How to Get an Accurate Auto Insurance Premium Estimate

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Things to Remember...
  • Getting automobile insurance is a mandatory part of the driving experience in the United States
  • Auto insurance is meant to protect drivers against all financial costs incurred by them in case of a motor accident
  • Most insurance policies have stipulated time periods of coverage. Drivers can buy them for six months to a year
  • Dig deep to find discounts that might apply to specific groups such as veterans, graduates, members of certain organizations etc
  • Make sure to get multiple comparisons from different companies to get the best rates


Getting automobile insurance is a mandatory part of the driving experience in the United States. However, automobile insurance can be very expensive, in some cases, prohibitively so.

If you want to shrink your insurance bill, you must understand the finer points of the car insurance industry and how it operates. This will help you understand how your auto insurance rates and premiums are calculated.

If you don’t have the time for in depth research, click here to type in your ZIP into our FREE quote tool to see the low rates and premiums we are able to offer you!

A 2008 New York Times article finds that across most states auto insurance companies are seeking higher premiums from their customers.

Blaming rising commodity costs that have increased the prices of auto parts and tires, auto insurance companies have claimed even with lesser cars on the road, their costs for meeting claims has risen dramatically.

So it is important for you to focus on ways to understand the details of your car insurance policy to lower its cost to you.

Understanding an Auto Insurance Policy

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According to the Insurance Information Institute, auto insurance is meant to protect drivers against all financial costs incurred by them in case of a motor accident.

An insurance policy is a legal document, a contract between the two signing parties: the driver and the auto insurance company.

Under the contract, the driver has to pay a set premium amount in return for coverage from the insurance company. All states require you to buy certain types of car insurance or provide proof of financial responsibility.

Most insurance policies have stipulated time periods of coverage. Drivers can buy them for six months to a year. Before an insurance policy expires, drivers are required to either renew their policy or get a new policy.

Besides these long-term auto insurance policies, the weakening economy and shrinking budgets of many households has led to the emergence of new kinds of auto insurance.

One of them is pay-as-you-go insurance. Under these plans, a driver can save up to 30 percent on their car insurance costs.

Different Kinds of Auto Insurance

There are seven different kinds of coverage within an auto insurance policy. Drivers can choose the types of coverage they need.

  • Liability insurance – This is mandatory in most states and covers the driver in case of an at-fault accident. It is meant to pay for the cost of repairing all property damage caused to the other vehicles involved in the accident, any buildings, fences, sidewalks or the like, as well as medical bills from any resulting injuries.
  • Collision insurance – This covers all damage caused to your car in case of a collision. If your car is totaled in the accident, it will give you the value of your car. This form of insurance is not mandatory unless you have a car loan, in which case your lending company will likely require it. Additionally, collision insurance is highly recommended if you have an expensive or brand new car.
  • Comprehensive insurance – This form of coverage protects you in case of all non-accident damages to your car. From Acts of God such as hurricanes, tornadoes, and earthquakes, theft, vandalism, animal collision, or a mistimed golf ball, it will cover you for a range of damages.
  • Uninsured or underinsured motorist protection – As the name suggests, this form of coverage protects you in case you collide with someone who has little or no insurance. This is especially handy if you are not at fault and the at-fault party cannot pay for all or any of the damage caused.
  • Medical or personal injury protection (PIP) – This covers all costs for treating accident related injuries.
  • No fault insurance – This pays for all injuries and property damage, irrespective of fault.
  • GAP insurance – This form of insurance is meant for people who are still making car payments on a car that is likely to fetch less than what it is worth if it were to be sold today.

In such cases, this will cover the remaining loan amount, if it were wrecked in an accident. GAP insurance is also meant for people who are between cars but plan to get one in the near future.

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Factors that Impact Auto Insurance Premiums

There are a number of factors that have to be considered while calculating auto insurance premiums. Some of the major markers are:

  • Driving record – A clean driving record with no speeding tickets, moving violations, accidents, or reckless driving citations will lower your insurance bill.
  • Vehicle – The year, make, model, color, safety equipment, crash test results deeply affect insurance premiums. An expensive, luxury car is always more expensive to insure since its repair and replacement of parts cost more.
  • Demographics – Age, sex, and marital status are also counted in calculating insurance premiums. Drivers below the age of 25 and senior citizens are prone to a higher rate of accidents and consequently, pay more towards insurance. Women and married individuals pay lesser than men and unmarried people.
  • Geography – Your location can make a substantial difference in your insurance bill. Rural and suburban drivers pay lesser since they usually drive in low traffic areas. The crime rate of your residential area also impacts your insurance bill. Also, insurance bills can spike if you move to an area that is prone to catastrophic weather events such as hurricanes, tornadoes, or snowstorms.
  • Credit rating – According to MyFICO, credit reports contain a history of your financial transactions. They are regularly used by insurance companies to determine your level of financial responsibility, which then impacts your insurance premium.

It’s Easy to Get an Accurate Estimate

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Gone are the days when you needed to make a dozen phone calls to get an auto insurance policy. Nowadays you can get a dozen quotes within minutes from competing insurance companies via the Internet.

To ease the process of getting accurate auto insurance premium estimates, there are a couple of steps you can take.

Research the different kinds of auto insurance available. With that information, determine the type and amount of insurance you need.

Research and find the different kinds of discounts available to you. Make a list of reliable insurance companies and the discounts each of them offer.

Dig deep to find discounts that might apply to specific groups such as veterans, graduates, members of certain organizations etc.

Finally, make sure you have all the required information before setting out on your quest for low auto insurance premiums.

You should have all the license numbers of the drivers to be insured, the vehicle identification number (VIN) for each car, driving distance from work, driving and traffic violations and insurance claims in the past five years, declaration page from your current policy, and total mileage per year per vehicle.

Once you have all the information, you can easily raise a number of competing insurance premium estimates online.

Lowering Auto Insurance Premiums

Soaring gas prices, rising inflation, a teetering economy, and a dismal job market are making Americans tighten their purse strings.

As people go into save mode, they are looking for ways to chisel down their auto insurance bills.

Some Basic Steps You Can Take

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Raising your deductible can shave quite a few dollars off your insurance bill. However, make sure that you can pay the large sum in case of an unfortunate accident.

You should also remove comprehensive coverage. Unless you have a brand new car, an expensive car, or a car loan, it does not make financial sense to carry comprehensive coverage, which is usually quite expensive.

Make sure you shop around. Do not automatically renew your car insurance every term. Instead, look at what new options are available.

Car insurance companies are regularly floating new discounts and new terms to entice new customers.

Your driving record also is the first indicator used by insurance companies in deciding your premium. So keep a clean record by driving within speed limits and following traffic rules.

Not only will it keep you, your family, and people on the roads safe, it will also save you a bundle of money.

Raising your credit rating can’t hurt either. Financially responsible behavior will help you get cheaper insurance as well as other loans from mortgage companies and auto lenders at lower rates.

If you are in the market for a new vehicle, try to get a make and model that is cheap to insure. Sometimes, even the color of your car can make a difference to your insurance bill.

Make sure you look for discounts from your insurance company. From student discounts to profession-specific discounts, you can get a decent reduction on your premium.

Buying Automobile Insurance

The Internet has made getting auto insurance easy. With the click of a mouse, you can get a long list of insurance quotes, handy calculators, and free advice from dozens of experts about how to get insurance.

While this ease is much more desirable than having to haggle with insurance agents and companies over the phone, it does require consumers to be more vigilant and educated about their choices.

If you want to avoid scams and poor coverage, enter your ZIP into our FREE quote tool below and instantly see a list of insurance quotes that will cover all your insurance needs!

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