How to Compare Auto Insurance

Know how to purchase auto insurance easily and cheaply from a reliable company.
Did you know that in 2019, 61,462 auto insurance complaints were filed against insurance companies for which the state determined the insurer was at fault1? The fact is over half of complaints were due to claims handling, specifically due either to denial of claims, unsatisfactory settlement, delays, or promptness of pay2, and policy holders were left holding the bag in their hour of need.

It makes you wonder: “Do I have a reliable insurance provider?”

How to Choose the Right Insurance Policy

Choosing the right insurance policy can be challenging. Many variables are involved, and cost and reliability are two major ones. The vast majority of companies online will tell you that buying insurance is simple and that it is all about deciding on the right level of coverage and then collecting three or more quotes. But we know that it is a bit more involved than that.

When we buy insurance, we want to feel comfortable not only with our level of coverage and the cost but also with the insurer—otherwise we’re paying big money for pretty policy paper! Fortunately, Auto Insurance Nerd has closely analyzed people’s needs as well as vast quantities of insurance information to help you easily choose the right car insurance for your needs.

Buying auto insurance can be described in three easy steps that address the following:

  1. Determining reliability
  2. Deciding on a level of coverage
  3. Comparing quotes

Determining Reliability

In 2020, the United States has over 600 insurance companies insuring drivers. So it is important to view these insurers ratings on both their claims satisfaction and financial strength to know which companies are dependable.

Companies that receive a high claims satisfaction rating from their customers will be reliable when you need to file a claim. However, a company also needs to be well-funded and not overextending itself by taking more policies than it can afford to pay out. And a high financial strength score of A+ or higher (it goes to AAA) shows that a company has plenty of finances to cover your claims.

These kinds of ratings are provided by J.D. Power, Consumer Reports, BBB, and A.M. Best. These experts interview customers and analyze insurance companies’ books to provide a rating that you can rely on.

Take a look at the chart below and you should see just how dependable popular insurers really are.

Top 25 Insurance Companies’ Rankings

Claims RatingClaims RatingOverall RatingOverall RatingFinancial Rating
CompanyJ.D. PowerConsumer ReportsConsumer ReportsBBBA.M. Best
NJM Insurance Co.5590B-A+
Amica Mutual5589A+A+
COUNTRY Financial5479A+A+
Erie Insurance3586A+A+
State Farm3478A+A++
The Hartford3474A+A
Auto Club 3483A+A-
American Family3476AAu
Automobile Club of S.C.3-70A+A+
Liberty Mutual3472AA
CSAA Insurance3479A-A
MAPFRE Insurance2374A+A
National General2474A+BBB-

Note. J.D. Power and Consumer Reports’ claims ratings are shown on a scale of 1-5 with 5 being the highest. The overall ratings provided by Consumer Reports and the BBB range from 0-100 and F-A+, respectively; NR means No Rating. A.M. Best’s financial rating is shown on a scale from C-AAA.

Deciding on a Level of Coverage

Now that you know which insurers are trustworthy since looking at the table above, the next step is to determine the level of insurance coverage that meets your needs. Everyone’s situation is different, and that is why you may either want the minimum coverage required by law to save on premiums or somewhat broader coverage that better protects your finances in case of an accident.

Auto insurance should be viewed in two parts. First, the five types of coverage. And second, the liability limits. The following provides you with a quick introduction to each of these coverage points. As you read about the coverages, keep in mind whether minimizing potential financial loss or your premiums is more important to you.

Liability Coverage

This coverage is required by law in most states.

Bodily injury insurance. This covers injuries that you cause to others as well as yourself.

Property damage liability insurance. This covers damages that you cause to someone else’s car or to any objects and structures your car hits.

Uninsured/Underinsured Motorist Coverages

This coverage is also required by law in most states.

Uninsured motorist bodily injury. This covers bodily injuries that you and your passengers receive if hit by either a hit-and-run driver or an uninsured driver who is at fault.

Uninsured motorist property damage. This covers damages to your car if hit by either a hit-and-run driver or an uninsured driver who is at fault.

Uninsured motorist coverage. This covers bodily injuries that you and your passengers receive if hit by an underinsured driver who is at fault.

Medical Coverage

This coverage is required by law in some states.

Medical payments insurance. This covers bodily injuries that you and your passengers receive regardless of who is at fault.

Personal injury protection. This also covers bodily injuries, but may be extended to lost wages, funeral costs, and more.

Excess medical payments. This covers necessary medicals costs beyond personal injury protection coverage.

Coverage & Deductibles

This is not required by any state law.

Collision and deductible amount. This covers repairs to your car or cash for a “totaled” car after you have paid your deductible.

Comprehensive (other than collision) and deductible amount. This covers repairs to your car that do not result from a collision after you have paid your deductible. Covered conditions might include fire, theft, vandalism, falling objects, hail, flood, or an accident involving an animal.

Optional Coverages

Rental reimbursement. This covers daily rental car charges while your car is being repaired for covered damages.

Towing coverage (roadside assistance). This covers any costs that result from your car becoming disabled. Covered conditions might include towing and locking oneself out of the car.

Guaranteed asset protection. This covers any accident that results in your car being worth less than the loan still on the car and can help you pay off the loan.

Liability Limits

Liability insurance covers three costs, generally represented by three numbers (e.g., 25/50/25), that respectively address the maximum amount in thousands of dollars that the policy would pay for the following:

  1. Bodily injury per person (states’ required minimum ranges from $10,000-$50,000)
  2. Bodily injury per accident (states’ required minimum ranges from $20,000-$100,000).
  3. Property damage that you cause in one accident (states’ required minimum ranges from $5,000-$50,000).

The most common required minimum coverage is 25/50/25, which meets or exceeds the requirements of 44 states and the District of Colombia. But, to decide how much liability coverage you need, first check your state’s minimum requirement provided here by the Insurance Information Institute (III). Then, consider whether your financial situation would benefit from additional coverage in case of a serious accident.

You now have a clear understanding of what car insurance coverage is available to you. Be sure to determine whether your state requires uninsured/underinsured or medical coverage and the maximum deductible allowed according to the III’s link above. Also consider whether you could benefit from any optional coverages to further protect your finances in case of an accident. If you decide that you can cut back on some coverage to save on your premiums, consider what you will cut back on: specific coverages areas, your liability limits, or both? Increasing deductibles to your State’s allowed maximum is another option.

Once you’ve thought through and decided on your coverage needs, you are ready to start comparing some quotes.

Comparing Quotes

Now that you have your level of coverage in mind, you can begin comparing quotes from a variety of insurance providers. While you browse auto insurance quotes, keep in mind the reliability of each insurer by checking back to this page.

Two sites that offer real-time online quote comparisons are:

Note. Auto Insurance Nerd is not affiliated with either website in any way.

Once you’ve found the cheapest quote from a reputable provider using one of the online quote comparison tools, lock in that deal!

Congratulations! You should now have the best auto insurance deal from an insurer that you can rely on.

1,2Closed confirmed consumer complaints data provided by the National Association of Insurance Commissioners (NAIC).