Car Insurance Buying Guide

Given that practically everyone who drives needs car insurance, you wouldn’t think it would still be so confusing. We go over car insurance basics and how to get cheap car insurance elsewhere, so this page is all about the details of what insurance is out there, how to decide what your car insurance needs are, and how to get the best-priced policy.

Car insurance is complex (and opaque)

We can’t think of another industry anywhere near as complex as insurance where the average consumer has to have it but doesn’t understand it. The complexity is understandable — it’s an industry built on risk models, human behavior models, thousands of cars for it to apply to, and everyone’s individual risk tolerance is unique.

Insurance companies don’t make the process much easier by hiding the precise details of your policy until after you’ve purchased it, and they don’t make shopping around for quotes easy either. The big companies tend to feed consumers into policies that will be the most profitable, rather than coming up with tailor made policies which reduce the buyer’s overall cost burden.

That's why we started Coverage Cat. We want to find a way to use data science to bring price transparency to the insurance buying process. The easiest way to do that is to let us shop for you.

What is the best car insurance?

The internet has trained us consumers who like shortcuts to simply ask your favorite search engine “what’s the best one?” In most cases the answer to this question is highly personalized.

There are two common ways to think about what the best car insurance is:

What is the best car insurance company? When trying to answer this, some people consider how well companies pay out on claims. Since insurance companies are heavily regulated and therefore (nearly) always pay out exactly what they are required to, this is really more of a question of who has the best policies — something you can’t check before you buy.
What is the best car insurance coverage? While people might make the case for minimum coverage or “full coverage,” the reality is that the best insurance coverage is highly personal, based on your financial situation and your risk tolerance. If your motto is “better safe than sorry” then more coverage is a good idea (if you can afford it).

We think the best car insurance is the cheapest option that still ensures you won’t get bankrupted by a car crash, no matter how severe.

What kinds of car insurance coverage do I need?

As mentioned above, this is highly personal. There are many things to consider as you formulate your auto insurance plan. It’s best to start with the minimum requirements in your state, the car you drive, whether you frequently have non-household passengers in your car, and what assets you have to protect.

Here’s our general advice:

You need liability coverage (Bodily Injury and Property Damage). It pays for injuries to other people and their vehicles when you cause a crash. Some states require additional forms of liability coverage.
You probably want Uninsured/Underinsured Motorist coverage (UI/UIM), because other people often don’t have enough insurance to cover your costs in a truly serious incident, which can leave you harmed but without the ability to recover money from them.
If you can afford to repair or replace your car from savings, you can simplify your insurance and save money by avoiding collision coverage (repairs/replaces your car) and comprehensive coverage (repairs/replaces your car in a non-collision, like theft). If you finance or lease your car, however, lenders usually require collision and comprehensive coverage.

There are more kinds of insurance than just these. Figure out which kinds of car insurance coverage are right for you.

Car insurance cost factors

Insurance companies are in the business of predicting risk. The more of a risk you are, the more you pay for your insurance. Some risks come with a higher “premium penalty” than others. Reducing your risk factors reduces your bills.

The biggest impacts on your car insurance premium are: your driving record, your credit score, where you live, and the car you drive. Generally, the car you drive has less impact on your liability coverage, but can have a huge impact on collision and comprehensive coverage if you elect them. An exception to this is high-powered sports cars which are often driven in a riskier manner and therefore have higher liability coverage costs (as compared to a fully loaded luxury SUV which might cost the same amount).

Learn what goes into the cost of car insurance and how to lower your premiums.

Are you paying too much for car insurance?

There are really two questions to ask in regards to whether or not you’re overpaying for your insurance: could you get the same coverage elsewhere for less and are you paying for insurance you don’t need?

The only way to know the answer to the first question is to shop around and get multiple quotes. Using a service like Coverage Cat (we’re an independent broker who will tell you what your best insurance rates are even if we can’t sell you a policy ourselves) you’ll even discover whether you are optimally insured for your personal financial situation.

It is our opinion that many people are overpaying for insurance because they don’t have the right coverage (i.e. they’re paying for coverage they don’t need, or they’ve been sold on the concept of multi-policy bundling when that’s not actually a better deal).

Read our car insurance recommendations to figure it out for yourself, or try Coverage Cat.

When should I shop for car insurance?

A common misconception is that you can only change your insurance when your term is almost over. That’s not true! You can exit an insurance policy mid-term with minimal (or no) early termination fee AND receive a prorated refund for the days you prepaid but your policy wasn’t active. Just don’t cancel your policy until a new one is active.

In short, you should shop for new car insurance any time your situation changes. That’s quite vague, but there are a lot of reasons to shop around for new car insurance! Here is a quick list:

You are now a good driver. If it has been three years since your last moving violation or at-fault accident, you should start shopping for new insurance right away.
You are no longer a good driver. Likewise, if you've recently crashed your car, racked up several speeding tickets, or had your license suspended, you should start shopping for new insurance. Some insurers penalize different infractions more or less than others and they may even drop you as a policyholder.
You’ve had a major life event — you married (or moved in with a partner who shares your car), you moved to a new zip code, you bought a house, you changed jobs (and your commute length), you retired (or turned 65), etc.
Your car drops below $50k in value. Interestingly, our data shows that premium prices don’t vary much by car value until you cross the $50k threshold, at which point insurance gets more expensive for every $10k in value you add to the vehicle.

See even more reasons to shop for new car insurance.

How do I buy car insurance?

The process of buying an insurance policy doesn’t closely match the process of buying anything else.

You’re entering a complicated legal agreement without understanding the full context of what you’re agreeing to and there are literally thousands of factors which go into the price you pay for your car insurance policy (most of which you can’t control).

On top of that, because so many insurers are competing for your business, they engage in myriad tactics to convince you that you’ll get the best deal from them. From promising discounts you may or may not qualify for to carefully crafted quotes, you may not get the right policy for your needs by working with an online quoting system. You’re likely to get quote options like: Basic, Better, Best and no option to change the policy recommendations without calling the company and subjecting yourself to future sales calls.

So what’s a price-conscious car insurance buyer to do? The number one rule when shopping for car insurance is to get multiple quotes. Learn how and where to get car insurance quotes or skip most of the work and try Coverage Cat.

Need help shopping for car insurance?

Coverage Cat shops for your insurance for you. We search across dozens of major insurers, and use data science to compare millions of real quotes, to find the best combination of policies, coverage, and price for your personal financial situation.

Our promise:

We will never share your personal information with anyone other than the insurance companies we get quotes from
You will not receive any phone calls from us or any other insurance companies
We will only send you a few emails while we find the perfect insurance for you

We can only optimize car insurance for people in: Florida, New York, Texas, and Washington state. More states are coming soon.

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