to — just because you haven’t shopped the marketplace in a few years.


DID YOU KNOW? Georgians are paying more for car insurance than previous years. Some people get hit harder than others, but not always because of their driving record.

We’re digging into the factors some say are unfair in determining rates, Tuesday on Channel 2 Action News at 5 p.m. 


Getting a better policy is easy. Here’s how to start.

Begin by identifying solid companies

Channel 2 Consumer Advisor Clark Howard has long talked about the merits of Amica Mutual and USAA. But those aren’t the only two companies you should look at. Consider buying a one-time subscription to Consumer Reports and checking their latest list of the best auto insurance companies to find others that should make it onto your shortlist.

Get your quotes

Once you have a list of candidates, you’ll want to start getting quotes. This typically takes around 15 minutes on the phone. Have your most recent policy in front of you in case any questions come up about the make and model of your vehicle(s).

Working with an insurance broker is another option. He or she will get multiple quotes for you and you’ll have access to all the insurers they do business with. It’s an easy one-stop shop that lets you still have the flexibility of comparison pricing.

Compare quotes

Once you get the quotes back, it’s time to compare them. Each quote should be based on the same amount of coverage so you can do an apples-to-apples comparison.

What if a poorly ranked company offers you a great quote? Clark says to avoid them! While the premium might be tempting, you want to be sure your insurer is there for you when the chips are down.

Know when to drop comprehensive and collision

The general rule is when the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at Edmunds.com, KBB.com or NADA.com.

So let’s take a simple example. Say your vehicle is worth $4,000. If you’re paying anything more than $400 annually (that’s 10% of $4,000) for comp and collision, it no longer makes any financial sense. One notable exception to this rule: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying for comp and collision.

Be prepared to take a higher deductible

You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any small piddling claims.

Don’t forget to ask about discounts!

The Insurance Information Institute reminds you that there are a ton of different discounts out there. Here are some you can ask about:

  • Anti-theft devices
  • Multiple policies with the same company
  • College students living away from home
  • Defensive driving courses
  • Driver's education courses
  • Low annual mileage
  • Long-time customer
  • More than one car
  • No accidents in three years
  • No moving violations in three years
  • Student drivers with good grades

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