How to Shop for Car Insurance

Wondering how to shop for car insurance? This is one of those things where you could be paying $1,000 more annually than you need to — just because you haven't shopped in the marketplace in a few years.

Any time of year is a great time to shake the dust off your budget and look for some areas where you can save big bucks. This includes shopping around for cheaper car insurance rates.

Learning how to shop for car insurance isn't difficult. Here's how to start.

The first thing to do when you’re learning how to shop for car insurance is to identify good companies to shop with.

Money expert 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.

Or you could just check our guide to the Best and Worst Auto Insurance Companies. We’ve combed through the recommendations from both Consumer Reports and J.D. Power for you.

Hearing other customers’ satisfaction with an auto insurance company can be another great way of finding an insurance provider. Research different car insurance companies based on what their customers say about them.

Once you have a list of candidates, you’ll want to start getting car insurance quotes. This is the most labor-intensive part of learning how to shop for car insurance.

This step in the process typically takes around 15 minutes on the phone for each insurance company you’re getting a quote from. All you need to get started is your most recent policy. You’ll want to have that 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 car insurance 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.

If you choose to do it on your own, making the calls is the hardest part of the process. But it's a very important step and there's no shortcut.

"Comparison shopping websites are really just lead generation services," Clark says. "You have to shop individually with different insurers [by] calling them all."

As insurance is state regulated, Clark would love to see each state create an online comparison-shopping tool. He imagines it being a database that can quote you across companies as a one-stop-shop kind of thing. But no state has stepped up to tackle that task yet!

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

This is the easiest part of learning how to shop for car insurance!

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 you need them.

If you get your quotes back and they’re still just a little too high for you, try dropping comprehensive and collision coverage. 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.

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 claims.

Meanwhile, check out our piece on How to Save Money on Car Insurance for more great tips like this one.

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

However, just like discounts, there are ways your insurance rate can spike. Having a new car, being a high-risk driver, or being a new driver can cause your insurance rate to be on the higher side.

Good, cheap auto insurance is out there; it just takes a little shopping around to find it! That's why it's so important that you know how to shop for car insurance.

Whenever you’re thinking about switching insurers, be sure to pay attention to a company's record with customer satisfaction and complaint resolution.

Remember, you can see the highest-rated auto insurance companies in our newly updated guide to Best and Worst Auto Insurance Companies.

But don't get too sucked in by a cheap premium; make sure you’re going with a quality company, too.

"Sometimes you’re better off paying a little more to be with a quality insurer who will be there when the chips are down," Clark says.