Are You Making An Apples-To-Apples Insurance Comparison?
Most people have a singular goal when shopping for car insurance: lower prices. Unfortunately, this approach relies on the incorrect assumption that any two insurance policies are interchangeable. In reality, the benefits you receive from your auto insurance can vary from one provider to another, as can the level of service you can expect.
While shopping around for a better rate is a great way to save money on your auto insurance, you should also ensure you're making an apples-to-apples comparison. If one company offers a cheaper premium, it can pay to take some time to understand why their rates are better and whether you're receiving the same coverage as you would with a more expensive policy.
How Do Insurance Policies With Similar Coverage Differ?
Most people understand the basics of automotive insurance. Essential coverage (in at-fault states) includes liability, collision, comprehensives, and medical payments, with uninsured/underinsured coverage as an extra level of protection. No-fault states work differently, and you'll typically only need personal injury protection (PIP) if you live in one of these areas.
Comparing basic policy coverage is usually fairly straightforward. For liability or medical coverage, you can compare the maximum coverage amounts directly. Likewise, you can easily make a like-for-like comparison of collision or comprehensive coverage by looking at your deductibles. However, the similarities usually end there.
Many insurers offer added or bonus coverage on top of their basic policies. These benefits may include rental car reimbursement, no-deductible glass coverage, roadside assistance, or even vanishing deductibles. Some companies may include these extras as part of your normal policy coverage, so you'll need to read the fine print to understand how two seemingly similar policies might differ.
How Can You Make a Direct Comparison?
The easiest way to directly compare two policy quotes is to understand your needs. Do you want rental car coverage? If so, do you want enough coverage to rent an equivalent car, or are you okay with lower daily limits? Do you already have roadside assistance, or will you rely on your insurance policy for this added benefit?
A more expensive insurance policy with more features you need may still be a better deal than a cheaper, more barebones policy. On the other hand, you might not be interested in these extras at all. If you're looking for essential coverage and nothing more, it may not be a financially sound decision to pay higher premiums for policy benefits you don't need or won't use.
Ultimately, no single rule will work for every situation, and everyone's insurance needs will differ. However, clearly understanding the details of every policy you consider and making a fair, apples-to-apples comparison will provide you with the best information to select the coverage that fits your requirements.
Contact an auto insurance agent to learn more.