The first step in shopping for auto insurance is to decide on the types
and levels of coverage that will keep your risk to an acceptable level
for a reasonable annual premium. You will have to choose from a broad range
of available auto insurance coverage options. When considering the amount
of much coverage, keep in mind that the purpose of insurance is to cover
losses you cant afford to cover yourself. When you buy more insurance
than you need, you are simply wasting money.
Part 1: Bodily Injury to Others
Compulsory Bodily Injury to Others coverage pays for damages (for example,
medical expenses or pain and suffering) to anyone injured or killed by
your carbut only in accidents that occur in Massachusettsup to a basic
limit of $20,000 per person and $40,000 per accident. Injuries to the driver
or passengers in your car are not covered under this Part. If you want
coverage when you drive outside of Massachusetts, or in places where the
public has no right of access, or for guests who ride in your car, you
will need to purchase Optional Bodily Injury to Others (Part 5) coverage.
Part 2: Personal Injury Protection (PIP)
Personal Injury Protection (PIP) coverage pays up to $8,000 to you or anyone
you allow to drive your car, anyone living in your household, passengers,
and pedestrians regardless of who causes an accident. PIP coverage pays
for medical expenses, replacement services, and 75 percent of any lost
wages. PIP coverage includes protection for owners of cars and motorcycles,
as well as members of their households, if they are injured while occupying
or struck by a car that does not have Massachusetts Compulsory Insurance.
If you have medical insurance, you can turn to PIP coverage rather than
your health plan to cover medical expenses up to $2,000; but if you seek
payment from your PIP coverage for medical expenses in excess of $2,000,
PIP will pay only after these expenses have been submitted to the health
plan and the health plan determines what it will pay. Your PIP coverage
will not pay for expenses over $2,000 that your health plan would have
paid if you had sought treatment in accordance with the terms of the health
The driver and passengers riding a motorcycle are not covered by PIP,
but the motorcycle owner must purchase this coverage to protect other people
who may be injured by the motorcycle.
You can lower your premium by accepting a deductible, applicable either
to you alone or to you and other members of your household. The policy
will pay expenses for you, or you and your household members, only up to
the difference between $8,000 and the amount of your deductible.
Taking a deductible is more attractive if you have health insurance and
a disability income plan. But even if you have health insurance, it may
not cover all accident-related medical expensessuch as cosmetic and dental
services, co-payments, and deductiblesso PIP coverage can still be useful.
Taking an $8,000 deductible for PIP coverage instead of no deductible usually
only saves about three percent of a policys total cost.
Part 3: Bodily Injury Caused by an Uninsured Auto
Coverage for Bodily Injury Caused by an Uninsured Auto protects you, anyone
you allow to drive your car, household members, and passengers (unless
covered by another Massachusetts policy with similar coverage) against
losses caused by an uninsured or unidentified (hit and run) driver. A
minimum limit of $20,000 per person and $40,000 per accident is required.
This coverage does not pay for property damage or damage to your auto.
Many consumers raise their policies limits for this coverage to match
the optional higher limits they choose for bodily injury to others coverage
(described below). Raising this coverage from the minimum limits to typical
100/300 coverage levels typically adds only three percent to a policys
total annual cost.
Part 4: Damage to Someone Elses Property
Coverage for Damage to Someone Elses Property pays not only for damage
to another persons property but also for costs associated with the loss
of use of that property when you, a household member, or another authorized
driver of your car causes an accident. A minimum limit of $5,000 is required
but you can purchase higher limits to protect yourself in case you become
liable for major expenses if you cause one or more other cars to be totaled
or seriously damaged. It usually adds only about four percent to total
premium costs to increase the minimum $5,000 limit to a $50,000 limit,
and going from $50,000 to $100,000 usually costs most policyholders only
$10 to $20 more per car each year.
Part 5: Optional Bodily Injury to Others
Coverage for Optional Bodily Injury to Others extends your liability protection
(the basic 20/40 limits under Compulsory Bodily Injury to Others). This
option provides coverage for accidents beyond Massachusetts to anywhere
in the U.S., U.S. territories and possessions, and Canada. This coverage
also pays for damages suffered by guests in your auto. And under this option,
you can increase the coverage limits from the 20/40 limits for Compulsory
Bodily Injury to Others (Part 1).
Most drivers buy coverage above the basic 20/40 limits to protect their
assets from catastrophe. Possession of substantial assets (or anticipation
of substantial assets in the future) is a compelling reason to purchase
sizable additional bodily injury coverage: You have a lot to lose; you
are an attractive target for lawsuits; and you might get relatively little
sympathy from juries.
Although buying coverage with higher limits costs more, the price increases
are often modest. As this figure shows, policyholders with 50/100 optional
bodily injury coverage can expect to increase total annual premiums by
only about five percent by moving up to 100/300 coverage; and moving from
100/300 limits to 250/500 would increase premiums by only about 12 percent.
Most consumers consider this extra cost a reasonable price to pay for increased
peace of mind.
Part 6: Medical Payments
Medical Payments coverage pays for medical expenses for you, your household
members, and passengers over and above amounts covered by Personal Injury
Protection no matter who causes the accident. The minimum amount is $5,000.
Minimal Medical Payments coverage is relatively inexpensive, less than
$30 per year per car for most consumers, but it still may not be a good
option if you have a good health plan. Increasing medical payments coverage
to a high limitsay, $25,000is also relatively inexpensive. But your money
would likely be better spent on a more comprehensive health insurance policy,
since good health insurance coverage would protect you and your family
from catastrophic expenses caused by any disease or injury that might befall
you, and not merely cover limited amounts of expenses resulting from injuries
that involve automobiles.
Part 7: Collision
Collision coverage pays for damage to your car in a collision, less any
applicable deductible, no matter who causes the accident. If your car is
financed, your lender may require this coverage and also stipulate a particular
Most policyholders have $500 deductibles, but you can select a different
amount. You can lower your premium substantially by choosing a larger deductible.
As this figure shows, our illustrative policyholder would usually lower
his or her total premium by about 15 percent by increasing collision and
comprehensive deductibles from $500 to $1,000.
To determine the amount of deductible that is right for you, decide how
much you can afford to pay out of pocket in the event of an accident or
loss for which you are at fault, or the other driver is unidentified. It
doesnt make sense to buy insurance of any kindincluding comprehensive
coverage (described below) and PIP coverage (described above)for expenses
that would not be catastrophic. (Insurance generally costs more than the
companys expected payout for losses because the insurer must charge you
not only for the losses but also for sales commissions, administrative
expenses, claims-handling expenses, fraud losses, and other costs.)
If your car is old and not worth much, it doesnt make sense to buy collision
(or comprehensive) coverage; you dont have much to lose.
Part 9: Comprehensive
Comprehensive coverage pays for damage to, or loss of, your car, less any
applicable deductible, that results from perils such as fire, theft, vandalism,
and striking an animalbut not collisions. Personal property is not covered
unless it is permanently installed in your car. If your car is financed,
your lender may require this coverage.
You may be denied comprehensive coverage or required to pay a higher extra-risk
rate if you own a high-theft vehicle that does not have a qualifying anti-theft
or recovery device. Coverage may also be denied or priced higher under
certain other conditions.
As with collision and PIP coverage, a relatively high deductible for comprehensive
coverage reduces premiums.
Part 10: Substitute Transportation
For an additional premium, you can broaden your comprehensive coverage
to include reimbursement for the expense of a rental car and taxi, bus,
and train fare while your car is being repaired.
Given that even a modest level of coveragetypically $30 per day with a
limit of $900 per claimusually costs $30 to $60 per year, our advice is
to decline it altogether, since the additional premium costs are very likely
to exceed any benefit youll ever collect.
Part 11: Towing and Labor
Towing and Labor coverage pays up to $50 for towing and labor charges each
time your car stops running, whether or not due to an accident. You are
covered only for on-site labor costs at the breakdown site (not parts)
to tow your car or get it running again. This coverage usually costs $6
to $12 per year, and some insurers offer this coverage at no additional
cost. Coverage of up to $100 per disablement is available usually for double
the cost of standard coverage.
If you belong to a motor club, you dont need this coverage since many
motor clubs services include towing and labor.
Part 12: Bodily Injury Caused by an Underinsured Auto
Coverage for Bodily Injury Caused by an Underinsured Auto pays for bodily
injury damages to you, household members, and passengers unless they have
a policy of their own or are covered by a Massachusetts auto policy of
another household member with similar coverage. The accident must be caused
by a driver who doesnt carry enough bodily injury coverage to pay for
your loss. This coverage pays you up to the difference between the total
amount collected from the bodily injury liability insurance covering the
owner and driver of the other car and the limits you purchased for this
Massachusetts has relatively few uninsured drivers compared to many states,
but many Massachusetts drivers buy only minimum required amounts for Bodily
Injury to Others.
You may purchase both Uninsured Auto coverage and Underinsured Auto for
coverage up to, but no more than, the limits of the Bodily Injury to Others
coverage you carry. In general, it makes sense to purchase as much Un/Underinsured
motorist coveragewhich protects youas you purchase of coverage that protects
Your Un/Underinsured coverages will not pay for damage to property.
The company you choose and the coverage types and levels you select determine
your premiumsbut so do various facts about you and the vehicles you drive.
Some facts are beyond your control; but others you can change, and in doing
so substantially influence your insurance premiums.
Your driving record is very important. Industry data indicate that an individual
who has had two accidents in the past two years is almost two-and-a-half
times more likely to have an accident in the coming year than someone who
has had no accidents. Similarly, the accident rate for individuals with
two traffic convictions during a three-year period is twice as high as
the rate for drivers with no convictions.
It will come as no surprise, then, that driving records have a big impact
Insurance companies can set rates using either the states old Safe Driver
Insurance Plan (SDIP) or their own merit-based systems (which must be
approved by the state) to evaluate drivers based on their driving records.
Within both systems, drivers who have not caused an accident or had traffic
violations in the previous five or six years pay the lowest auto-insurance
rates; those who have caused accidents or had traffic violations pay higher
It is difficult to predict exactly how one speeding ticket or one accident
will affect your premiums. But we estimate that even one speeding ticket
in the last five years increases premiums by, on average, about 18 percent.
Two speeding tickets produce even larger bumpsan additional 60 percent
Accidents can be even more costly than tickets. We estimate that having
one at-fault accident in the last three years will cost most drivers an
extra 50 percent in premiums, and two at-fault accidents will more than
double most drivers annual premiums.
Most companies consider the driving records of everyone driving your car
or cars. Therefore, if you have a perfect driving record but your spouse
has had violations or accidents, you may not qualify for the companies
Fortunately, insurance companies cant hold recent accidents or tickets
against you forever. Both the states formula and the insurance companies
own systems for determining how much to penalize drivers for accidents
or tickets incorporate a merit-based rating system that rewards safe driving
and cancels penalties for previous accidents and tickets if a policyholder
is accident- or ticket-free for a period of years.
Driving experience is strongly related to the likelihood of having accidents
and claimsand has a big effect on rates.
In Massachusetts, insurers cant use the age of drivers to set rates, but
they can charge higher rates for inexperienced drivers. Companies usually
classify drivers according to three length-of-experience levels: inexperienced
drivers licensed less than three years; inexperienced drivers licensed
three or more but less than six years; and experienced drivers, licensed
six or more years. Inexperienced drivers are further classified according
to whether they are a vehicles principal operator or only an occasional
A principal operator with four years of driving experience can usually
expect to pay roughly double the rate of an experienced operator. A principal
operator with only one year of driving experience will usually be charged
more than three times the rate of an experienced driver. While having an
inexperienced driver on your policy as an occasional driver usually doesnt
cause such a large differential, it still dramatically increases the total
Message to parents: Have your kids take driver training. Most companies
offer discountstypically 10 percentfor inexperienced drivers who have
completed an approved driver training course. Message to kids: Get your
license while your parents are paying the higher inexperienced driver rates.
As our price comparisons show, insurance premiums are greatly affected
by where policyholders live. In our comparisons, policyholders living in
Lexington pay hundreds of dollars more per year than their South Boston
You probably wont buy a car based on insurance costs, but the differences
among cars are often substantial: It costs $200 or more per year extra
to insure some cars than others.
Keeping an old car, or buying used, can also substantially affect your
premiums. For example, premiums on a seven-year-old car are usually about
12 percent lower than on a five-year-old car. As mentioned above, youll
also save by driving an older vehicle if you drop collision coverage, since
the loss of an older car will probably not be a financial catastrophe.
Your insurance premiums also slightly decrease if your car is equipped
with safety devices or anti-theft features. Companies must offer a 25 percent
discount on PIP, Medical Payments, and Uninsured/Underinsured Motorist
coverages for cars with passive restraint systems (air bags or automatic
seatbelts). If your vehicle has anti-theft devices, your company must discount
your comprehensive coverage by five to 36 percent, depending on the type
of device. Your insurance company or agent can provide a list of qualifying
anti-theft devices and corresponding discounts.
You cant control your age, but if you are age 65 or older you can at least
make sure your premium reflects an important discount. All insurers must
offer policyholders age 65 or older a 25 percent discount off their total
premium if there are no inexperienced drivers on the policy and their cars
are not customarily used for business purposes.
If you drive your car 5,000 miles a year or less, companies must cut your
premium by 10 percent (except on the portion of the premium for comprehensive,
substitute transportation, and labor and towing coverages). Most companies
also offer small discounts if you drive between 5,001 and 7,500 miles.
If you are considering switching insurance companies, and have been loss
free with your current company for a while, calculate in any future longevity
discounts. Many companies offer renewal discounts each year. Some offer
five to 10 percent discounts for three years of coverage without an at-fault
accident, and may increase the discount at six years and nine years.
Most companies offer multi-car discounts for insuring one or more cars
with them. Discounts vary, but 30 percent for both cars is typical.
Many insurance companies also offer lower rates if you insure both your
car and your home with them. Some knock off five percent, 10 percent, or
even more from either the auto rate or the homeowners rate; some knock
off a percentage from both. From a consumers point of view, this dual-policy
pricing is an undesirable practice because it makes shopping more difficult;
to find out the exact savings you could realize by switching companies,
you have to shop for both types of coverage at once.
Several insurers offer five to 15 percent discounts to groupsemployees
of specific companies and members of employee associations, alumni associations,
and others. Check the Division of Insurance website at www.state.ma.us/doi
for the list of these groups. Several groups whose members can get 10 percent
discounts are open to anyone.
Even with a 10 percent group discount, companies that offer these discounts
rarely beat the lowest priced companies shown in our price comparisons.
But checking on available group discounts might lead you to an insurance
company that you would prefer for service or other reasons, but would be
unacceptably expensive without a group discount.
If you regularly use mass transit, some companies offer a 10 percent discount
on property damage and collision coverages if you provide evidence that
you purchased at least 11 months of commuter passes.
Some companies also give discounts for inexperienced drivers who are full-time
students and have good grades (typically, a B average or better). If your
policy includes a student who lives at least 100 miles away at school,
without a car, some insurance companies offer a considerable price cut.
There are two main considerations in choosing among auto insurance companies:
amount of premiums and quality of service. But also consider a companys
record on terminating policyholders, its financial stability, and a few
Our price comparisons show annual premiums for auto insurers writing
new policies in Massachusetts. The states Division of Insurance of the
Office of Consumer Affairs & Business Regulation maintains an
database of companies current rates for several sample profiles. Our
price comparisons report the premiums for standard coverage for four
profiles in eight Boston area locations.
As our price comparisons indicate, company-to-company rate differences
are dramatichundreds of dollars a year for every case, and more than $1,000
for many cases.
The rates in our price comparisons will probably not apply exactly
to you; most drivers will differ in location of residence, vehicle usage,
vehicle type, or other ways. But the rates provide a good starting point
for shopping. Companies with low rates are good prospects.
You can focus in even more tightly on your best prospects by using the
states rate-comparison website (www.mass.gov/ocabr/consumer/insurance/auto-insurance).
Select a profile close to your own in terms of driver experience, driving
record, and other variables, and use it to obtain premiums for the available
Once you have identified a few prospective companies, begin shopping on
the Web; many company websites will provide quotes. Or use the websites
to locate agents. Then ask each agent to quote a price for the coverage
you want. Before shopping, make a list of the coverages you plan to purchase.
Independent agents who sell policies offered by many companies can provide
quotes from various companies. But policies from some companies are not
available through independent brokers or agents; to get these companies
rateswhich often are the lowest availableyou have to obtain a quote from
a company website or contact company agents directly.
When contacting agents, you may have to push hard to obtain reliable information.
When we researched our article on homeowners insurance, we found that
many insurance agents were unable to provide accurate price quotes and
that some could not correctly answer even the most basic questions about
coverages. For auto insurance, we find that most agents can quote accurate
rates, but problems still exist. Some agents quote wildly inaccurate rates,
while others persistently push more coverage than requested.
In addition to seeking out companies based on their relative rankings in
our price comparisons, you might consider using an insurance comparison
website, such as www.insweb.com, www.insurance.com, or www.answerfinancial.com.
But because these sites provide rates only from companies with which they
have business relationships, the lowest cost companies for you may not
be included in reports the sites generate.
Most insurance companies write auto policies by assigning prospective customers
to tiers determined by their driving and credit records. When dealing with
agents, make sure you ask whether you qualify for the best rates companies
offer, and, if not, why you dont.
If you have so many accidents or violations that it is difficult for you
to qualify for coverage, you are entitled to buy insurance through your
states assigned risk plan. Rates in the assigned risk plan are often triple
or more what youd pay for a preferred policy.
Consider price in relation to the quality of service companies provide,
especially their claims-handling service. Our Ratings Tables, for the
largest insurers in the area, provides three types of information about
service: a survey of policyholders, a survey of auto body shops, and an
analysis of complaints.
Our Survey of Policyholders
We asked area consumers (primarily CHECKBOOK and Consumer Reports subscribers)
who had recently made auto insurance claims to rate their companies inferior,
adequate, or superior for simplicity of claim procedures, adequacy
of claim payment, and other elements of service. Our Ratings Tables
show what percentage of policyholders rated each company superior on
each element. (For a further description of our policyholder survey and
how its results and our other research results should be interpreted, click
Our Ratings Tables show big differences in how customers rated companies.
For example, at the time of our last full, published report, Amica was
rated superior for speed of claim payment by 90 percent of its surveyed
customers. In contrast, Metropolitan received superior ratings from only
Asking the Experts: Auto Body Shops
We also asked area auto body shops to rate the insurers poor, fair,
good, very good, or excellent on treating their customers (car owners)
fairly. Our Ratings Tables show the percent of surveyed shops that
rated each company good, very good, or excellent, and the number
of ratings each company received.
Surveyed shops gave high marks to Amica, Arbella, Norfolk & Dedham, Plymouth
Rock, Quincy Mutual, Safety, and USAAthey all received favorable ratings
from at least 80 percent of shops. Allstate, GEICO, Liberty Mutual, Occidental,
and Progressive were rated lowest, receiving favorable ratings from fewer
than 45 percent of the shops.
Another way to assess quality is to look at the number of complaints filed
against each company with state insurance departments, compared to its
volume of business. While policyholders might rate a company less than
superior if its deficiencies are minor, filing a formal complaint with
a government regulatory agency presumably reflects serious dissatisfaction.
Our Ratings Tables report the number of private passenger auto insurance
complaints filed in 2010, 2011, and 2012 with the Massachusetts Division
of Insurance plus a complaint rate for each company. The complaint rate
takes into account the fact that companies that do much more business than
others are likely to incur more complaints. It is calculated as a companys
number of complaints per $10 million in private passenger auto insurance
While shopping, pay attention to news about a companys financial instability.
Dont sign on with a company that may soon have to cut many policyholders
or raise prices sharply to stay alive. Also avoid companies that may go
out of business soon, forcing you to begin shopping again.
On the other hand, there is little reason to worry about insurer stability.
If a company goes bankrupt, policyholders may have to wait to recover money
owed them but generally are protected from major losses. A special insolvency
guaranty fund in every state has the duty to assess all insurers doing
business in the state on a pro rata basis and pay off outstanding claims
of insolvent companies and refund each policyholders paid-in premium.
Some individualsusually the young and those with records of accidents
or violationsfind it difficult to locate a company to insure them.
If you are one of these high-risk individuals, the only solution is to
shop. Try several of the insurance companies to see if they will cover
you. As a last resort, you can sign up for insurance through the Massachusetts
Automobile Insurance Plan (MAIP), Massachusetts assigned risk plan.
MAIP is open to licensed drivers who cant get coverage through the regular
market, or who cant get coverage at rates that do not exceed MAIPs. An
agent contacts the plan on the drivers behalf, and drivers are then assigned
to regular insurance companies. Each company is assigned a pro rata share
of policyholders according to its share of business in the state, and the
policyholder pays the same premium at whatever company he or she is assigned
Dont assume that once you have been turned down by a preferred company
you must turn to a high-risk company or the assigned risk plan. Companies
standards for accepting new policyholders vary widely and change constantly
as their rates and volume of business change. To enhance your chances,
remind agents that you or members of your family have other business with
their companyfor instance, a homeowners policy or automobile policies
for other drivers. On the other hand, dont stop shopping even after you
are accepted by a preferred company. High-risk companies or the assigned
risk plan sometimes offer better rates. If you must join the assigned risk
plan at a very high price, look for other coverage after a year.