Understanding your car insurance quote

An auto insurance quote is an estimate of how much your auto insurance premium will be. Auto insurance quotes are usually free and you can get multiple quotes online in order to compare insurers.

Zack SigelKara McGinley

Zack Sigel & Kara McGinley

Published May 13, 2020

KEY TAKEAWAYS

  • When shopping for insurance, an insurer will give you an auto insurance quote, which is the estimated rate that your auto insurance would cost if you bought a policy from them

  • Auto insurance quotes are free and you can get multiple quotes online or through an independent insurance broker

  • Factors like how much coverage you need, what discounts you qualify for, the make and model of your car, and your driving history will all go into calculating your insurance quote

  • You should shop around and get quotes from different car insurance companies before purchasing a policy. Shopping around is the most reliable way to find affordable car insurance

Car insurance is financial protection in case you get into a car accident and damage someone else’s vehicle or cause them injury. An auto policy can also cover you if your car gets damaged in an accident or by another covered peril, like falling objects, fire, or lightning.

Though it's a necessary and valuable form of protection, buying auto insurance can be confusing when you first start shopping for a policy. Collision and comprehensive. Liability insurance and PIP. Deductible and premium. And those three numbers at the top of the page — just what do they mean?

Letting some of those complexities get in the way can deter you from finding the best and most affordable policy for your needs. But when you’re fluent in reading an auto insurance quote, you’ll know exactly how much coverage you’ll get, and how much it’ll cost you, taking the guesswork out of finding a better insurance package.

Before you get behind the wheel, it’s important you understand all the aspects of your auto insurance quote.

In this article:

What is an auto insurance quote?

A car insurance quote is the estimated amount your car insurance will cost and what goes into that amount. The quote factors in a number of variables:

  • How much coverage you’ll need
  • Personal characteristics about you, including driving history and age. See more below.
  • What components of car insurance you need, including option ones like collision and comprehensive insurance.
  • Your deductible

Your auto insurance quote is only an estimate of how much your insurance premium will be. The actual cost of your premiums may change when you buy your policy, especially if you have omitted any facts, like previous driving violations.

When you go through the quote process, insurers provide you with a few different quote options to show how much it would cost if you bought different amounts of auto insurance coverage. For example, you might get a bare bones quote that shows how much a policy would cost if you only bought a minimal amount of coverage, a standard quote, which shows how much it would cost to have a typical auto insurance policy, and a premium option that shows how much your policy would be if you were to buy the highest level of coverage.

Getting an auto insurance quote also allows you to see how adding or subtracting certain types of coverage would affect the price of your auto insurance — we’ll explain more about the different parts of an auto insurance policy later on.

How to get an auto insurance quote

The process of getting an auto insurance quote is relatively simple and you can easily get multiple quotes from a few different insurance companies online. Or you can work with an independent broker who can show you multiple quotes from different companies with just one application. A broker can also help you compare coverage options and make sure you’re choosing the best policy for your needs.

Auto insurance quotes are free because insurance companies want you to purchase a policy with them. Most insurers have instant quote tools on their websites. When getting a quote, you should be prepared to provide the insurance company with some information about yourself and your vehicle, including:

  • Your address
  • Whether or not you have a current auto insurance policy
  • Your name, date of birth, marital status, and gender
  • How long you’ve lived at your home and if you rent or own it

Below are details you will need to provide about your vehicle:

  • Vehicles you have at your current address
  • The year, make and model of your vehicle
  • Your vehicle identification number (VIN)
  • If you own, lease, or finance your car
  • What year you purchased your vehicle

You will also need to provide details about your household, like how many licensed drivers are in your family. Finally, you will be polled a few questions to see if you qualify for any discounts. The insurance company will then use all these details to calculate a quote. They will either generate an instant quote, email you the quote, call you over the phone, or direct you to a broker.

Typical components of an auto insurance policy

When you get an auto insurance quote, you’ll be shown the different policies and you’ll choose the types of coverage you want your auto policy to contain. You will also choose how much coverage you want.

You have the option to purchase as much insurance in each of the various components of car insurance coverage as you want. Although there are state minimums for some areas of coverage, like liability and personal injury protection, other components are entirely optional. A "full coverage" auto insurance policy refers to policies that include a mix of the different components of auto insurance coverage.

Knowing how much coverage you need in each type can get you a more accurate quote and save you money both in the premiums you pay for a given amount of coverage and when you’re in a car accident and liable for damages. Below is an example of the components of a “full coverage” auto policy.

Coverage TypeWhat It Does
Bodily injury liabilityThe part of your liability coverage that pays for medical bills if you've injured someone in an accident
Property damage liabilityThe other part of liability coverage, covers the cost of property damage you've caused in an accident
Personal injury protectionCovers medical expenses for you or your passengers after an accident
Uninsured/underinsured motoristCovers the costs if you're in an accident caused by a driver with little or no car insurance
ComprehensiveCovers damage to your car that happens when you're not driving
CollisionCovers damage to your car after a car accident, no matter who was at fault

Gap insurance and other add-ons

In addition to the basic components of car insurance that make up a so-called full coverage auto policy, there are other coverages you may want to add on as you’re shopping for insurance, including gap insurance. Gap insurance is a sort of auxiliary protection to collision coverage that covers the difference – the “gap” – between the amount you still owe on your car payments and the actual value of the car if it’s totaled in a crash or stolen. If you lease or finance a car, your lienholder or lessor may require you to add gap insurance to your policy as a way of protecting their investment.

Additionally, when shopping for car insurance, inquire how much it’ll cost to obtain roadside assistance or car rental coverage. Having both options on your policy can ensure that you won’t need to pay for your vehicle to be towed, or to rent a car while yours is in the shop (being paid for by your insurance carrier, no less).

Sample car insurance policy

Below is a sample car insurance policy with typical coverage limits. When an auto insurance companies gives you a “standard quote” the quote may be based of a similar policy and coverage limits to the one below:

Basic CoveragesPolicy Limits
Bodily injury liability$50,000 each person, $100,000 each accident
Property damage liability$50,000 each accident
Medical expenses (personal injury protection)$5,000 each person
Uninsured/underinsured motorist$50,000 each person, $100,000 each accident
Comprehensive$500 deductible
Collision$500 deductible

Each component of coverage has a coverage limit, meaning the maximum amount you will be paid out for a covered claim. For example, the above policy contains $50,000 of property damage coverage per accident. If an accident causes $60,000 worth of damage, then you are covered up to $50,000. The remaining $10,000 you have to pay out of pocket.

Certain components of coverage, like comprehensive and collision, require a deductible. You have to pay your deductible before your coverage can kick in. For example, if a hail storm results in $2,000 worth of damage to your car and you have a $500 deductible, you need to pay your insurance company the $500 and they will then cover the remaining $1,500 in hail damage.

You choose your deductible and coverage limits when you buy a policy. How high your deductible and coverage limits are will affect the estimated quote of your premiums.

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How do car insurance companies calculate your quote?

Besides how much coverage you need, there are several other factors that go into determining your individual insurance rates. Some you can control, and some are more difficult to change.

  • Your age: Younger, less-experienced drivers pay more for car insurance, but around age 25 rates start to drop.
  • Your driving record: Safer drivers – those with fewer traffic violations, for example – are more affordable rates.
  • The car you drive: Driving a lower-end car will be easier to insure because higher-end cars are more expensive to repair.
  • Where you live: Someone living in an area with less crime will pay lower rates than someone living in an area where the car is more likely to be stolen or vandalized. Drivers in high-density areas will pay more because more drivers on the road means a greater chance of accidents.
  • Your credit score: In many states, auto insurance companies will factor in your credit score as a part of what’s called an insurance score. Drivers with poor credit may pay more or be denied coverage from certain companies.
  • Your insurance company: Different companies may be more lenient about violations or poor credit than others. That’s why it’s best to shop around for the best rates.
  • Discounts you are eligible for: Insurance companies offer discounts for things like safe driving, good grades, and different group affiliations.

Learn more about how car insurance premiums are calculated.

Car insurance terms to know

When you’re getting auto insurance quotes from different companies, you’ll probably come across a lot of language that’s specific to insurance. Some terms may look familiar, some may not, but understanding all of them will clarify your quote:

  • Actual cash value (ACV): When a car is totaled in an accident, the insurance company will pay out the policyholder the appraised market value of the vehicle. You may be able to purchase a replacement cost value (RCV) policy that reimburses you for the cost of the vehicle when bought new, but those types of policies are more expensive.
  • At fault: An at-fault accident is one that you cause, so your insurance will be responsible for paying damages to the other parties involved, after you meet your deductible limit. At-fault insurance has a counterpart in no-fault insurance, in which each party’s own insurance pays them for a claim regardless of who was at fault.
  • Claim: A bid/request made to your insurer to pay for expenses related to damages that qualify under your policy (also known as a "covered" incident), like car repairs or medical expenses; to determine what will be covered, your provider may dispatch a claims adjuster to investigate your claim.
  • Deductible: Like other types of insurance, your deductible is the amount of money you’re required to pay before your insurance takes over; if an accident results in $1,000 in damages, and you have a $500 deductible, you’ll need to pay $500 out of pocket before your insurer pays the remaining $500. As with other types of insurance, higher deductibles mean lower premiums, and vice versa.
  • Limit: It’s the maximum amount your insurer is willing to pay after you’ve reached your deductible. Once that limit has been reached, the policyholder would be responsible for any further expenses.
  • Premium: The amount you pay to have insurance coverage. Your premium costs may be monthly, bi-annually, or annually, depending on the insurer.

About the authors

Managing Editor

Zack Sigel

Managing Editor

Zack Sigel is a SEO managing editor at Policygenius. He covers personal finance, comprising mortgages, investing, deposit accounts, and more. His previous work included writing about film and music.

Insurance Editor

Kara McGinley

Insurance Editor

Kara McGinley is an Insurance Editor at Policygenius. She previously worked as a freelance writer and a copywriter for various startups. Her work can be found in Teen Vogue, The Culture Crush, Mask Magazine, and more.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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