Understanding Car Insurance Estimates

Car insurance is an unavoidable expense, but you shouldn’t pay more for it than necessary. If you’re buying a car, truck or SUV, get a few insurance estimates before you commit to the purchase so that you know what it will cost you to own and drive the car.

Types of Car Insurance

You have three different types of insurance to consider for your car:

  • Liability insurance is the coverage that states require car owners to have. You’ll need to have this coverage in place at the minimum required by your state to drive legally. Liability insurance covers property damage to other people’s property and their medical expenses in the event of an accident that’s your fault.
  • Collision coverage covers damage that happens to your car. This coverage will only pay you as much as the cash value of your vehicle.
  • Comprehensive coverage is necessary for protection from loss for theft or damage to your car from fire, flood, hail, vandalism and situations involving animals.

Factors That Affect Price

There are several factors that determine how much you pay for insurance:

  • Less-experienced drivers will have higher premiums thanks to the statistics that say that these drivers are more likely to have accidents. Once you hit age 25, if you’ve got a clean driving record, your rates should be lower.
  • Married drivers will often pay less for insurance than single people.
  • If you live in a highly populated area, insurance companies may rate you up due to the higher likelihood of accidents due to more traffic.
  • The number of miles you average per year could drive up your rates. Insurance companies might charge higher rates for people who drive 30 miles or more to commute.
  • Expensive cars that are expensive to fix will be more expensive to insure.
  • If you have a history of accidents or citations, you will probably have higher rates.

Requesting Estimates

Once you settle on a car, the next step involves figuring out the coverage you want. You’ll need to get at least the minimum amount required by your state for liability coverage. Adding collision and comprehensive coverage depends on your budget and the value of the car. New car purchases should usually include these options. For used cars, you might forgo them. Although a lender might make you get this coverage if you take out a car loan.

Most insurance companies have estimate tools on their websites that let you enter details about the car and your personal demographics to give you a quote for coverage.

Comparing Coverage

It’s smart to get a few quotes so you can compare coverage and pricing for different insurance companies. You can also compare prices for different options and levels of coverage to explore pricing. Check out what changing your deductible does to the overall price for coverage too.

Tips for Reducing Premiums

Paring down your coverage is the best way to reduce your insurance premium. Keep in mind that if you just buy the minimum liability coverage, and you are at fault for a serious accident, you could be sued to cover these expenses.


Sometimes, just shopping around to compare pricing between companies will help you save money because different companies use different formulas that result in lower pricing.