What You Need to Know about Auto Insurance Quotes
Whether you’re a novice or experienced driver, your search for an auto insurance policy should always begin with a price quote. To get the best possible deal on your coverage, it’s important to know how quotes work, what insurers look at when generating them, and what you can do to access the lowest available rates.
What is an auto insurance quote?
An auto insurance quote is a best-guess estimate of how much it would cost you to insure one or more vehicles through a particular company. To generate a quote, you will need to provide the insurer with some background information about you and the car(s) you want to insure.
Each company has its own informational requirements at the initial stage, but insurers usually focus on the following basic, general factors:
- Your age
- Your gender (in some U.S. states)
- Your marital status
- Where you live
- What kind of car you drive (make, model, year)
Some insurance companies also ask for additional information at the outset, related to things like:
- Your occupation
- Whether you own or rent your home
- Your credit rating
- General details of your driving record (traffic violations, accidents, convictions)
The more information a company collects from you at the outset, the more accurate your quote will be.
Factors that affect your quote
Beyond your personal details and information about your vehicle, residence, credit rating, occupation, and driving history, quotes also depend on the preferred structural features and characteristics of your policy. This includes such factors as:
- Coverage type(s): If you elect to purchase only the bare minimum required in the jurisdiction where you will be driving, your quoted rate will be lower. However, this comes with a trade-off: you will leave yourself vulnerable to many financial risks, which you can address by adding optional forms of coverage that will deliver more complete protection but increase your annual premiums.
- Coverage limits: Insurance policies come with caps on the maximum financial value you can claim. These caps are known as “coverage limits,” and the higher your limit, the more your policy will cost — and the more protection it will provide.
- Deductibles: All auto insurance policies come with deductibles, which represent the amount of money you must pay before your coverage will activate. For example, if you require $2,000 in repairs and your policy has a $250 deductible, you will have to pay that $250 out of pocket and your insurer will cover the balance. The higher the deductible you choose, the lower your quoted rate will be.
Some other factors apply, such as how you use your vehicle (personal or business), your previous claims history, and how many miles you drive in an average year.
In some cases, insurance companies also consider how long you have been a customer of your current or previous insurer, and whether or not you have any gaps in the continuity of your auto insurance coverage.
How to get a quote
There are several different ways to request an auto insurance quote:
- Visit an insurance office: If you like to do things the old-fashioned way, you can visit local insurance offices and request a quote in person. The advantage of this approach is that your customer service representative can customize the session, which can vastly improve the accuracy of your quote.
- Call your preferred insurance provider: Almost all insurance providers offer prospective customers the option to request a quote by phone.
- Enlist the assistance of an insurance broker: An insurance broker is an independent professional who works with individual clients, making recommendations and providing helpful advice. They are not affiliated with insurance companies, and thus always work to protect their clients’ best interests. You can work with a local broker who can collect quotes on your behalf.
- Go online: The internet has become a very popular source of quotes. You have two main options: (1) request an online quote from a specific provider, or (2) use an aggregator service to collect quotes from multiple, competing providers and compare prices.
Online quotes are becoming more and more popular since they make shopping for insurance quick and efficient. However, keep in mind that a growing number of insurance companies and aggregator sites only complete your quote request once you enter your contact information. If you do not finalize your purchase right away, you may then receive solicitations by email and/or phone, which some people prefer not to get.
Are quotes always accurate?
Auto insurance quotes are, by definition, estimates. They can be highly accurate, or they can change significantly, depending on how much information the provider asks you for up-front. More importantly, quotes also depend on how detailed, accurate, and honest you are when answering the initial questions.
In general, the more questions a provider asks you, the more accurate the quote will be. The opposite is also true: providers that only collect bare-bones basic details create wide latitude for pricing disparities.
You should not treat a quote as a firm, final price. Instead, think of it as a “best guess” as to how much the provider will charge for the policy you’ve requested.
To make the process faster and easier, you should have the following information on hand when you begin your quote request:
- The age at which you were first licensed to drive
- Your driver’s license number and Social Security Number
- The make, model, and year of the vehicle(s) you want to insure, along with their current mileage
- Specifics about any anti-theft or advanced safety features your vehicle(s) have
- Complete details about your driving record, including traffic tickets and convictions for traffic violations or criminal offenses you committed while in the act of driving
- Details of your current insurance policy: who your provider is, the type(s) of coverage you have, and how long you have been their customer
- Information about your claims history: have you ever filed or been paid out for an auto insurance claim before? If so, what are the details and circumstances?
- Documentation related to the completion of any driver safety courses you’ve taken
You should also have this information available for every other person who will be named on the policy.
Does requesting a quote affect your credit score?
Some insurers take your credit score into account when calculating your quote. This requires them to request information from credit reporting bureaus, and you may be worried that this can negatively impact your score.
Your credit rating only goes down (temporarily) if an inquiry requires a “hard pull” of your credit data. This usually happens when you apply for a bank loan or mortgage. Auto insurance providers do a less stringent check known as a “soft pull,” which will not have any effect on your score, temporary or otherwise.
Ways to lower your quote
If qualifying for the lowest possible rate is your top priority, there are a few strategies you can use:
- Opt to carry only core or mandatory forms of coverage
- Reduce your coverage limits
- Raise your deductible
- Apply for discounts based on your profession, academic achievement, or membership in charitable or professional organizations
Keep in mind that for every action, there is an equal and opposite reaction. Scaling back the scope of your coverage leaves you exposed to financial risks, as does lowering your coverage limit or raising your deductible. When it comes to auto insurance, the bottom line tells only part of the story, so keep this in mind as you shop around.