Picking out the best car insurance for your needs can be overwhelming, especially when it’s the first time you’re doing it. Not only are there many different companies to choose from, but there are also different levels of insurance, such as liability and full coverage, as well as different prices for each level that depend on the company you decide to go with.

It may leave you wondering what the difference is when it looks like you're getting all the same things for such a wide range in estimates. Make sure to read this list to gain a better understanding of what to consider before going out and purchasing auto insurance.

How do companies determine your insurance rates?

The first step to determine what your rate will be is known as underwriting. This is done to determine what the risk is with the applicant, and it’s used to decide whether the company will insure you. Second, if the company decides that they will accept the application, they move onto the second step, which is rating. This will give a specific price on what is believed the cost will be for the financial responsibility for a possible claim.

What factors affect your overall insurance rates?

Driving record: Previous violations or accidents on a past driving record places the individual as high risk, creating a higher insurance payment.

Geographic territory: Typically, an urban area will have a higher claim than a rural area.

Gender: Males tend to have more accidents than females, causing them to have a higher rate.

Age: Different age groups tend to be viewed as higher risk, such as under 25 years old.

Marital status: Those who are married tend to have lower rates of claims.

Prior coverage: Insurance companies check to see if in the past, you have been dropped due to not paying your insurance premium.

How often the vehicle is used: Driving the vehicle more frequently puts you at a higher risk of accidents and/or violations.

Make, model, and year of the vehicle: New and luxury vehicles are more expensive to insure. A brand-new car right off the lot will almost always be more expensive to insure than a second hand car that you bought.

Shop around for different companies before you settle on one

Make sure to give every potential company the same information so that the quotes are as reliable as possible. Moreover, make sure to get a detailed list of what’s covered under the quote that they give you to compare with the other companies you’re looking into. 

The different ways to obtain free car insurance quotes include online, by phone, or face-to-face. You can visit the websites of your prospective insurance companies and compare quotes. Checking a website that provides quotes from different insurance companies on one page will help you save time. Review sites usually provide this information, along with a buying guide, helping consumers decide on the best car insurance that suits them. You can also visit or speak with a local insurance agent who will help you determine the right car insurance you can afford. However, an insurance agent might recommend the more expensive insurance plan in order to earn a higher commission.

Where to look for insurance companies

Of course, browsing online and looking at reviews of each company and each agent can be beneficial, but be sure to check around with family and friends to see who they use or have used in the past. They will be able to tell you about anyone they think you should avoid or look into based on their personal experiences.

When looking for insurance companies online, visit the insurance provider’s website, where you can find all relevant information, such as the insurance plans, rates, and testimonials. Check the profile or ‘About Us’ page, which usually includes details about the history or humble beginnings, number of insurers, and achievements of the insurance company.

You might want to consider choosing an award-winning insurance company. This way, you’ll have peace of mind that you’re dealing with a reputable provider that’s recognized by respected organisations and award-giving bodies. And you’ll be sure that they offer value to their clients. For instance, insurance providers who win the Mozo People's Choice Awards are the ones that have received the best feedback from thousands of Australian consumers.

Check for any possible discounts

There are some discounts that companies will offer because they see you as a better risk or lower risk. Potential discounts are for good students, good drivers, multiple vehicles, a package for auto and home, low mileage on the vehicle, anti-theft systems, and more. Check with companies that you’re interested in to see what discounts they may have.

Read the policy very carefully

An insurance policy is a legal contract and is written so that all parties' rights and responsibilities are stated clearly. Make sure to read the policy thoroughly, so you understand all of its contents. Contact your agent if something is unclear to you or you need clarification on anything. You also have the option to sit down with your agent and go over the policy line for line with them. You can take notes and ask questions if you have any.

Conclusion

Insurance is required to drive a vehicle, but don't rush the process and sign up with just anyone. While shopping for insurance can be overwhelming, following these six tips will help make the process easier and provide you with enough knowledge. You can always reach out to family and friends. They might share some helpful recommendations or give advice on providers you need to avoid, so you won’t have to waste time talking and getting quotes from them.