How to compare car insurance rates

Woman relaxing on her couch, smiling and comparing car insurance rates on her tabletImage: Woman relaxing on her couch, smiling and comparing car insurance rates on her tablet
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Before you buy an auto insurance policy, it’s a good idea to compare rates from car insurance providers. Doing so can help you find the best policy to fit your coverage needs and financial situation.

There are several ways to compare car insurance rates. While many insurers offer free car insurance quotes on their websites, you can also use third-party online comparison tools or work with an insurance agent.

Here are some steps to help you find an auto insurance policy with your budget in mind.

1. Gather some information to get a car insurance quote

To get a car insurance quote, you’ll need to give some information to the provider. Here’s what you’ll typically need to share.

  • Personal information — Insurers usually ask for your address, ZIP code, date of birth and coverage start date.
  • Vehicle details — These details may include the vehicle’s make, model and year; whether it’s paid off, leased or financed; and how the car is used.
  • Driving history — Insurance companies may ask how many violations or tickets you’ve had within a specific time frame, as well as when you first received a driver’s license.

These details are among the factors that affect your insurance rate or the types of coverage you may need. Be aware that some companies may run additional checks for other information, such as your driving record, credit history and past insurance claims, before providing a quote.

2. Identify the types of auto coverage you need

The car insurance coverage you need depends on a number of factors, like where you live and whether you lease or finance your vehicle. Before you buy a policy, be sure to check with your state department of insurance to find out what coverage is required in your state.

In general, there are six common types of auto insurance that may be included in your policy, and we’ve covered them below. But there are a range of optional coverages beyond these six types, such as rental reimbursement or towing and labor coverage.

The types of coverages available vary by insurer. If you’re looking for unique coverage options, it may help to search for insurers that specialize in these offerings.

Liability insurance

Liability coverage is required in every state except New Hampshire and Virginia. If you live in Virginia and choose to forgo liability insurance, you must pay an uninsured motor vehicle fee.

This type of insurance usually includes two separate types of coverage — bodily injury liability coverage and property damage liability coverage — both of which can protect you financially against other people’s claims if you cause an accident.

Uninsured or underinsured motorist coverage

Your liability insurance may also include uninsured or underinsured motorist coverage. This type of insurance pays you if you’re injured in a hit-and-run accident or by a driver who either doesn’t have liability insurance or doesn’t have enough to cover your damages. Uninsured motorist coverage is required in 21 states and the District of Columbia.

Comprehensive insurance

Comprehensive coverage helps cover damage to your car resulting from a non-collision event such as theft, vandalism, fire, falling objects or damage caused by an animal. Comprehensive insurance is optional, though your lender may require it if you finance or lease your car.

Collision insurance

Collision coverage is optional, but — like comprehensive coverage — it may also be required by the lender if you lease or finance your vehicle. This type of insurance helps pay for damage to your car resulting from a collision with another car or an object like a fence or tree.

Personal injury protection

Personal injury protection, or PIP, is required in states with no-fault laws. In these states, each driver files a claim with their own insurance company following an accident, regardless of who is at fault.

PIP coverage can help foot the bill for your (or your passengers’) medical costs after an accident. It may also help cover costs related to the accident, such as lost wages and funeral expenses.

Medical payments coverage

Similar to PIP, medical payments coverage can help pay for medical and funeral expenses for you or your passengers. Medical payments coverage may also cover your costs if you’re hit by a car as a pedestrian. An alternative to PIP, this type of insurance is usually optional and available in some states that aren’t no-fault states.

3. Determine how much car insurance coverage you need

Failing to buy enough auto insurance could put you at financial risk, but purchasing too much coverage could put unnecessary strain on your wallet. To figure out how much coverage to buy, consider factors like your state’s coverage requirements, your assets and other insurance, and your vehicle.

Your state’s coverage requirements

Each state has its own requirements for the minimum amount of liability coverage you need to buy. If your state requires other coverage like uninsured motorist, PIP or medical payments coverage, you’ll also want to find out what the required minimums are for those types of insurance. Check with your state department of insurance or state transportation agency to find out.

The lower your coverage limit, the lower your car insurance premium will be. But be aware that your state’s required coverage limits — the maximum amount your insurance company will pay on an approved claim — may not adequately protect your finances. Before you opt for the minimum coverage, consider your assets and other insurance.

Your assets and other insurance

When choosing car insurance coverage limits, think about the value of your assets, such as your home, savings and investments. These assets could be at risk if you settle on your state’s minimum coverage limits and later cause a major crash or are sued after an accident. If the resulting expenses are higher than your coverage limits and you don’t have the cash to pay the difference, you might have to tap into your assets.

It’s also a good idea to consider your health insurance and disability insurance when choosing a PIP or medical payments coverage limit. Combined with the coverage these policies provide, your state’s minimum requirement may be enough to protect you.

Your vehicle

If your lender or leasing company requires comprehensive and collision coverage, or you want to buy these types of coverage to protect a newer vehicle or expensive model, your coverage limit for each of these policies is typically the actual cash value — or current market value — of your car.

But you’ll still need to choose a deductible for each type of coverage. A deductible is the amount of money you’ll be responsible for paying before your auto insurance kicks in on an approved claim. Common deductible amounts are $250, $500 and $1,000. In general, the lower your deductible, the higher your premium will be. When choosing a deductible, weigh how much you could realistically pay out of pocket against how much premium you can afford.

4. Get and compare car insurance quotes

Once you’ve gathered your personal and vehicle information and have a sense of what types of coverage — and how much —you need, you can begin gathering and comparing quotes from multiple insurance companies.

As you review the quotes, ask yourself these questions.

  • Do all the quotes feature the same types and levels of coverage? If one quote includes only the minimum liability coverage required by your state while another contains a higher coverage limit, you’ll likely see a big difference in rates.
  • Are the deductibles the same across your quotes? If you plan to buy comprehensive or collision coverage, make sure that each quote features the same deductible for each type of insurance. Otherwise, you aren’t comparing apples to apples. If one quote has a $250 deductible for comprehensive coverage and the other has a $500 deductible, the first quote will likely have a higher premium.
  • Do the quotes include any discounts you’re eligible for? Check to see if each quote includes discounts offered by the insurer that you qualify for. Discounts vary across insurance companies and may be based on your driving history, certain groups or organizations you belong to, customer loyalty or your vehicle’s safety features. It’s common to see discounts for safe drivers, good students, cars with anti-theft features and more. You may also be able to save on car insurance by bundling your auto policy with other policies, such as renters or homeowners insurance.

Once you’ve confirmed that each quote has the same types of coverage, limits and deductibles, you can complete your rate comparison and identify the car insurance policy that works best for you and your finances.

How much should I be paying for car insurance?

The average U.S. driver is paying $1,483 for auto insurance in 2021, according to The Zebra’s 2021 The State of Auto Insurance report. But keep in mind that a range of factors, including where you live, the coverage you choose, the car you drive, your driving history and routine, your age and — in some states — your credit, can affect your auto insurance rate.
While some of these factors may be out of your control, shopping around and comparing auto insurance quotes can help you find the best car insurance rate for your needs.

To give you an idea of average rates, this table shows the average annual premium by state for liability coverage alone and liability coverage combined with comprehensive and collision insurance in 2018. The information in the table comes from the National Association of Insurance Commissioners’ Auto Insurance Database Report 2017/2018, released in February 2021. Keep in mind that average premiums increase each year — according to NAIC data, the average liability premium increased anywhere from 2.09% to 6.90% each year from 2014 to 2018.

State Average annual liability premium (2018) Average annual liability + comprehensive + collision premium (2018)
Alabama $511.13 $1,066.92
Alaska $576.09 $1,111.07
Arizona $646.75 $1,181.29
Arkansas $486.72 $1,097.33
California $616.51 $1,194.83
Colorado $687.40 $1,290.34
Connecticut $784.70 $1,326.09
Delaware $900.32 $1,393.70
District of Columbia $809.41 $1,574.09
Florida $1,009.94 $1,520.99
Georgia $797.80 $1,382.52
Hawaii $479.27 $944.70
Idaho $425.89 $828.32
Illinois $515.94 $995.55
Indiana $442.69 $864.82
Iowa $348.87 $816.18
Kansas $421.78 $985.34
Kentucky $611.54 $1,088.73
Louisiana $1,015.36 $1,751.37
Maine $374.59 $782.72
Maryland $737.73 $1,327.40
Massachusetts $658.47 $1,246.08
Michigan $952.15 $1,590.35
Minnesota $499.48 $971.66
Mississippi $538.35 $1,149.85
Missouri $520.45 $1,052.86
Montana $435.81 $1,025.46
Nebraska $429.35 $962.79
Nevada $900.40 $1,386.22
New Hampshire $436.76 $882.65
New Jersey $955.93 $1,500.58
New Mexico $576.81 $1,102.15
New York $920.25 $1,558.66
North Carolina $391.29 $870.87
North Dakota $307.97 $844.18
Ohio $448.59 $881.91
Oklahoma $508.89 $1,123.61
Oregon $689.74 $1,077.22
Pennsylvania $555.42 $1,100.84
Rhode Island $885.33 $1,500.31
South Carolina $702.37 $1,227.54
South Dakota $333.44 $905.02
Tennessee $477.07 $995.91
Texas $659.47 $1,372.25
Utah $601.77 $1,038.50
Vermont $376.99 $854.27
Virginia $492.68 $956.98
Washington $689.18 $1,120.02
West Virginia $521.74 $1,096.80
Wisconsin $422.28 $830.06
Wyoming $356.25 $971.07

Source: National Association of Insurance Commissioners’ Auto Insurance Database Report 2017/2018, released in February 2021.

FAQ: Editors’ answers

How do I get the best deals on car insurance?

To get the best deals on car insurance, shopping around and comparing insurance quotes from various insurance companies is key. You’ll also want to carefully consider the types of auto coverage, coverage limits and deductibles that you choose — all of which can drive up or down how much you pay for car insurance.

In choosing liability limits, keep in mind that the higher your coverage limit, the higher your insurance rate will be. But if you have a lot of assets — such as a home, savings or investments — choosing the minimum liability coverage required by your state could be risky. You may want to select a coverage limit that at the very least is equal to the total value of all your assets. This way, if you cause an accident where the medical or property damage costs are more than you coverage limit, you’ll have more protection for your assets.

Think carefully about your deductible, too. You may be able to lower your car insurance rate by raising your deductible. Just make sure that if you choose a higher deductible, like $1,000, you’d be able to come up with the cash if you need to file an insurance claim.

If you don’t log a lot of miles or are a careful driver, a usage-based insurance program may also help you save money on insurance. Depending on the UBI program, the insurance company will also factor in your driving behavior or your mileage when calculating your premium.

Finally, make sure that the quotes you’re given reflect all discounts that you qualify for. Depending on the insurance company and type of discount, you could save anywhere from 3% to 40% on your premium.

Do my credit scores affect my car insurance rate?

Depending on where you live, car insurance companies may use information from your credit reports to calculate your insurance score. Your insurance score is a numerical score used to predict the likelihood that you’ll file an insurance claim. If you have good credit, your coverage may cost less than if you have bad credit.

The use of credit-based insurance scores isn’t allowed in California, Hawaii, Maryland or Massachusetts. As of June 20, 2021, it is not allowed in Washington, either. And even if it’s allowed in your state, keep in mind that your credit-based insurance score isn’t the only factor insurers consider when setting your rate. Your driving history and habits, driving record, age, the car you drive and your location are among the additional factors that can drive your rate up or down.

How often should I shop for car insurance?

Insurance companies adjust their rates regularly, so shopping for car insurance each year can give you an idea of whether you’re getting the best deal on coverage or if you may be able to get a lower rate.
It’s also a good idea to shop for car insurance when you buy a new car. The type of car you buy could cause your rate to go up or down — comparing multiple quotes could help you find the best rate.
You may also want to shop around if any of these scenarios apply to you.
You’re about to move: Where you live is an important factor in determining your rates.
Your credit scores have changed significantly: Car insurance companies — with the exception of those in California, Hawaii, Maryland and Massachusetts — consider your credit when setting your rate.
Your driving history has improved: If it’s been awhile since your last accident or driving violation, your rate may improve.
You’re adding a new driver to your policy: Adding drivers, especially teen drivers or young drivers below age 25, can significantly increase your rate.
Your driving routine has changed: If you’re driving fewer miles these days or no longer commuting for work, you may want to shop around to see if you can get a lower rate.

Who is the No. 1 auto insurance company?

The No. 1 auto insurance company, based on total market share of private passenger auto insurance premium in 2020, is State Farm, according to the National Association of Insurance Commissioners, or NAIC. Here are the other insurance companies on the top five list.

1. State Farm
2. Berkshire Hathaway
3. Progressive
4. Allstate

But if how an insurance company handles claims is important to you, consider that NJM Insurance Company, Amica Mutual, Auto-Owners Insurance, The Hartford and MetLife were the top five companies in J.D. Power’s 2020 U.S. Auto Claims Satisfaction Study.

And if your shopping experience is a priority, it’s helpful to know that Geico, Nationwide, State Farm, Allstate and Liberty Mutual were the top five in J.D. Power’s 2020 U.S. Insurance Shopping Study.

About the author: Rebecca Giantonio Moran is a senior editor at Credit Karma with a focus on auto. She has nearly 20 years of experience in brand development, content and website strategy, copywriting, ma… Read more.