How to compare car insurance rates

First, every car insurance quote you receive should be free — whether it’s from Geico, Farmers or a small insurer you’ve never heard of. Some auto insurers require a down payment to start your policy, but whether you’re comparing car insurance rates online or with an agent, a simple estimate should always be free of charge.

You’ll likely see the terms “quote,” “rate” and “premium” used to describe how much you’ll pay for car insurance.

1. Gather your information

To quickly and easily compare car insurance online, you should have the following on hand:

Personal information, which includes the address, date of birth, occupation, driver’s license and marital status of everyone you want included on the policy.

Vehicle information, including the mileage, date of purchase and vehicle identification number (VIN) for each car. If you haven’t purchased the car yet, have mileage, make, model and year handy.

Driving history, including all claims, violations and tickets you’ve had over the past five years, plus any completed driving courses.

Current or previous insurer’s name for anyone on the policy or in your household. Some insurers won’t cover you without some coverage history, and if you want to exclude anyone living with you from the policy, you’ll need to prove they’re covered elsewhere.

2. Choose the right liability car insurance coverage levels

Auto insurance is financial protection, not just for the investment you made when you bought or leased your car. After a really serious accident, bills for property damage and injuries can easily reach into hundreds of thousands of dollars.

If you happen to cause this kind of wreck, the victims could sue you. And in that situation, assets such as your savings and even your home could be seized.

Liability auto insurance protects you from that worst-case scenario by providing a cushion between your assets and the amount you’re on the hook for. That’s why choosing the right liability limits is the most important part of a car insurance quote comparison. NerdWallet typically recommends having at least as much liability coverage as your net worth.

But liability coverage levels come in threes — you’ll probably see something like 50/100/50 or 250/500/250 included in most policies. You can think of these limits as individual injuries/total injuries/property damage. (Insurers are a little more technical with the names, calling them bodily injury liability/total bodily injury liability/physical damage liability.)

Liability insurance comes in thousand-dollar increments, so when you choose an auto insurance policy with 100/300/100 limits, you’ll be choosing:

• $100,000 for bodily injuries per person in a crash that you caused.

• $300,000 total for all bodily injuries in a crash that you caused.

• $100,000 for damage to any property in a crash that you caused, including cars, buildings and objects like mailboxes and lampposts.

Understand car insurance requirements in your state

Any car insurance comparison tool you use should have your state’s minimum car insurance requirements pre-loaded into its options. In certain states, you may be required to have a car insurance policy that includes personal injury protection (PIP), medical payments coverage (MedPay) or uninsured/underinsured motorist coverage — or two of the three. If you have MedPay you don’t need PIP, and vice versa.

States requiring PIP or MedPay are generally referred to as “no-fault” states. This means that when injuries occur, each driver in a crash makes a claim with their own insurance company to pay for them. Then, the at-fault driver’s liability insurance will kick in to cover any expenses beyond the PIP or MedPay limit.

3. Decide if you need full coverage car insurance

Liability coverage doesn’t pay for your car or injuries — or for any injuries your passengers sustain — if you cause a wreck. This is why you may want “full coverage” car insurance, especially if your car isn’t paid off.

However, full coverage insurance isn’t actually a type of coverage. It typically refers to policies that include liability coverage plus comprehensive and collision coverage.

In other words, you can’t just click a “full coverage” button when comparing car insurance quotes online or buy something called a full coverage auto insurance policy. You’ll need to add collision and comprehensive coverage in the amounts you want, which will also increase the amount you’ll pay.

If you add collision or comprehensive coverage to your policy, you’ll choose deductible amounts for each. These deductibles are amounts you will pay out of pocket for each claim you make, similar to a deductible when you go to a doctor’s office or pick up a pharmacy prescription. (The difference is they tend to be significantly higher than either of those examples.)

Collision insurance pays for:

1. Damage to your car in an accident you cause.

2. Damage to your car if you hit an object such as a fence or pole.

3. Damage to your car if someone else hits you. Another option in this case is to make a claim against the other driver’s liability insurance.

Comprehensive insurance pays for the value of your car if it’s stolen and not recovered, and damage from:

1. Weather such as tornadoes or hail.

2. Floods.

3. Fire.

4. Falling objects.

5. Explosions.

6. Crashes with an animal, such as striking a deer.

7. Riots and civil disturbances.

4. Collect and compare car insurance quotes

You’ll want to get car insurance quotes from at least two or three companies. If you want to be sure you’re getting a good deal, consider comparing insurance quotes from regional companies as well as the big companies such as Allstate, Progressive and State Farm.

To make sure you’re getting comparable auto insurance quotes, each should include:

1. The same levels of liability and uninsured/underinsured motorist protection.

2. The same deductibles for collision and comprehensive coverage, if you’re buying them.

3. The same drivers and cars.

4. All discounts you’re eligible for (most insurers list discounts on their websites).