Oranges

Comparing car insurance can be confusing and difficult. CoverHound makes it easier. This guide is divided into two sections – one on how to compare car insurance policies and another on how to compare car insurance companies.

Comparing Car Insurance Policies

When comparing car insurance policies, there are three numbers that are of particular importance. They are the bodily injury limit per person, the bodily injury limit per accident and the property damage liability limit. Each has a distinct meaning, in terms of the limits of your car insurance.

While every state sets its own minimum required limits, every state requires you to carry a certain amount of coverage for each. Take Texas for instance. Texas minimum car insurance limits are as follows: 25/50/25. That means that the minimum liability coverage for each injured person is $25,000, a limit of $50,000 for all injured persons, and $25,000 minimum car insurance coverage for damage that you do to someone else's property (it's important to note that your liability property damage doesn't cover cost to your vehicle or property). These minimums change often - Texas' minimum car insurance limits will rise to 30/60/25 on January 1, 2011 - but don't worry, no reputable car insurance company will sell you a policy that does not meet the state's minimum requirements.

In general, the higher the limits the better since that means that you have more coverage in case you incur damages in an accident that is deemed to be your fault. Also, just because you carry the state minimum amount of car insurance coverage doesn't mean that you couldn't be on the hook for additional damages beyond your car insurance if you cause an accident. For instance, if you were to damage a very expensive car (like a Ferrari) a court could order you to pay a sum in excess of the state minimum required car insurance or even in excess of your car insurance limits even if they're higher.

Of course, lower car insurance limits generally mean lower car insurance rates so lots of people still choose to buy the least amount of car insurance required to stay legal. But if you can afford higher limits, it's always a good idea to be safe rather than sorry.

Car insurance liability limits are the most important thing to keep in mind when comparing car insurance policies but there are other concerns that you should keep in mind. Does the car insurance policy include rental car insurance that would completely or partially offset the cost of renting a car while your car is in the shop after an accident?

Another very important consideration is whether your car insurance policy would cover the cost of fixing or replacing your car in the event that you cause an accident. That coverage is referred to as “Collision Car Insurance” and has it's own deductible (the amount that you pay before insurance kicks in). Also, does the car insurance policy cover the cost to replace your car is it's stolen. That's called “Comprehensive Car Insurance”. Both of these additional (and generally not required by your state) are going to cost extra but they may well be worth every penny is you're involved in an accident or if your car is stolen.

Comparing Car Insurance Companies

A big consideration here is a car insurance company's AM Best rating which can be found at www.ambest.com. This is like a credit score for car insurance companies and is a measure how likely a car insurance company is going to be able to pay a claim in the event that you are involved in an accident or your car is stolen. Ratings are given like school grades with A++ being the highest rating given. CoverHound only work with highly rated car insurance companies.

Another thing to consider is whether a car insurance company sells directly to consumers or sell their products through local car insurance agents (many companies do both). While one's not better than another, if you're one of the millions of people who would prefer to buy car insurance from a local agent, this is something to keep in mind.

The most important thing to remember when comparing car insurance companies is to ask questions about each company in addition to getting a car insurance quote. The price that you're quoted is only part of the story when it comes to car insurance. So when you compare car insurance companies and polices, make sure that you're comparing apples to apples. 250/500/250 car insurance policies offer a lot more coverage and financial protection than 25/50/25 policies so they're going to be more expensive.

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