Auto insurance: If you own a car, you need car insurance. But everybody hates paying for it. So, you compare and compare to get the very best auto insurance rates.

As a result, it is no surprise that insurance companies are the most incessant television advertisers. My two-year old walks around saying “GEICO” after seeing ads featuring the company’s British spokes-Gecko. And does anybody else want to shove a piece of apple pie in Progressive’s cutesy-but-annoying retro sales-gal Flo?

But if you’re reading Money Under 30, you know better than to choose an insurance company based on the wit or persistence of their advertising.

This is an introductory page, so we’re just going to hit the basics of auto insurance, but there are two big things to keep in mind when shopping for car insurance:

Auto insurance rates vary widely

If you don’t comparison shop anything else, shop for car insurance! I’ve run quotes through different companies and gotten results that are more than $500 apart for the same coverage (something I’ll cover in a moment). Think about: Do you really want to be paying an extra $500 a year for no good reason?

But wait, how can every insurer out there claim that you’ll save money when you switch to them?

The reason is that car insurance rates are highly personalized. With any insurer, the rate I’m quoted will be different than the rate you’re quoted…and both of our rates will be different again with another insurer. Here are just some of the factors that come into play when insurers set auto insurance rates:

  • The car you’re insuring
  • Your record
  • Your age and marital status
  • Where you live
  • How much you drive
  • Past insurance claims
  • Your credit score (yes, really!)

Every insurer weighs these factors differently, and you won’t know until you shop around.

How to do apples-to-apples comparisons between auto insurance policies

Car insurance rates differ widely for the same policies. But car insurance policies are also infinitely customizable. While most states have minimum required auto insurance coverage levels for damage or personal injury you cause others or that’s caused to you by an uninsured driver, you may want to increase those coverage levels or add other coverage types like comprehensive coverage that protects your car in the event of theft or fire or collision coverage that will help fix your car in the event of an accident.

Also, you can raise or lower your deductible (the out-of-pocket amount you must pay before insurance kicks in for a claim) which will impact your premium (the monthly amount you pay for insurance.

As soon as you start to tweak those variables, your insurance rates change. So when you shop for insurance, pay attention to the coverage levels and deductibles you select and input the same on every insurer’s site. Only when the policies are identical can you be sure you’re getting an apples-to-apples comparison between car insurance policies.

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