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Understanding Car Insurance Quotes

Simply put, a car insurance quote is an estimate of the amount that you will have to pay for a certain amount of auto insurance coverage from a specific car insurance company.  When you seek for a car insurance quote from an auto insurance company, it is important for you to remember that it is just an estimate. Furthermore, the estimate is based on the accuracy of the information that you provide, so it is important for you to be honest if you want an accurate quote.  

What Information is Included in an Car Insurance Quote?

An auto insurance quote includes much of the information that is necessary for you to choose the company offering you the best rate on auto insurance. Thus, an auto insurance quote contains:

  • the specific types of coverage you are requesting;
  • the limits that you will receive on each type of coverage: Limits often include per person and per accident. For example, for liability coverage may be written as 100/300/100 which means $100,000 per person bodily injury, $300,000 per accident bodily injury and $100,000 property damage per accident limit; and
  • the deductible amount is typically included since this can affect your rate.

What Factors Affect a Car Insurance Quote?

Auto insurance companies take into account a number of factors when they are deriving a quote for you. Below are the factors in the order of importance:

  • The types of coverage and coverage amounts: The more coverage types and the higher coverage amounts, the more expensive the quotes are.
  • Driving record is taken into account. This includes the number of driving violations you have received, what they were for, and the number of at-fault accidents you have been in (car insurance companies may actually consider all accidents but claim they consider at-fault accidents).  
  • Car insurance history is also taken into account. This includes whether you have had continuous coverage and the number of claims that you have filed in the past.
  • Location: Your location usually correlates with the probability of accidents and other risks such as vandalism. It is understandable that there tends to be more accidents and break-ins in areas with higher population density. State and local laws could also affect car insurance quotes.
  • Credit score: Insurance companies price drivers with bad credit scores at a higher rate than those with good credit scores, except in three states: California, Hawaii, and Massachusetts.
  • Personal demographic information: your age, your marital status, your gender, your level of education, and your occupation. Much of this information does not seem to have anything to do with your driving; however, statistics show that these factors can affect the likelihood that a person is in an accident. However, one new auto insurance company that seeks to change this is Root Car Insurance which makes your driving the main factor in determining your car insurance quote.

What Information Do You Need To Get A Car Insurance Quote?

  • Coverage Types and Coverage Limits: The easiest way to get an auto insurance quote is to obtain a copy of the declaration page of your current car insurance.  This declaration page includes the information that your current car insurance company used to determine your rate and is exactly what another auto insurance company needs.  
  • Vehicle Information: All basic information such as make, model, year, and current mileage. Also, prepared to provide vehicle’s VIN (vehicle identification number) of all vehicles included in the policy
  • Driver’s Personal information: full name, gender, marital status, and age of all of the drivers in your household who are being included on the policy
  • Annual Mileage: Car insurance quotes vary by the number of mileage you drive annually. The more you drive, the higher the quotes are. Ideally, car insurance companies wish to know the timing of your frequent driving as well, but that information might not be readily available.
  • Current Insurer: If you are not currently insured, your will be automatically qualified as “high-risk driver” and your quotes will be very expensive and sometimes it is very difficult for you to obtain car insurance. In some situations, you may not be able to get car insurance altogether if you are not currently insured because
  • Credit Score: The higher your credit card, the lower your care insurance quotes are. If credit score is too bad, lower than 400, you may also be considered a high-risk driver as well.
  • Driving Record: In order to provide the final quotes, car insurance companies must obtain your driving record of the past 5-7 years. They usually pay for this report. All traffic citations such as violations, accidents, DUI, etc., if any, you have ever had in the past 5-7 years are in your record. The more citations you have in your record, the higher the quotes are. And you are likely to be considered a high-risk driver. In some cases, you may be required to file for SR-22 certification together with an auto insurance policy; or you may not be able to obtain car insurance altogether.

When Should You Get A Car Insurance Quote?

You should get an auto insurance quote at the following times:

  • If it is your first time buying car insurance
  • When you are actively seeking to change car insurance companies
  • If you purchase a new car
  • When you move to a new location
  • When your credit score has significantly improved
  • If you have recently received a DUI, reckless driving ticket, or been in a serious at-fault accident
  • If you have been in a number of small accidents
  • If you have receive a significant number of moving violations
  • If you have been recently classified as a high-risk driver
  • If you are no longer a high-risk driver
  • If you want to change your coverage options
  • You have a new teenage driver

You should get and compare car insurance quotes periodically even if you are happy with your current car insurance rates. Fortunately, getting free car insurance quotes online is relatively easy and simple nowadays. In addition, you can also get multiple car insurance quotes from insurance brokers who represent several carriers and can help you get and compare quotes from the carriers that they represent.

Another time you should get a car insurance quote is when you purchase a new car.  Car insurance companies base their rates on the type of vehicle you drive and a more expensive vehicle may raise your rates.  Furthermore, if your vehicle is financed, you may be required to have Gap insurance, a coverage that not all car insurance companies offer.  Moreover, some auto insurance companies give you a discount for insuring a new car, especially one with additional safety features.

Car insurance companies also base their rates on your address.  Therefore, if you move from an urban area to s suburban area or vice versa, you may want to check out the rates that different auto insurance companies are offering for your coverage.  This also goes for changes in your credit score.

You should also obtain car insurance quotes if you receive a DUI, reckless driving ticket, been in a serious at-fault accident, or had other significant changes to your driving record occur since you purchased your insurance.  In fact, you should obtain car insurance quotes as soon as possible after these events. The primary reason for this is that these events can result in a significant change in your car insurance rate. Furthermore, some auto insurance companies may go on and cancel your auto insurance policy altogether.  Thus, you need to have auto insurance quote so that you can get new auto insurance immediately.

>>MORE: Compare Car Insurance Quotes from Different Companies

How Accurate Are Car Insurance Quotes?

Car insurance quotes tend to be fairly accurate so long as you have all of your information available and submit it accurately.  This does not guarantee that this is the rate that you will receive from the auto insurance company if you purchase insurance unless it is a bindable quote.  A bindable quote is the rate for which an auto insurance company will provide you with a certain amount of coverage so long as all of the information that you provided is true and accurate.  Most auto insurance quotes that you receive, however, are unbindable quotes, which means that they are estimates that are subject to change until the auto insurance company has had a chance to look over the information that you provided and evaluate it for accuracy.

>>MORE: Who has the Cheapest Car Insurance?

The Bottom Line

The bottom line is that an auto insurance quote is simply an estimate of how much you will pay for a certain amount of coverage with a certain deductible from an auto insurance company.  To get the most accurate auto insurance quote, it is important to make sure that all of the information that you enter or provide your auto insurance agent is as true and accurate as possible.  There are several different times when you should get an auto insurance quote. These times include when you are actively searching for auto insurance, when your driving record has significantly changed, or when you have purchased a new car.  You may also want to shop around from time to time to find out if you are getting the best rate. To obtain an auto insurance quote, you should either have the declaration page of your current auto insurance or a copy of your driving record, credit score, the year, make and model of your car and information about other drivers in your household that will be included in your policy.

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