What the best auto insurance has
Easy-to-reach representatives. Some companies encourage you to use local agents, while others prefer to do business online or over the phone. In either case, you should be able to report an accident and file a claim 24 hours a day, seven days a week.
Flexible plans. You should be able to customize coverage to fit your needs instead of being forced into a policy that offers options you don't need or want.
A wide range of discounts. Most insurers will knock a bit off your rate for a variety of factors: having a good driving record or owning a newer car with a security system are just a couple of examples.
Other policy options. One of the best ways to save money is "bundling" policies, which means that, in addition to car insurance, you may insure your home, life, RV, motorcycle or have other insurance plans through the same company.
Solid financial ratings. Several independent ratings agencies regularly assess insurers' abilities to pay claims, but A.M. Best's ratings are considered the most reliable and unbiased.
Know before you go
How much coverage do you need? Each state has certain minimum requirements for bodily injury and property damage coverage. It's always worth double-checking the numbers on your state insurance commissioner's website. Most experts recommend purchasing more than the minimum; however, you need at least enough coverage to cover your assets, and purchasing the state minimum is generally only enough to keep you driving legally. If you're on a tight budget, though, that's certainly better than nothing and will keep you out of worse difficulties in the case of an accident.
What type of coverage do you need? Liability coverage is required by law of all car owners, but it covers only expenses related to bodily injury or property damage you do to others. If you want your own vehicle covered in the event of a crash, you'll need collision coverage, and if you want it covered for anything other than a crash -- a nasty hailstorm or vandalism, for instance -- you'll need comprehensive coverage. Another major consideration is uninsured/underinsured motorist coverage, which will cover you if the person who hits you didn't pony up for his or her own policy. If you do not own your car outright, more coverage will be required by your lender.
Is the car insurance company reputable? In recent years, a plethora of online-only insurance companies have cropped up -- aimed mostly at very-high-risk drivers who can't find insurance elsewhere. Some are highly-rated companies, and are often subsidiaries of larger corporations that specifically handle high-risk drivers. Do your homework, though, if you're dealing with a company that you've not heard much about. Check their Better Business Bureau ratings and be sure they have a solid financial rating as determined by A.M. Best. Also, high-risk drivers should double check the premiums in their state's assigned-risk program. Assigned risk is never cheap, but could still be a better deal than a high-risk policy from a less-than-reputable insurer.
Buying tactics and strategies
Know roughly what you should pay. Figure out whether you're in a high- or low-cost state for car insurance, and check your state's insurance department website for hypothetical rates for customers with similar circumstances. Remember that your credit score may affect your quotes -- if you have poor credit, you could be penalized with higher rates.
Compare, compare, compare. Rate-comparison sites such as those at Insure.com, Insurance.com and Netquote.com can help you get several car insurance quotes. Remember to contact other insurers who might not use such tools to see whether they can beat the quotes you receive.
Take advantage of discounts. Nearly all major auto insurers provide a variety of ways to save, but be sure to ask for a full list -- they may give you a break for everything from demographics to driving habits to what car you drive. Note that available discounts may also vary by state.
Think about a higher deductible. If you can afford to pay more in the event of a crash or other catastrophe, you may be able to lower your premiums by opting for a higher deductible (the amount you'll pay before insurance kicks in). But it's a risk worth taking only if doing so won't put you in a financial bind, experts say.
Reassess your situation every year. Your insurer may lower your rate for several reasons: if your credit score rises or if you're driving less, for example, but they won't do so without prompting from you.
What's to come
Tracking programs may be the future of auto insurance. Pioneered by Progressive Insurance with their Snapshot program, these telemetric devices are to cars as the black box is to an airplane. They track your every driving move, from braking, acceleration, speed and more. Then, the insurance company can use that data to give you discounts based upon good driving habits. At this time, they do not penalize you by raising your rates, but many think that these trackers will someday do just that. Right now, only a few auto insurance companies have car tracking programs, but at least one study estimates that by the year 2020 more than 25 percent of auto insurance revenue will be generated by car-tracking-related policies.