Shopping for Insurance

Once you've decided on what coverage you need for your car (or cars), it's time to shop for the best deal.

If your driving history is a reasonably safe one, make a list of the types of coverages you want, and shop at least five companies. For the same vehicle in the same place, you may find variations of $600 a year among companies.

Companies sell in one of three ways:

  • Through independent agents who sell policies from various companies. The Independent Insurance Agents & Brokers of America can help you locate an agent in your area.
  • Through their own agents, such as those employed by Allstate, Farmers, Nationwide and State Farm, among others.
  • Direct to the consumer with toll-free phone numbers, such as Amica Mutual (800-242-6422) and GEICO Direct (800-861-8380).

The direct sellers are usually the least expensive but tend to accept only drivers with near-pristine records. Companies with their own agent network are often the next most affordable.

Additionally, your state's insurance department may offer price comparisons that show what different companies will charge for various types of coverage. Though these comparisons probably won't fit your situation exactly, they can give you a good idea about which company's premiums are the cheapest.

Online Shopping

Buying auto insurance online can work well, but it's no magic path to savings, says Robert Hunter of the Consumer Federation of America. Just like when you use the phone and shop with agents, be sure to get comparative quotes.

The lowest quotes, as with phone shopping, are likely to come from direct sales firms, such as GEICO and Amica. The major drawback is that these firms want your business only if you are a very good risk with no violations or accidents. If you fit the profile, buying from them on the internet can work for you.

Such quotes will usually be lower than any from an agent, but double-check an agent's quote if you qualify for special discounts, especially if you're insuring your home and car with the same company. In that case, you might do better with an agent than anywhere online.

Membership Insurance

Some specialized companies provide insurance only to members of an organization or those who meet some special qualification. Auto insurance rates are often lower through these organizations than in the general market. USAA — an association comprised of active and retired members of the U.S. military and their families — provides insurance and other services to more than 4.6 million people. AARP also sells auto insurance to its members.

Can They Pay the Claims?

Once you have two or three of the most promising quotes, you want to be sure the company you are considering will be able to pay a sizable claim if you ever have to make one. For a quick read on that, look up the insurer's financial strength ratings. Several competing companies, including A.M. Best, Duff & Phelps, Moody's and Standard & Poor's, offer such ratings. The Insurance News Network website offers free ratings from Standard & Poor's, and Moody's website lists its ratings, as well.

Insurance Ratings
Standard & Poor's rates the financial strength of insurers via the system below.
Secure Range: AAA to BBB
(Extremely strong to good)
Vulnerable Range: BB to CC
(Marginal to extremely weak)
Quality of Service

The quality of service is another crucial consideration. Will the insurer give you an estimate quickly and not hold up car repairs? Will it pay promptly? Because this is difficult to determine beforehand, ask friends and co-workers about their experiences. In addition to keeping price lists, many state insurance regulators also publish complaint ratios that show how often consumers complained to state officials because service was slow or the company refused to pay what it thought was a legitimate claim.

© Cars.com 6/29/09