How to buy car insurance online

The internet has made buying car insurance much easier than it used to be. No longer do you have to drive to your insurance agent's office, haggle over coverages and deductibles and be pushed into a policy that isn't right for you.

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Most major car insurance companies now allow you to quote and purchase a policy right from the comfort of your own home. Shop in your pajamas if you want! This convenience is not without risk, however. Insurance agents are trained to spot situations where your car insurance policy may leave a coverage gap. This car insurance buyers guide can help you:

  • Find the insurance company that's right for you
  • Compare car insurance rates between the carriers of your choice
  • Help you compare apples-to-apples coverage and make a fair comparison
  • Make sure your car insurance quote is rated correctly

Finding the right car insurance company

Consumers shopping for car insurance have a myriad of companies to choose from. The right company for you may depend on your perception of companies from what you see on television, from neighbors' opinions, from online forums or insurance company reviews, or maybe you have no insurance company preference and just want the lowest car insurance rates.

Large insurance companies such as State Farm, Allstate, GEICO, Progressive, Nationwide and Libery Mutual spend millions of dollars a year on traditional and online advertising to help sway your insurance dollars their way. Before you buy into their clever advertising messages, make sure you do your homework and read the fine print. Remember, all that glitters is not gold.

Compare car insurance rates from several companies

Getting car insurance quotes is pretty straight forward. You fill out a form that asks questions about your driving habits, the vehicles you drive, your personal details such as your age and marrital status, the coverages you want and other pertinent information. You then submit the form and receive either an immediate non-bound quote online or quotes from local agents within a day or two.

There are several ways to get car insurance comparison quotes:

  1. (Easiest) Fill out a form like this and get multiple quotes from insurance companies in your state
  2. (More time consuming) Complete quote forms on individual company websites
  3. (MOST time consuming) Contact individual insurance agents in your area and ask them to give you quotes

Quote method #1 is far and away the easiest way to get online car insurance quotes. Here's how it works: You fill out one form with your car insurance information. Your information is sent automatically to many insurance agents in your area and they go to work getting you their best insurance rates based on the information you provided.

The agents know they will be competing against other agents for your business, so you know the quotes they provide will be as competitive as they can get. You can then pick the quote that fits your situation best and buy your coverage through a local insurance agent.

Some consumers still prefer the individual attention they can only get from a local agent, so method #1 gets our pick for the best way to compare car insurance rates.

Quote method #2 is also a good way to get comparison quotes. The only drawback is you must enter the same information repeatedly in each company's quote form. If you have a specific insurance company you want to receive comparisons from, this would be the way to accomplish that. For example, if you want to compare the rates of State Farm, Allstate, Progressive and GEICO, you would go to each company's website and enter individual quotes. Just make sure the information you input into the quote forms is identical so you can compare apples-to-apples quotes.

Quote method #3 is a somewhat antiquated way to obtain comparison quotes. Insurance agents absolutely serve a purpose in the sale and service of policies, but online quoting is a huge time-saver. What many people don't realize is when they request a comparison quote from an insurance company's website, the quote will actually be sent to an agent in their area. So by quoting online, you will actually receive the personal attention from a local agent. The information is just rated and transferred to the agent via the internet!

Compare apples-to-apples car insurance quotes

This is the SINGLE MOST IMPORTANT step in comparing car insurance quotes from different companies. The information on each quote should be IDENTICAL or as close to it as possible. Different car insurance companies may write slightly different liability limits such as 300/500/300 instead of 250/500/250 or different deductibles such as $200 instead of $250, but the numbers used in your quotes must be nearly identical to make a fair comparison.

This goes for coverages such as towing or roadside assistance, rental reimbursement, full glass coverage or any other options you may want. Make sure every quote has the same coverages. Don't let companies quote lower limits than you requested in order to drive the rate down. If the coverage limits are lower than requested, simply contact the company and have them requote with the correct limits.

Make sure MVR information is present and correct

An MVR is a Motor Vehicle Report that is used to find moving violations, accidents and other driving-related incidents. Some companies may try to quote your car insurance without obtaining a current MVR. If you or another driver rated on the policy has had an at-fault accident or violation that is not accounted for in the quote, your actual rates are going to be higher than the number quoted.

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Conversely, double check to make sure you are not being surcharged for accidents or violations that are incorrect. It is not uncommon for car insurance rating systems to surcharge for not-at-fault accidents simply because the MVR does not provide information pertaining to fault. So if you've had an accident in the last three years that was not your fault, make sure you're not being charged for it on your quote.

Your credit rating impacts your premium substantially

Car insurance companies use your credit rating as a determining factor in the rates you pay for insurance. Make sure all your comparison quotes are using accurate credit reporting data. If one company processes your quote without obtaining your credit information and the other do, you are not getting a fair comparison of the rates.

Consumers often underestimate the impact their credit has on their insurance rates. It is very important to frequently inspect your own credit report for errors, as even a small amount of misinformation on your credit report can push your credit score down to substandard levels. This could result in you paying hundreds and possibly thousands of dollars a year in extra premiums because it not only affects your car insurance rates but also your home insurance and any credit card debt you carry.

Double check driver assignments

Some car insurance companies rate specific drivers on specific vehicles. Others use a "driver-averaging" technique that doesn't rate drivers specifically but rather averages their risk across all the vehicles on your policy.

If your chosen company assigns drivers to vehicles, make sure the drivers that actually drive the cars are rated accordingly. If your teen driver is the primary driver of your 2007 Acura, you may be tempted to rate him or her on that liability-only 1987 Chevy pickup you use on weekends for chores. This would obviously reduce the premium paid on your car insurance policy, but if your teen is involved in an accident, you will be the one explaining why your teen driver was rated on the pickup.

Insurance companies may require the higher-risk drivers to be rated on the higher-value vehicles, so make sure you investigate the options available for driver assignment.

Do you really need full coverage?

The majority of the cost of car insurance comes when you add comprehensive and collision coverage to your vehicles. You may have older vehicles whose actual cash value does not justify the expense of carrying full coverage. If you are in a financial position to absorb the cost of repairing the vehicle in the case of a partial loss or the full value if a total loss, you may be better off pocketing the savings you would normally be paying for full coverage.

What about Uninsured/Underinsured Motorist coverage?

UM/UIM is a commonly misunderstood liability coverage. Uninsured Motorist coverage will pay for YOUR medical expenses if you are hit by an uninsured driver. Underinsured Motorist coverage pays your expenses if the party that was liable for an accident carries low liability limits.

For example, if your state requires 15/30/15 limits ($15,000 bodily injury per person/$30,000 bodily injury per accident/$15,000 property damage coverage) and you car is hit by a driver with these limits, those are the maximum amounts their car insurance company will pay.

Obviously these low limits will not go far in paying medical or property damage bills. So if you carry 250/500 UM/UIMlimits on your policy, your insurance company will actually pay any expenses over the coverage provided by the other person's car insurance company up to the limits on your policy. UM/UIM essentially is buying insurance FOR other drivers to pay YOU for your injuries.

States don't require high liability limits and there are more uninsured drivers than we'd like to admit. This neccessitates buying adequate UM/UIM coverage. Obviously your personal health insurance situation plays a role in determining how much you should buy, but UM/UIM coverage can also pay for pain-and-suffering type damages over and above required medical care.