Car Insurance Buying Guide

It is a common misconception that insurers reward customers for sticking around. A recent national survey commissioned by CR shows that you can save money by shopping around for a better rate from time to time. Twenty-eight percent of the members we surveyed told us they’d switched insurers in the past six years. Among those, 58 percent said they’d found a better price, and 37 percent said they switched because of premium increases from their previous insurer.

“Price optimization” can be another reason to shop for a new insurer every few years. So far, 20 states have outlawed this controversial practice, which allows insurers to raise rates for reasons that aren’t related to increased liability risk. Here’s how it works: If an insurer figures you aren’t likely to jump ship to another carrier, it may raise rates just because it can, costing you extra money.

If you get married, add a teen driver to your policy, or add or remove a vehicle, or the distance of your commute changes—as it did for many people during the pandemic—ask your insurer how much the changes will cost or save you. Shop other insurance companies to see which carrier can give you the best rate. Remember to ask for an adjustment to your coverage to reflect your car’s depreciation; insurers don’t necessarily do that without your prodding.

For a comprehensive list of insurers that might not be visible with a simple Google search, consult CR’s car insurance ratings.

Securing a lower premium is important, but price isn’t everything. Find a carrier that—in addition to having competitively low premiums—provides fair and fast claim settlements, offers great customer service outside of claims, helps you review your policy thoroughly, and proactively offers help and advice.

CR rates insurers based on member feedback on the cost of their premiums, the ease of processing claims, the quality of non-claim-related customer service, thoroughness of policy review, clarity of policy coverage, and proactive help and advice. To create our ratings, we surveyed 40,251 CR members in the summer of 2022 about their car insurance. They provided us with 47,713 reports on their experiences with the car insurance companies they did business with, and told us whether they had switched insurers or filed a claim between 2018 and 2022. (CR members’ experiences are not necessarily representative of the U.S. population.)

Most states require drivers to have at least minimum coverage, but it’s a good idea to bolster your coverage beyond these minimums if you can afford to do so.

Liability insurance: This covers bodily injury and property damage caused to another party in a crash. Experts recommend buying more than the legal minimum even if you don’t have much in assets to protect. Depending on your state, a portion of your wages could be garnished in a judgment against you. A more protective level of coverage is $100,000 per person, $300,000 per incident, and $100,000 for property damage. Douglas Heller, an insurance expert at the Consumer Federation of America (CFA), says an umbrella liability policy may be worth considering because it extends coverage for both your car and home, and it offers additional protections as well. Those policies usually increase the per-person coverage to $300,000.

Low-limit coverage: Heller says that although they offer better protection, umbrella policies and policies with higher liability limits can be difficult for lower-income drivers to afford. Currently, only three states—California, Hawaii, and New Jersey—offer specialized insurance coverage for lower-income drivers. Heller says that having low-limit liability coverage is better than going without insurance, or simply not driving, which can cut people off from economic opportunity.

Uninsured motorist coverage: In many states, this coverage is optional—but worth having. According to the Insurance Information Institute, 1 in 8 drivers don’t carry car insurance. That’s a statistic that has remained fairly constant for more than two decades, making uninsured motorist coverage a smart buy, even if it’s not required. This coverage, which is usually inexpensive, pays medical bills for you and your passengers after a crash caused by an uninsured, at-fault driver. Why get it in a no-fault state, where your company pays regardless of who’s at fault? Because it reimburses for lost wages after a crash. Uninsured motorist insurance also covers you and your household as pedestrians, and in hit-and-run crashes. (Pedestrian fatalities have been on the rise in the U.S., increasing by 54 percent from 2010 to 2020, according to the National Highway Traffic Safety Administration.) Heller says you want to get at least as much coverage for yourself as you would get for others involved in a crash.

Underinsured coverage: More motorists are opting to carry only state-mandated minimum liability coverages in order to save money. Underinsured coverage protects you if you get into a crash with someone who doesn’t have enough insurance to cover the cost of injuries and property damage.

Collision insurance, which pays for crash damage, and comprehensive insurance, which protects against vehicle theft and damage caused by storms and such, are two types of coverage you may be able to whittle down in order to reduce your premium. You also may be able to forgo other types to save even more money.

Adjust your deductible. Raising your comprehensive and collision deductibles from $500 to $1,000 can shave 11 percent off your premium on average, says Hunter at the CFA. Just make sure you can afford to pay the extra out-of-pocket cost if you’re unfortunate enough to get into a crash.

Older cars don’t need extra coverage. Consider dropping collision and comprehensive coverage when your annual premiums equal or exceed 10 percent of your car’s book value. Otherwise, you could end up paying more over time than you would recoup for repair or replacement of your damaged, stolen, or totaled vehicle. (If you have a car that is appreciating and is old enough to be considered a classic, and you don’t drive it to and from work and for most errands, consider getting a classic car policy. That type of coverage insures your car for an agreed-upon value based on its collectability and other factors.)

Drop rental reimbursement coverage. If you have another car you can use while your vehicle is being repaired, you don’t need to buy this coverage. You can also skip roadside assistance coverage if you have an auto-club membership that’s a better deal, or if roadside assistance comes as part of your car’s warranty.

Review personal injury protection and medical payments coverage. If you already have good health coverage, you don’t need it through your auto policy. Keep the coverage if you don’t have health insurance, or if your usual passengers might not be well-insured.

Actively pursue discounts. They can include breaks for bundling home, auto, and umbrella policies with the same carrier; taking a safe-driving course; letting your carrier know about your lower annual mileage; and reporting your teen driver’s good academic average, typically a B or better.

Keep your credit and driving record clean. Both have an impact on the price of your insurance premium. For the best rates, you’ll need to have at least three years of clean driving. In most states, the better your credit score, the lower your rates will be.

Choose your car wisely. Premiums vary by model. When comparing models, ask your insurer for premium quotes on the different vehicle models that you’re considering. Luxury and high-performance cars tend to cost more to insure than more mainstream models.

Assign the right driver to the right car. Ask your insurance agent who the principal driver should be for each car in your household. Basing those matchups on individuals’ driving records and car values might save you money. Pairing a lower-value car with the driver who commutes the longest distances, for instance, may cost you less than giving that driver the higher-value car. (Of course, this strategy may require come negotiation among family members.)