We’d have to call several insurance providers and spend hours on the phone. Even worse, drive to each insurance provider in person. This process could take days.
Today, if we wish to compare auto insurance rates, it’s much easier than the past. Online tools such as auto insurance calculators and quote software make it quick and simple. In fact so simple they allow you to both research and compare auto insurance rates as well as companies.
But it’s important to know that online calculators and quote tools work differently.
In this article, I’ll define each tool. In addition, I’ll talk about how each one works to compare auto insurance rates. I’ll also discuss the differences to help you decide which is the better tool to compare auto insurance rates.
Watch this short video Explaining the Basics of Car Insurance
Calculators Vs. Quotes: How to Compare Auto Insurance Rates
1. What Is an Auto Insurance Calculator?
An auto insurance calculator is an online tool that provides a ballpark figure of what insuring your automobile will cost.
Calculators provide you a rough estimate based on certain criteria. They include general rates by zip code, your state, and your country as well as other factors.
Auto insurance calculators collect aggregated data from the internet to provide estimates when you want to compare auto insurance rates. When using a calculator you won’t have to provide too much personal information like your name or social security number. Your identity remains private and you will only need to provide general information.
Calculators also work fast. After you input your information, you should be able to compare in five to ten minutes, perhaps even sooner.
You only have to input your information once and the calculator will return multiple estimates from various insurance providers. Calculators are simple to find online and provide you with a variety of insurance premiums.
2. How Calculators Work to Compare Auto Insurance Rates
When you locate the auto insurance calculator, you will need to complete an online form. You’ll provide some general information starting with your 5-digit U.S. zip code.
If you live outside of the United States, the number in your zip code or geographical area identifier may vary.
Your zip code will help the calculator match you with state insurance requirements. Including local, regional and national auto insurance providers.
The calculator tool will then churn out a variety of estimates. The estimates come from the information you provide, the state laws and the insurance companies in your geographical area. Presto! Then you can compare auto insurance rates for you and your family.
Calculators enable you to compare auto insurance rates based on their estimates. This will help you access the most competitive auto insurance premiums.
The calculator tool can also provide you with special discounts, unique deals, and other savings opportunities. You can apply these towards your auto insurance premium.
3. Questions Calculators Ask You
There are many questions auto insurance calculators will ask to enable you to discover and compare auto insurance rates. Your zip code, the state you live in, your gender, and your age determine the rates.
However, some more intelligent calculators may require you to provide the following additional information. This additional information will give you a more accurate estimate.
What is the number of drivers you want to insure?
The number of drivers on your policy can greatly affect your auto insurance rates. You can receive discounts for insuring other family members.
What is the model and make of the car you drive?
The make and model of the car you insure matters. A new sports car will return a higher rate than an older car that has a lower value.
Here’s how it works: insurance companies create premiums based on risk. A brand new $50,000 Mercedes will cost the insurance company more money if you get into an accident. Compared to a used car worth a few thousand dollars would.
Other criteria based on the model of your vehicle gathered from the National Highway Traffic Safety Commission can also determine your premium.
How many cars do you want to insure?
The number of cars you want to insure can provide you additional discounts. It’s similar to how a cell phone provider will provide a better monthly rate with multiple lines on the plan.
What is your accident history?
Accident history is a big factor in determining what you’ll pay for your premium. You will pay more if you have had an accident in the past 3-5 years. On the other hand, you will pay a lower premium if you had no accidents in the past five years.
Are you are a homeowner?
Insurance companies consider homeowners responsible. This means if you own a home, you can receive a discount on your auto insurance. But note, this varies based on the auto insurance provider.
What is your risk tolerance?
Risk tolerance is based on how much you are willing to pay for your deductible. As you know, your premiums will be less if you pay a higher deductible. With a $1,000 deductible you will pay less compared to a $250 dollar deductible. Risk tolerance can bring down your insurance rates considerably.
4. What Is An Online Quote?
When comparing auto insurance rates, you can also research online quotes. These quotes tend to be more accurate than calculator estimates. More detailed data such as your personal information and driving history establish the quotes.
Quote software estimates are compiled from an auto insurance company’s rating engine. Quotes provide a fairly accurate estimate of what you will pay for your auto insurance premium.
Typical information quote software requires include your name, social security number and other personal details.
You might also have to provide your address and phone number to receive a quote. What you need to input will depend on the insurance website you are using.
Watch this Video Demonstration Of How To Get An Online Quote
5. How Online Quotes Work to Compare Auto Insurance Rates
Quotes work by compiling your data and matching it with data from a company’s rating engine.
When you compare auto insurance rates using online quotes, you have two options.
Visit a specific insurance company’s website.
Or use a price comparison website that will present you with price variations.
It works similar to the Travelocity travel website. You put in the data of where you want to go, from what airport and when. The website delivers a list of different airline options and the plane ticket prices for you to compare.
Put in the data in a comparison website and you’ll receive a list of insurance quotes to choose from.
Online quote software determines your rates by the answers you provide to the questions the tool asks.
Here are some of the questions quote software will want to know.
What is your social security number?
Your social security number provides a lot of financial and legal information about you. It is often used by insurance companies to determine risk.
How many miles do you drive your car every day?
Auto insurance companies want to know how many miles you drive your car each day. The more you drive your car, the higher of a risk you are to get in an accident. If you do a lot of driving, your premiums are likely to be higher.
Do you own or lease your automobile?
If you lease or finance a car you’ll need comprehensive and collision coverage. Even if you drive an older model car.
Comprehensive and collision insurance costs more than liability insurance and influences your premium.
Do you use your car for business?
If you have a business and you use your car for appointments, you may be required to purchase commercial insurance.
This will depend on the insurance company and the type of business you have. A commercial insurance policy costs more than a non-commercial insurance policy.
How many automobiles do you want to insure?
The number of vehicles you insure can influence your premium. If you insure more than one vehicle, it can help you save on your auto insurance.
Is your car equipped with anti-theft and safety devices?
Having anti-theft and safety devices can save you money on insurance because it reduces the risk of theft and injury.
If you don’t know if your car has an anti-theft device or safety devices, consult your owner’s manual.
Do you have any violations or tickets on your driving record?
If you have any violations, tickets or accidents in the last three to five years, you will pay more. A poor driving record presents a high risk to the insurance company.
Who is your current insurance company?
But, likewise, if you are insured with a low-risk insurance company, you can be rewarded with a lower rate.
When does your current policy expire?
If your current policy doesn’t expire for awhile, you can be considered a responsible shopper and eligible for a discount.
On the other hand, if your policy expires in a couple of days, an insurer might see that as irresponsible.
Does your vehicle have a salvage title?
If your car has a salvage title, it can work against you. Many insurance companies will not insure a driver with a salvage title until the repairs are fixed.
How many licensed drivers live in your household?
Other licensed drivers who live with you can affect your insurance rates, depending on their driving history. Insurance companies factor this in because they assume anyone in your residence can access to your vehicle.
Do you want to exclude any drivers?
If someone has a poor driving record that lives with you, you can exclude them from driving your car. Excluding them may lower your premium. However check with the laws of your state because some states do not allow exclusions.
When is your birthdate?
Your age can lower or raise your premium. Younger drivers with little driving experience pay higher premiums. Generally they are considered a higher risk when it comes to experiencing an accident.
What is your gender?
Gender plays a major part in your insurance rate. Since women statistically have been reported having fewer accidents, a woman can receive a discount. Age also can play a factor with gender as well.
Are you married?
Some insurance companies view married couples as more responsible drivers. Insurers believe they are less likely to become involved in an accident. If you are registered in a domestic partnership, you may also qualify for a lower premium.
What is your profession?
Your profession can affect your insurance rate. Certain job titles are associated with lower accident rates and can work in your favor.
For example, teachers often get auto insurance discounts. Believe it or not, your career can play a role in how much you pay for auto insurance.
6. Calculators vs. Quotes: Which Is Best?
Whether a calculator or an online quote, both have their benefits when you want to compare auto insurance rates.
A calculator takes less time and requires you to provide less personal information. However, calculators only provide a rough estimate of what you will pay for car insurance.
This means you might end up paying a different rate than estimated by the calculator. However, it can be a good first step if you are just looking and wondering what other drivers are paying.
In contrast, a quote will deliver more accurate insurance rates. As a result, it can take more time and requires you to input more personal data. But this can work in your favor if you have a good driving record and insurance history.
Now you have some actionable advice to help you decide which online tool is best for you. An auto insurance calculator or quote.
Whichever method you choose, make sure to visit at least three websites to compare auto insurance rates. This way you can receive the best price for your auto insurance policy.
Credit Squared helps consumers understand the complicated nature of personal finance. Our singular goal is to provide you with actionable tips and advice so you can become savvy in the world of finance. Contact us today to learn more about auto finance and other finance topics.
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