photo credit: uggboy

Comparing new car insurance rates online is a far simpler process than it was only a few short years ago. Part of this is due to the fact that there are not aggregators used to compare similar policies amongst multiple insurers. In fact, some insurers are so bold that they will even put the results of such aggregators onto their own website and tell consumers when going elsewhere is a good idea.

Here is how the process works. Start by choosing a few different insurers and then visit their website. Most insurers offer online quotes, and companies like Progressive even offer competitive quotes as previously mentioned. Input the make, model, year, and trim of the vehicle, along with other vital stats such as your name, age, social secutiy number, marital status, driving history, and how often the vehicle will be used. Note that not all websites are going to ask these questions, which could create a problem where you might think you are doing a fair apples-to-apples comparison but are not actually doing so.

photo credit: samographer

Before covering the apparent but inaccurate comparisons, remember that there is some level of control given to visitors of these websites over the type of coverage can also vary. For example, not all websites allow for deductibles to scale by $100 segments like GEICO currently does, so choosing a $400 deductible might be a bad idea for a true apples-to-apples comparison, because other vendors might only have $250 and $500 deductibles. The same is also true of coverage limits and caps. These are the things that consumers visiting websites for auto insurance quotes can control.

There are still a few things that insurance-seekers have no control over, such as the actual fine print in any given policy. This means that even lining up all of the deductibles and caps as closely as possible could result in comparisons that are still not necessarily equal. Consider the following points, and be sure to look in the fine print when comparing:

• How are temporary car rentals handled?
• Are the temporary car rentals and payments handled? Via reimbursement or co-payment?
• Are the deductibles per-item or per –visit?
• Is there a minimum time window in which claims cannot be filed? If so, what is it?

photo credit: asurroca

It would be worth spending a little time scouring each policy and remember that those policies that are significantly lower are that way for a reason. That reason is likely to be found hiding in the black print, and it may not be worth living with if it takes too much money out of your pocket at the wrong time. There is no sense in paying even a penny for an insurance policy that does not meet your needs, so be sure to factor in as many considerations as possible when trying to make an honest apples-to-apples comparison.

photo credit: alanvernon

There are many things to look for in an insurer when you are trying to insure a new car.  Simply put, insuring a new car is a risky business for many, and some people are prone to save a few dollars that could cause them more than a little grief and heartache later.  If you’re thinking of buying a new car or just bought a new car, then you need to know the truth about insuring new cars before it is too late.

The first thing that you need to know about insuring your new car is that it is likely to be expensive, but you can change that with a few checkmarks in the right feature boxes.  In fact, choosing the right features could save you so much money on insurance over time that the features would literally pay for themselves.  Here’s how it works: insurance companies are known to give discounts for auto insurance premiums when the vehicle features brakes, an active traction control system, and/or a security system.  These features all cost more initially, but can almost always be financed.  Furthermore, these same features can also increase the resell value of the vehicle later, which further decreases their actual price from a total ownership standpoint.

photo credit: irwandy

What does this mean to new car buyers?  It means that they can splurge a little and either get a higher trim level or additional gear and still pay a comparable amount every month, all the time knowing that their investment will be worth more down the road.  Consider this: if a new (2010) Honda CR-V costs just under $22,000 for a base model, but a $2300 upgrade to the EX model nets dozens of great features including a security system that can save some owners over $8 per month on insurance (this savings comes from a GEICO quote).  At $96 a year in savings, the discount on insurance would actually offset a healthy part of the difference in purchase price.  The additional features would make the vehicle more enjoyable, and increase its resell value down the road.  If the CR-V were owned for 5 years, there is a good chance that the difference in features alone would have made the upgrade a better long-term investment.

The next thing to look for when insuring a new car would be the different types of deductibles.  Almost any traffic accident today will break the glass, but many people overlook the glass deductibles.  Being injured, then having to pay two deductibles is like adding insult to injury, so be sure to decrease the deductibles if it is at all practical.  Remember that lower deductibles mean higher premiums, but paying any premium when the deductibles are too high is folly.  For example, it is possible to choose deductibles of $500 for both comprehensive and glass, but that means an accident will take $1000 out of your pocket in almost all cases.

photo credit: matt-davis

Add to that figure the possibility that you might be paying for a rental car and dealing with injuries, even after a covered hospital visit, and you can see why low deductibles are desirable.  It should also be apparent why many people look carefully at each insurer’s policy on rental cars as well; there is a world of difference between having an insurer cover the rental vehicle and being reimbursed 60 or 90 days after the fact.  A good rule of thumb is that you should be prepared to pay more for lower deductibles if you are not prepared to spend a lot of money when and if an accident does actually happen.  If you are the type that is sitting on a healthy bank account, then you may not need to worry about low deductibles as it will all balance out in the end.  If you live paycheck to paycheck, then you should really prepare yourself properly by choosing low deductibles.

Also note that you can save a good deal of money if you are able to pay for 3 months, 6 months, or even an entire year of auto insurance at one time.  Insurers manage their risk with up-front payments and customers save money on transaction fees built into insurance premiums.  It is possible to save around $7 to $9 per payment in transaction fees alone with GEICO, Progressive, and other major providers simply be paying up-front.  Fewer transactions means fewer transaction fees, but it also means a greater discount.  When combined together, it simply does not make sense to pay monthly premiums if they can be avoided.

There are many little secret tips to discuss when you are ready to shop for car insurance, and sadly not all of them are well known. Here are the top 5 tips for shopping for car insurance that will save you money, time, and perhaps a lot of heartache:

Tip #1: Pay For the Entire Policy Up Front

photo credit: avlxyz

Many insurers actually charge fees to process payments, even if they process the payments online. These fees are generally far greater than what the insurer actually pays to process the fees, which begs the question: why do insurers charge each time they process a payment? That is a good question, and the short answer is that insurers reward customers that pay up front in two ways: lower rates, and fewer processing fees. Everyone understands the lower rates as a process of risk management, but the processing fees often go over most people’s heads.
Here’s the deal. If you are buying car insurance and the insurer has to process a payment, they need to set aside a certain amount of time for a human to review the payment and handle any problems that might arise because of the payment. It is generally also true that insurers, like other vendors, end up having a payment gateway from a bank or other third party take a piece of their action. Add in the risk of a bad payment and thus the need of an accounts receivable specialist, and it is easy to see why some insurance companies charge up to $8.50 per payment!

Tip #2: Clean Up That Credit!

photo credit: alancleaver

Many people do not understand how credit works, but it does play a very major role in how insurers determine the price of an insurance policy. The problem is made far more complex by the fact that there are three different credit reporting agencies that could be used to pull credit scores, and sometimes the FICO score is less important than the presence of derogatory information; The individual insurers have the freedom to create their own pseudo scoring system based on the contents of any credit report that is pulled.
In order to get the best rates on car insurance (and loans, mortgages, etc.) check your credit report every year or more frequently if possible. Clear up any problems and inaccuracies as quickly and as thoroughly as possible. The long term results will be lower insurance rates, but also more opportunities for credits and even promotions/new jobs.

Tip #3: Check Those Deductibles!
A deductible is how much money an insured party needs to pay whenever they get a repair. The problem is that not all insurance policies cover deductibles the same way. The more expensive insurance policies generally require policyholders to pay a one-time deductible per visit unless glass coverage is involved in addition to other types of coverage. In these cases, insurers typically require a separate glass deductible and a regular repair deductible, but this is preferable to low-cost insurers that charge per-item deductibles. That’s right, per-item.
Per-item deductibles can be found on some of the most affordably priced auto insurance policies, and they require that each major item being repaired come with a customer-paid deductible. If an accident requires body work, a new radiator, and a new motor, then expect at least three deductible payments. The only way to determine how deductibles work is to check the fine print.

Tip #4: Co-Payment vs. Reimbursement
Another trick that many so-called discount auto insurance policies use is the reimbursed deductible. A reimbursed deductible is essentially a way of saying that the customer pays for everything and then submits a claim. The insurer will evaluate the claim and will, under ideal circumstances, repay everything but the deductible. The upside to these insurance policies is that they tend to be very inexpensive, but the downside is that they are very risky for customers without a lot of money in hand.
Again, the only way to determine whether an insurer will offer a co-payment or a reimbursed deductible is to read the fine print. The fine print should be the go-to location for anyone reading an insurance policy.

Tip #5: State Laws Trump Your Signature on a Policy

photo credit: manc

Does an insurance policy say that the insurer gets to choose which repair shop(s) do the work and what part(s) they can use in the repair process? See what local law has to say about that, as many states do not support this type of clause. Instead, residents of certain states have the right to choose their repair shop and whether 3rd party or direct-from-manufacturer parts are used in the repair process. Never let an insurance representative claim that this right is waived by a signature and/or payment, because rights cannot be waived. If the insurer gets testy, talk to a lawyer and they will usually calm back down immediately.

Anyone that has purchased a new car has probably noted that the insurance rates tend to be very high compared to insurance rates associated with older vehicles.  If this sounds like something you’ve thought of, but you haven’t been able to figure out why, then you are in luck.  We are about to explore new car versus used car insurance rates.

Why New Cars Are Expensive to Insure

photo credit: pyxopotamus

On the surface, it would seem like new cars should be very affordable from an insurance standpoint.  After all, new cars come with all sorts of safety features, are built to survive accidents better than previous generations of vehicles, and so on.  So what’s the deal?  The fact is that while these are all great arguments, the truth is that new vehicles do have a few problems from the perspective of an insurer.
The first thing that insurers look for when evaluating vehicles is their known accident rate.  Known accident rates could involve mechanical or electrical failures, and while it is simple to suggest that insurers simply look at previous models from the same vendor for a clue, this does not always work.  Case in point would be the Toyota failures of late 2008-2010.  Toyota built an incredible reputation as the maker of some of the most reliable vehicles on the planet and then failed to live up to that reputation.  The result was that if an insurer had made a bet that they could affordably insure new Toyota drivers on a budget due to he success of previous models, they would be probably be losing money.
This logic needs to extend to what happens when a vehicle is damaged.  New vehicles, especially first and second year vehicles, are difficult to find replacement and repair parts for.  Since many insurers have to weigh the financial risks of paying for a rental car versus the ability of repair shops to find qualified parts to finish repairs, the insurer is forced to protect themselves by charging higher rates.  Simply put, there are not a lot of used car parts for new cars, and there are not a lot of third parties that have tested affordable replacement parts.  This makes repairs more expensive, and expensive repairs translates into higher premiums.

Why Old Cars Are More Affordable

photo credit: pinkmoose

Older vehicles are affordable to insure primarily for the aforementioned reason that finding spare parts is difficult.  Add to this the familiarity that mechanics and repair shops have with older vehicles, and it is generally safe to say that repairing older vehicles is more affordable and quicker.  Since time is money, let’s just say that affordable is the bottom line from the standpoint of an insurer…unless the vehicle is special.
Older vehicles that are special, either difficult to find or in cherry condition, might be difficult and/or expensive to insure.  Again, insurers are looking for vehicles that are statistically proven to be safe and affordable to repair.  If a classic or rare vehicle is being insured, it might be too difficult to find parts for, and thus it could be assessed with a high insurance rate.  Older vehicles that have survived the test of time are also far more likely to be easy to insure by the same logic.

Financing Matters

photo credit: amagill

Another reason that new cars tend to be very expensive to insure is that most lenders have stricter requirements for insurance than used car lots.  Comprehensive and collision coverage are likely to be required for any new car loan, and more coverage results in higher rates.  Most lenders require this coverage to protect their investment in loan, but many used car lenders have less concern over the security of their loans as they already cover their risk with higher interest rates.  In fact, many buy here/pay here car lots charge the maximum legal amount for loans and require deposits that are more or less equal to their investment in any given vehicle.  This allows them to care less about the insurance coverage unless required to do so by law, but this is the polar opposite of how new car sales work.

photo credit:

GEICO – GEICO or the Government Employees Insurance Company, is a wholly owned subsidiary of Berkshire Hathaway and provides coverage to over 10 million motorists.  As a nationwide provider, GEICO’s claim to fame is that it was one of the first web-based insurance agencies and it seems to have an overall friendly demeanor and image.  GEICO offers great insurance rates and excellent customer service, including on-site adjusters.

Progressive – founded in 1937, Progressive Corporation is actually a very old insurer despite the company’s best efforts to project themselves as hip and new.  Progressive handles many kinds of insurance, which does help the company offer great bundled prices that some of the less-focused insurers cannot compete with.  With over 10 million auto insurance policies and counting, Progressive is one of the top auto insurers in the nation.

Allstate – Allstate is another older insurer, with a history dating back to at least 1931.  Despite its age, Allstate has remained at or near the top of the list when it comes to American insurance companies with its combination of great prices and excellent public image.  Insurers that choose Allstate have been in ‘good hands’ for generations, and those that bundle more than one policy can save a lot of money.

State Farm –State Farm is another well-respected name in insurance, and markets itself as being ‘like a good neighbor.’  Headquartered in Bloomington, Illinois, State Farm not only has some of the most attractive auto insurance rates in the county, but they also have very competitive life insurance and fire insurance policies.

photo credit: sercasey

Nationwide – Founded in 1926, Nationwide Mutual Insurance Company is better known to most as Nationwide.  Nationwide contributes to numerous charities, and has also been the recipient of several awards for corporate equality.  While most big companies give lip service to equal opportunity, Nationwide makes it happen, and that may be one reason why so many people choose the very charitable insurer.  Even those charity seems to be a major focus of Nationwide, the insurance rates are still very competitive, and the mobile claims division called Cartopia is certainly competitive with those offered by GEICO and Progressive.

photo credit: kawika-234

AllState is one of the oldest and more respected of the major auto insurers in the nation, so we thought that we would put them through a little test to see just how good their rates were.

We took three drivers and two cars and tried to get coverage rates for them all.  Driver A is a 22 year old single male with 2 speeding tickets and one traffic accident on file.  Driver B is another male, but he is 33 and married with children and a clean driving record.  Driver C is Driver B’s female analog, and should represent the safest driver in the bunch.  For our tests, we chose to use a pair of vehicles: a new (2010) Honda Accord EX and a slightly used 2005 Chrysler Town and County.  While Driver A probably wouldn’t be driving a minivan, it would fit Drivers B and C to a tee.

Here’s what we discovered:
Driver A would pay $505 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but just $390 for the Chrysler minivan.  Driver B would pay only $422 and $306, while Driver C would pay $394 and $222 respectively.
These rates assume that the insured parties are living in Tucson, Az.

A move to Chicago would produce the following results:
Driver A would pay $524 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but a premium of $410 would be assessed for the Chrysler minivan.  Driver B would pay only $448 and $320, while Driver C would pay $402 and $255 respectively.

photo credit: supersonicphotos

GEICO is one of the premier auto insurers, so we decided to put them through a basic test to see just how good their rates are.  Here’s how our basic test works:

We took three drivers and two cars and tried to get coverage rates for them all.  Driver A is a 22 year old single male with 2 speeding tickets and one traffic accident on file.  Driver B is another male, but he is 33 and married with children and a clean driving record.  Driver C is Driver B’s female analog, and should represent the safest driver in the bunch.  For our tests, we chose to use a pair of vehicles: a new (2010) Honda Accord EX and a slightly used 2005 Chrysler Town and County.  While Driver A probably wouldn’t be driving a minivan, it would fit Drivers B and C to a tee.

Here’s what we discovered:
Driver A would pay $523 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but only $388 for the Chrysler minivan.  Driver B would pay only $485 and $340, while Driver C would pay $460 and $332 respectively.
These rates figure in the city of Tucson as the location for the drivers.

Changing the city to Chicago resulted in the following rates:
Driver A would pay $606 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, while they would be expected to pay $430 for the Chrysler minivan.  Driver B would pay only $505 and $401, while Driver C would pay $498 and $377 respectively.

photo credit: fabioaro

Progressive is one of the most famous auto insurers in the nation, so we thought that we would put them through a little test to see just how good their rates were.

We took three drivers and two cars and tried to get coverage rates for them all.  Driver A is a 22 year old single male with 2 speeding tickets and one traffic accident on file.  Driver B is another male, but he is 33 and married with children and a clean driving record.  Driver C is Driver B’s female analog, and should represent the safest driver in the bunch.  For our tests, we chose to use a pair of vehicles: a new (2010) Honda Accord EX and a slightly used 2005 Chrysler Town and County.  While Driver A probably wouldn’t be driving a minivan, it would fit Drivers B and C to a tee.

Here’s what we discovered:
Driver A would pay $587 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but just $410 for the Chrysler minivan.  Driver B would pay only $492 and $361, while Driver C would pay $422 and $298 respectively.
These rates assume that the insured parties are living in Tucson, Az.  A move to Chicago would produce the following results:

Driver A would pay $610 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but a premium of $429 would be assessed for the Chrysler minivan.  Driver B would pay only $541 and $399, while Driver C would pay $436 and $310 respectively.

photo credit: moil

All State is certainly one of the most famous insurers in the country, and the ‘good neighbor’ company promises great auto insurance rates.  Do they live up to those claims?  Let’s see.

We took three drivers and two cars and tried to get coverage rates for them all.  Driver A is a 22 year old single male with 2 speeding tickets and one traffic accident on file.  Driver B is another male, but he is 33 and married with children and a clean driving record.  Driver C is Driver B’s female analog, and should represent the safest driver in the bunch.  For our tests, we chose to use a pair of vehicles: a new (2010) Honda Accord EX and a slightly used 2005 Chrysler Town and County.  While Driver A probably wouldn’t be driving a minivan, it would fit Drivers B and C to a tee.

Here’s what we discovered:
Driver A would pay $582 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but just $475 for the Chrysler minivan.  Driver B would pay only $388 and $267, while Driver C would pay $357 and $242 respectively.

These rates assume that the insured parties are living in Tucson, Az.  A move to Chicago would produce the following results:

Driver A would pay $611 for 6 months of full coverage insurance with normal caps and deductibles for the Honda Accord, but a premium of $521 would be assessed for the Chrysler minivan.  Driver B would pay only $420 and $278, while Driver C would pay $374 and $260 respectively.

photo credit: jbcurio

Car insurance premiums are decided after careful contemplation of several different factors.  These factors include the vehicle in question, the intended usage patterns, where the vehicle will be used, and the driver or drivers.  Add to this the variables in coverage, and is easy to see why some people are confused about car insurance premiums.  Luckily, this guide will take you though everything you should know about car insurance premiums but were afraid to ask.

Car insurance rates actually begin before most people even try to buy a car.  It all starts with a credit score, and everyone has one.  A credit score can be taken as an abstract representation of the overall reliability and stability of an individual.  Individuals that have a tendency to make better choices tend to have higher credit scores, and the opposite is also generally true.  Better choices, such as parking vehicles in well-lit spots and walking a block or two versus parking close to a home or business in a poorly lit area is just an example of how responsible decision making affects the risk that insurance companies take with various policies.

Risk is the basic factor that insurance premiums calculate.  An insurer looks at each potential insurance policy and asks: what are the risks of this policy not paying off?  Since insurers would lose business if too many claims were filed, they need to protect their business interests and existing insured-base by assessing risk.  While individuals are assessed based on their past driving records and their credit ratings, cities are also assessed.

photo credit: bike

Some cities are just more dangerous for motorists than others.  A dangerous blind drive here, a steep hill there, underfunded law enforcement, or any number of other factors can contribute to a city, county, or state being labeled as dangerous.  Danger comes in the form of traffic accidents, theft, or damaged vehicles that would result in claims and insurance agencies judge different areas based on facts provided by various government bodies.  For example, most states have their own Department of Public Safety that releases periodic crash and/or theft results.  These results help determine just how dangerous a location is.  This literally means that where you live could be significantly altering your insurance rates.

Of course, some cities are not naturally more dangerous but are filled with danger in the form of people.  This means that the local law enforcement agencies are properly staffed and that there are no innately dangerous roadways, but rather human factors make a city or town dangerous.  For example, cities along the southern border of the United States and Mexico are prone to exceptionally high theft rates due to the number of people that take vehicle to chop shops south of the border.  Of course, the types of vehicles that people choose to drive certainly determine how interested thieves are in that vehicle, but they also determine other things as well.

photo credit: uggboy

For example, a vehicle that has been statistically proven to be prone to mechanical failures may cause a very serious traffic accident that could result in very large claims and/or settlements.  Vehicles that are more expensive and/or difficult to repair also tend to cost more to insure for the same reason: claims.  The insurers protect themselves and their business from failure by increasing car insurance premiums to compensate for vehicles that would appear to be statistically more difficult to insure.  This causes premiums to increase, but there’s more.

There are different kinds of coverage, and different kinds of deductibles available.  Liability insurance covers the damage an insured driver does to others, collision and comprehensive (sometimes called comp and collision) covers repairs to the insured vehicle, medical coverage takes care of the occupants of the insured vehicle regardless of who caused the accident, Uninsured/underinsured motorist coverage covers medical bills when the other party lacks sufficient coverage.  Each of these types of coverage has limits and deductibles, both of which further impact car insurance premiums.

Coverage limits are basically caps on how much the insurer can be expected to spend.  This is done again to protect the insurer from extremely large claims, such as those brought on by people who need ongoing care or treatment that could result in payments in excess of millions of dollars.  Deductibles are how much money the policy holders are expected to pay whenever their vehicle is repairer or they see a doctor.  If the visit to the garage or hospital costs less than the deductible, then the policy holder pays 100% of the bill, but anything beyond the deductible is paid by the insurer via a claim.

Summing things up: your car insurance premiums are derived from complex formula that essentially calculates the amount of risk insurers assess to any given combination of user, city, vehicle, and usage.  Usage is essentially the estimated amount of mileage a vehicle will experience in any given time frame.  More usage slightly reduces theft in some cases, but it significantly increases the risk of a vehicle being involved in a traffic accident.