How do I compare the market for car insurance?

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Here's what you need to know...
  • An online rate quote tool is a great place to begin your comparison of the car insurance market
  • Shopping for car insurance is not like shopping for retail items. There is much variance in the features of policies from different companies
  • There are some wise steps you can take to ensure you buy your insurance from a reputable company

If you are in the process of buying your dream car or you are tired of doing business with a company that raises your premiums every time there is an opportunity, comparing the market is the key.

By exercising your right to shop a competitive marketplace for car insurance coverage, you take back the buying power.

You do not need to select a basic policy with bare minimum coverage to find competitively priced premiums.

Instead of rejecting coverage that will pay for hospital and repair bills or selecting the lowest liability limits that would not even pay for a broken leg, you can comparison shop and select a quality company and a comprehensive plan that will still fit in your budget

There are several different factors that all drivers need to keep in mind so that they can choose a trusted company with bargain-priced cover.

Here is your step-by-step guide to choosing an insurer so that you are not stuck with a company that does not live up to its promises.

Start comparing rates now by using our FREE tool above!

Why is it so important to compare the providers in the marketplace?

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Buying car insurance is not like buying just any type of consumer good. You can go from retailer to retailer to buy a product, and you know the main difference between each company will be the price.

The quality of the product will be the same regardless of where you are buying that product.

This cannot be said for car insurance because each company varies, for example:

Varying Terms and Conditions

When you are buying a car insurance policy, you are entering into a contract. The terms and conditions of the contract are ultimately what will dictate when benefits will be paid and when they will not.

If you select an insurer that has unfair terms, you may be restricted when you need to file a claim. It could be the difference between a payout and no payout at all.

Since you are buying insurance to help you when you need to file a claim, choosing the wrong insurer can become a financial catastrophe.

Varying Guidelines and Premiums

Every company is given the opportunity to set their own rates when they file these rates with the state department of insurance. Since insurers cannot always profit on every driver, they need to decide which drivers they want to target and which they prefer to stay away from.

Since insurers cannot always profit on every driver, they need to decide which drivers they want to target and which they prefer to stay away from.

Since one of the requirements for licensed insurers is to justify charges and outline expenses when they file their rates for approval, a company cannot just decide that they would like to charge their clients an exorbitant amount of money.

You may find that, as a driver with a clean record, some companies have much lower rates than others. This is because the companies with higher rates want to do business with those who present more risk.

Their rates were developed to profit more from the risky than the excellent driver. Companies who are targeting experienced drivers with great records might even disqualify those who have multiple tickets and accidents.

This is why comparing the market is so crucial whether you want a good price or your focus is more on finding a good product.

Steps to Take to Find Your Match


The best insurer for you might not be the best insurer for mom or your best friend. You should have a checklist and prioritize what is most important to you as you choose a carrier that will protect your finances and your family.

Here is how you can narrow that long list down to a more manageable one:

Find Companies Licensed In Your State

It is not just a requirement to buy insurance, it is a requirement to buy your cover from a provider that is licensed to do business in the state where the covered vehicle is registered.

Failing to do this can land you in hot water with the courts and with the Department of Motor Vehicles if you have an accident or are cited, but buying from a licensed insurer also protects you.

If you have concerns or you feel like an insurer is not complying with the law, you have the right to file a complaint. This is something you cannot do when the insurer is not licensed.

You can search for licensed carriers on the official state department of insurance site.

Checking Financial Security

You cannot expect a company that cannot pay for their credit or for their financial obligations to pay for your claim. This is why you need to check into the financial standing of each insurer that has made the cut.

You can easily assess the financial status of a licensed company by referencing the grades from a rating agency like A.M. Best or Moody’s. If the legend does not show that the status is a good grade, you should cross the company off of your list.

Review the Complaint Index

Since consumers can officially file complaints against companies, these complaints and the findings are both public record. Using the information that is found on the reports can really help you decide if an insurer will really give you a fair payout or good service.

Make sure that you use complaint databases found through state profiles or through the NAIC Consumer Information Source. This will help you see if there are trends or if complaints filed are justified.

— Consumer Reviews

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After you have reviewed all of the above you should check into consumer reviews. Companies like J.D. Power are dedicated to conducting customer satisfaction studies to see which companies have the best products, billing options, service and claims processes.

Just be sure that you are trusting a reliable source that conducts unbiased studies.

You should always review price last. If you have a list of the providers that you are confident that you can trust, it is time to start gathering quotes from agents or brokers.

If you want to start comparing car insurance rates now, enter your zip code in our FREE tool below!

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