For one illustrative Chicago couple, annual premiums for standard auto
insurance coverage would range from $817 to $3,156 among area companies,
a difference of over $2,300 per year. Even with State Farm, the states
largest insurer, the annual rate would be $1,809almost $1,000 higher than
the lowest rate we found.
If youve recently had an accident and have a male, teenage driver on your
policya nightmare for most insurers (and most parents)the rate differences
loom even larger: from under $2,800 to over $6,000 per year.
These and other comparative rates, obtained from company websites and insurance
agents, are shown on our price comparisons for the largest insurers
in Illinois, along with details of the assumptions underlying the companies
It takes a little effort to shop for insurance. But it is easier these
days than it once was to get at least a reasonably competitive rate using
the insurance companies websites. Even if you have to request quotes by
phone from companies and agents, the effort is small compared to the potential
You wont want to give up having a company that will deliver quality service,
financial soundness, and a willingness to stick with you if you have an
accident or violation or two. But you dont have to. Such concerns are
not a reason to stand pat.
In this article, we will give you the background you need to shop successfully
and, on our price comparisons and Ratings Tables, comparisons of
individual companies to help you focus your shopping efforts on the best
The first step in shopping is to decide on the types and levels of coverage
that will keep your risk to an acceptable level, at a reasonable annual
premium cost. You will have to decide among a broad range of available
auto insurance coverage options. When thinking about how much coverage
to buy, try to keep in mind that the purpose of insurance is to protect
you from losses that you cant afford to cover yourself. When you buy more
insurance than you need, you are wasting money that simply goes to insurance
companies profits and administrative costs.
When you injure someone else or damage someone elses property, you may
be required by law to pay for the loss. Your home, your savings, and even
your future wages are vulnerable.
Liability coverage pays the amount of money for which you may be liable
for bodily injury and property damage to others, up to certain limits,
and covers legal fees incurred in your defense. Bodily injury claims can
include wage losses, medical expenses, rehabilitation costs, and pain
and suffering. Property damage can include damages to someone elses car,
building, or other property.
Your liability coverage will generally protect you, your spouse, other
members of your household, and anyone else who drives your car with your
expressed or implied permission. But any liability coverage you buy will
come with payout limits. If the damages for which you are found liable
exceed the limits specified in your policy, youll have to pay out of your
own pocket. It is up to you to decide the limits you are comfortable with,
keeping in mind that the higher the limits you choose, the higher the premium
The limits your insurance company will pay are usually specified in the
policy as a set of three numbers divided by diagonal lines. For example,
a 100/300/50 policy pays a maximum of $100,000 for bodily injury to one
person, a maximum of $300,000 for total bodily injuries when more than
one person is hurt in an accident, and a maximum of $50,000 for property
damage in a single accident. Some policies are simply written with a single
limit, say, $300,000, and will pay up to this limit even if only one person
is injured or if only property is damaged. Because of its greater flexibility,
single-limit $300,000 coverage is worth somewhat more than 100/300/50 split-limit
Since your insurance not only protects your assets but also ensures financial
relief for anyone you may injure, Illinois law requires you to buy at least
a minimum level of liability insurance. By state law, you are required
to carry at least 20/40/15 coverage.
If you are considering driving without liability insurance, or if you are
considering a policy at the minimum coverage amounts, you should realize
that once you have driven without insurance or with low insurance coverage
levels, most companies will treat you as a person who takes unnecessary
risks, and will charge you very high premiums for future coverage.
Most drivers buy liability insurance and insure beyond the legal minimumperhaps
out of a social concern for the possible victims of their negligence or
perhaps out of a personal concern to protect their assets from catastrophe.
Individuals with substantial assets (or with expectations of substantial
assets in the future) have the strongest reasons to purchase sizable liability
coverage: they have the most to lose; they are the most attractive targets
for suit; and they may get the least sympathy from juries.
Although buying coverage with higher limits will cost more, the cost increases
are often modest. As Figure 1 shows, a policyholder with 100/300 bodily injury liability
coverage (and a $250 collision deductible and $100 comprehensive deductible,
discussed below) might expect to increase his or her total annual premium
by only about six percent by moving up to 250/500 coverage and might expect
to save only about five percent by moving down to 50/100 coverage. And
for most auto insurance buyers, doubling the limits of property damage
coverage from $50,000 to $100,000 costs only a few dollars per year. Most
consumers consider these extra costs a bargain for increased peace of mind.
If you want to protect your assets and future income from claims in excess
of $500,000, youll want to consider an umbrella policy. Such a policy
will give you liability protection in addition to that provided by your
auto and homeowners policies. In addition to protecting you from claims
by others for bodily injury and property damage, an umbrella policy will
protect you against suits for other types of injuries, such as libel, slander,
defamation of character, false arrest, and invasion of privacy, which are
not covered by your auto or homeowners policies. Before selling an umbrella
policy, many insurance companies will require you to increase the liability
coverages in your auto and homeowners policies to the maximum amount offered.
Collision and comprehensive coverage pay for repair or replacement
of your car, regardless of who is at fault. This coverage is not required
by law, but if your vehicle is financed, your lender may require you to
Collision coverage pays if your car rolls over or collides with an object,
including another car. Comprehensive coverage pays for damage to your car
from almost all other causesincluding vandalism, explosion, fire, wind,
and collision with animals. It will even pay if your pet chews the upholstery.
Comprehensive also pays if your car is stolen.
Both collision and comprehensive pay only up to the actual cash value
of your car. If you expect compensation for upgraded stereo equipment or
a special paint job or other unique feature, you will have to arrange in
advance for special coverageand pay an extra premium.
As the actual cash value of your car diminishes, the cost of comprehensive
and collision coverage declinesbut only declines significantly for the
first few years of the cars life. You pay about the same collision premium
for a 10-year-old car, for which if you had a complete loss your insurance
company would pay you almost nothing, as someone else pays to insure a
six-year-old car. Accordingly, collision coverage becomes an increasingly
wasteful purchase as your car grows old.
Collision and comprehensive coverages are sold with a deductible, a specific
amount you agree to pay out of your own pocket on a claim before you are
entitled to collect from your company. By taking a high deductible, you
protect the company from the paperwork of processing small claims and you
do so without exposing yourself to the possibility of catastrophic loss.
In general, the wisest way to manage your money is to take as a deductible
as large an amount as you can afford to lose without seriously disrupting
The considerable savings that can be made in this way are illustrated on
For example, the sample couple for whom we did the calculations for Figure 1 would
probably save about 20 percent off their total insurance bill by increasing
their collision and comprehensive deductibles to $1,000.
The virtues of substantial deductibles are more obvious when you consider
that you may not even want to file claims with your insurance company unless
damages exceed $1,000 or so. Filing small claims might lead a company not
to renew your coverage or might lead to higher premiums.
Medical payments coverage takes care of medical bills if any member of
your family is injured in an auto accident, or your funeral expenses if
death results from such an accident. Whether a family member is driving
your familys car, driving a rented or borrowed vehicle, riding as a passenger,
or walking and is struck by a car, you can collect these payments. Moreover,
medical payments coverage protects passengers who ride in your car. Most
important, payment is regardless of fault. Limits on the amount of payments
are stipulated in your policy.
Most of the expenses that would be paid by your medical payments coverage
will be paid by your familys health insurance policy, if you have one.
Since medical payments coverage is relatively inexpensive, usually less
than $40 per year for a $5,000 limit, it is reasonable to buy a minimal
amount of coverage to fill in possible gaps in your health insurance and
to help cover medical expenses for your passengers who may not have their
own health insurance. Increasing medical payments coverage to a high limitsay,
$50,000is also relatively inexpensive, and might make sense if you do
not have health insurance, but you might do better to put this money toward
financing health insurance, since health insurance coverage would protect
you and your family from any disease or injury that might befall you, not
merely from injuries that involve automobiles.
If you are the victim of an accident in which another driver is at fault,
you might expect to collect from that drivers insurance company. But despite
mandatory coverage laws, many drivers are uninsured. Also, even an insured
driver may be underinsured if your loss is large. If you are the victim
of an uninsured or underinsured motorist, you can turn to your collision
coverage (if you have it) for repairs to your car, or to your medical payments
coverage (if you have it) for your medical bills. But you will need other
coverage if your losses exceed these coverages and to compensate you for
pain and suffering. Uninsured/underinsured motorist coverage fills
this gap if you can show that the other driver was at fault or if you were
the victim of a hit-and-run driver.
Illinois requires uninsured motorist coverage for bodily injury at least
to the 20/40 level. (Uninsured motorist property damage coverage is sold
separately; if you dont have collision coverage, uninsured motorist property
damage coverage is available to a maximum of $15,000 with a $250 deductible.)
Underinsured motorist coverage is sold separately in Illinois, and is only
required if you purchase more than the minimum level of uninsured motorist
coverage. All the reasons that argue for higher limits on liability coveragewhere
you are protecting someone elsealso argue for high limits on uninsured/underinsured
motorist coveragewhere you are protecting yourself. The cost of increasing
your limit from 20/40 or 25/50 for the personal injury portion of uninsured/underinsured
motorist coverage to 100/300 will generally be small.
For an additional premium, most insurers will broaden your collision or
comprehensive coverage to include reimbursement for the expense of a rental
car while damages to your car are being repaired.
Since just about all the auto insurance companies are shameless in promoting
rental car coverage, were guessing that it is a lucrative line of business
for them. Given that even a modest level of coveragetypically $30 per
day with a limit of $600 per claimusually costs $40 to $75 per year, our
advice is to decline it altogether, since the additional premium costs
over time are very likely to exceed the benefits you will collect.
Towing coverage will pay for the costs of towing; emergency road service
coverage will pay the labor charges for any repairs that can be made at
roadside (such as, changing a tire). Some companies offer only towing coverage,
others offer both towing and road service coverage together. Most companies
offer these coverages for about $10 to $20 per year, and a few companies
dont charge anything for towing coverage. Under many policies, this optional
coverage will reimburse you only for $25 per claim. But for $3 or $4 more
per year, you can get coverage for up to $75 per claim. Though towing and
road service coverage is inexpensive, an auto club membership that includes
towing and road service might be a better deal for you if you would use
other club benefits.
Recently, some insurers have begun to advertise new policy features such
as accident forgiveness. When considering these types of plans, be aware
that some can be useless, and others need to be carefully evaluated on
a cost-benefit basis before buying.
As an example, Allstate heavily promotes its accident forgiveness feature.
With this option, if you have an accident, your premiums will stay the
same. Considering that your premiums might increase by 15 percent to more
than 100 percent, depending on the company, as a result of having just
one at-fault accident, Allstates offer might seem like a pretty good deal.
Allstate actually offers a few different plans: one provides the accident-forgiveness
benefit after you have had a claims-free policy with the company for at
least five years; another plan provides the accident-forgiveness benefit
immediately, and also has a disappearing deductible feature, whereby
your deductible decreases by $100 for each year in which you do not have
To get either of these options, Allstate will charge you an additional
premium, starting right now. In essence, Allstate is trying to sell you
insurance not only against losses and claims you might experience because
of a future accident but also against future insurance-cost hikes that
might result from an accident. For our sample, 30-something couple with
totally clean driving records, with two cars and living in Arlington Heights,
adding Allstates basic accident-forgiveness option would cost an extra
$81 in premiums per year. That means our sample couple would pay $405 in
extra premiums over the course of five years before they could actually
benefit from the plan, and they would benefit after that time only if they
had an accident. To add Allstates accident-forgiveness-with-deductible-rewards
plan, which would provide immediate accident-forgiveness coverage, the
extra cost is $162 per year.
Is this immediate add-on to your insurance costs really worth it? If you
have a clean driving record, theres a very good chance you wont have
an accident that would cause your premiums to increase for a long time,
if ever. If you dont, this premium protection will do you no good. If
you have a poor driving history, the chances are higher that you will have
a future accident, but the price you will pay for accident forgiveness
will be much higher than the price increase for our sample couple. In any
event, you have to decide whether even a substantial increase in premiums
as a result of an accident or accidents would be a catastrophe for you.
If not, dont insure against it; insurance is to protect you from catastrophes.
Armed with a knowledge of various possible coverages, you can ask each
company you consider to give you a breakdown of its premium by type of
coverage and to quote premiums for different liability limits and deductible
levels. A typical annual premium quotation for a married couple with clean
driving records and two cars in the suburbs might look like the following:
Bodily Injury Liability$100,000/$300,000 $278
Property Damage Liability$50,000 $240
Medical Payments/Personal Injury Protection$5,000 $30
Un/Underinsured Motorist Bodily Injury$100,000/$300,000 $92
Comprehensive$500 deductible $165
Collision$500 deductible $497
Rental Reimbursement$30/day, $600 max. $52
Emergency Road Service $13
What youll pay for insurance depends not only on the coverage limits you
select but also on your driving record; your age, gender, and marital status;
where you live; the kind of driving you do; your credit record; and other
factors. Knowing these factors will give you a sense of how warmly you
can expect insurance companies to greet your requests for coverage and
may also give you some ideas for changes you can make in your life to cut
your insurance rates.
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 in a three-year period is twice as high as the
rate for those with no convictions.
It will come as no surprise, then, that your previous driving record will
have a big impact on the best rate you can get.
As you can see for the illustrative couple for whom we did the calculations
for Figure 1,
if the husband had received just one speeding ticket in the last three
years, the couples rate would jump by $110 per year, on average. With
some companies, having only one speeding ticket wouldnt have affected
the couples premium, but with others, one speeding ticket meant a penalty
of over $350 per year. If the husband had two speeding tickets in the last
three years, the resulting premium increase was much more substantialtheyd
pay an additional $394 per year, on average.
Having a previous accident will be even more costly than if you just had
a speeding ticket or two. If the husband in the profile used for Figure 1 had
caused one accident in the last three years, our sample couple would pay
an extra $483 per year, on average. If hed caused two accidents in the
last three years, their annual rate would increase by almost $1,000double
what the couple would pay if they both had clean driving records.
Most companies consider the driving records of everyone who will be 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 preferred
rate. Different companies treat driving records differently for families
with more than one car. Some companies will charge a higher premium only
to the car driven primarily by the driver with violations and/or accidents,
while others will pool the points from the violations and accidents together
and spread them out over all the cars, or will assign the driver with the
worst record to the highest-cost car.
Men under 25 have the highest accident rates; after age 30, accident rates
are lower and fairly constant right up to age 65. Married men generally
have better accident rates than those who are unmarried. And women, especially
married women, do best of all.
This does not mean that women or older persons are better drivers than,
say, 25-year-old men. It is possible that their accident frequency may
be lower simply because they tend to drive fewer miles.
Nonetheless, low accident rates result, of course, in lower premiums. If
a company agrees to insure him at all, a single 17-year-old male can expect
to pay about four times as much as a 30-year-old male and twice as much
as his 17-year-old twin sister for comparable insurance coverage. Even
at 25, he can expect to pay about one-and-a-half times as much as his 30-year-old
A few of the common rating guidelines are as follows:
Young drivers will generally find that between the ages of 16 and 20 their
rates will be slightly reduced each year (so long as their driving records
remain accident- and violation-free), then will remain level between the
ages of 21 and 24. But a few companies offer married women adult rates
(which are relatively low) beginning at age 21.
Rates for single males age 25 to 29 are often the same as for those age
21 to 24. But single females in this age bracket may be classified as adults.
Married males in the 25-to-29 age bracket are often offered adult rates
and married females almost always are.
Most companies will classify single males as adults at age 30, but some
will continue to charge higher premiums up to age 49.
Rates for drivers over 64 are normally either the same as, or slightly
lower than, the adult rate. Some companies offer a senior discount
for persons as young as 50.
Since youthful drivers have especially high accident rates, companies have
sought various ways to identify better risks so that better rates can be
offered to attract these youths and their parents.
Many companies offer special rates, usually four to 10 percent lower, for
youths who have taken approved driver training courses. Studies have shown
that these courses do not make better drivers, but good risks simply
seem to take the courses; so driver training serves as a convenient screening
device for the companies.
Many companies also give a breakoften 10 to 20 percentto youths who have
good grades (usually B or better). The combination of discounts for driver
training and good grades may total 15 to 30 percent of a familys premium.
Most companies will also cut premiums dramatically if a youth goes to school
more than 100 miles away from home without taking a car. In addition, by
agreeing to restrict a youths driving to a single, less-expensive car,
a family may be able to cut the rates on other cars it owns.
Some areas present more chances for accidents, have higher incidents of
auto theft or vandalism, or have higher repair costs or medical and legal
charges than other areas. These differences sometimes result in auto insurance
rates that are almost twice as high in some parts of the Chicago area as
Insurance companies charge more for insurance on cars that are relatively
expensive to replace, expensive to repair, or prone to damages or theft.
Some companies charge extra for, or refuse to insure, high performance
cars (Corvettes, for instance) because they think people who drive them
are likely to be less responsible than other drivers.
Table 1 shows vehicle-to-vehicle differences for one illustrative driver
we checked. For example, comparable coverage from Metropolitan might cost
$742 for a Honda Odyssey and $1,132 for a BMW 530ia difference of $390
per year. There are some vehicle types that tend to be relatively expensive
with all insurers, as you can see by looking at the rates for a Nissan
Maxima and the luxury sedan examples shown on Table 1, but the patterns
are not always consistent across companies.
|Ford Focus SE||790||1140||1234||1091||610||930||772||740||937||756|
|Honda Civic EX||736||1100||1262||1124||572||890||734||701||894||784|
|Toyota Corolla DX||708||1100||1210||1102||516||870||762||707||878||780|
|VW Jetta GLS||731||926||1228||1089||610||890||780||656||871||746|
|Chevrolet Malibu LS||585||800||1167||1069||637||894||808||669||874||766|
|Honda Accord EX||626||800||1176||1229||572||906||836||716||855||778|
|Nissan Maxima SE||745||940||1429||1213||702||1128||978||763||976||862|
|Toyota Camry SE||593||860||1152||1135||558||866||864||700||828||790|
|Cadillac Seville SLS||678||1040||1511||1307||637||914||968||730||1091||782|
|Lincoln LS Premium||738||900||1420||1380||679||1112||956||778||938||806|
|Ford Explorer XLT||664||780||1169||1082||574||820||804||726||823||778|
|Honda Pilot EX||604||840||1082||1061||559||812||848||699||844||782|
|Jeep Grand Cherokee Laredo||669||820||1193||1199||588||854||810||738||871||754|
|Dodge Grand Caravan SE||589||720||1163||1023||505||776||752||650||852||720|
|Ford Freestar SE||570||740||1090||994||493||768||734||654||803||728|
|Honda Odyssey EX||583||660||1033||976||493||742||734||645||807||726|
|Toyota Sienna LE||583||720||1791||970||535||776||760||614||825||730|
1 Prices are annual premiums for 2004 model years for the coverages and driver characteristics for a single female, age 29, living in Arlington Heights.
2 Rates for Allstate were collected using its website’s “Ballpark” estimator. Rates include $100,000 of property damage coverage.
Your insurance premiums may also be slightly reduced if your car has safety
devices or anti-theft features. For example, most companies give small
discounts for cars with four-wheel, anti-lock brakes; passive disabling
systems (which deactivate the cars ignition system when the key is removed);
and anti-theft tracking devices (such as LoJack). But keep in mind that
these discounts are usually very smalltypically only one to three percent
off the total premium.
In short, you will want to consider insurance costs when deciding what
vehicle to buy (and to some extent, how to equip it), but the impact of
your choice may be larger or smaller depending on which insurance company
you select. You can find information on relative insurance costs in The
Car Book, by Jack Gillis, which can be ordered from the Center for Auto
Safety at www.autosafety.org or by calling 202-328-7700. For information
on safety ratings, you can consult Consumer Reports and the Insurance Institute
for Highway Safety (www.iihs.org).
Costs are higher for drivers who use their cars heavily. Compared to a
driver who uses his or her car only for pleasure, one who drives to work
can expect to pay about two to 10 percent more for coverage, and also two
to 10 percent more if the commute is more than 15 miles each wayand about
40 percent more if the car is regularly used for business. You might save
more than $150 per year in insurance costs by using public transportation
or by joining a car pool.
Companies also look at the number of cars they are insuring for a family.
The second car usually costs considerably less than the first because companies
assume you will drive each car less than you would drive a single car.
If you can show that the total mileage per year for your car is less than,
say, 12,000 miles or, better still, 7,500 miles, you might get a further
If you have had a lapse in insurance coverage at any time in the last five
years, including for non-payment of premium, expect your rates to skyrocket.
Insurers view potential customers who have had insurance lapses as high-risk
policyholders and most will not offer these potential customers their lowest
Similarly, many insurance companies will not offer their lowest rate programs
to potential customers who have recently maintained their liability coverage
limits below the 300/100/50 level.
If you are considering switching insurance companies, and have been loss
free with your current company for a while, you will want to consider
in the calculation any longevity discounts your company will be granting
you in the future. Many companies offer discounts of five to 10 percent
for three years of coverage without an at-fault accident and may increase
the discount at six years and nine years. Another benefit of longevity
is that your current company might examine your entire history with it
when deciding whether or not to re-assign you to a higher risk category
(and charge you higher premiums) if you have accidents, whereas a new company
might examine only your driving record in the last three years. Some companies
give accident forgivenessnot raising rates after an accidentto drivers
who have been with them five years or more and had no accidents. This is
different from the accident forgiveness policies, discussed above, that
are offered to new drivers for a price by some companies.
Many insurance companies 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 might realize by switching companies, you have to shop for
both types of coverage at once. But the discounts arent usually so large
that they have a major effect on the relative rankings of companies.
Another way insurance companies attempt to judge what kind of risk you
are is by looking at your credit history with one of the credit reporting
bureausEquifax, Experian, and TransUnion. Many companies have concluded
that consumers with poor credit histories are also more likely than others
to have claims.
Using complicated, secret formulas, insurance companies, or credit bureaus
on their behalf, calculate an insurance score that may be used to decide
what your rates will be, or even whether you will be covered at all. The
insurance score formulas are not the same as those used by lenders (such
as banks or mortgage companies) to calculate your credit score, but they
draw on the same types of data. The formulas vary from company to company,
since different insurers (or the scoring companies they use) weigh the
various factors differently.
The appropriateness of using credit histories in making insurance decisions
is a hotly debated topic among the insurance industry, consumer groups,
and state legislatures. Aware that there is risk of discrimination and
unfair treatment under such practices, many states have passed, or are
considering, laws designed to protect consumers by limiting the insurance
companies use of credit data. Illinois law makes it illegal for a company
to cancel or non-renew your existing personal insurance policy based solely
on your credit history. But companies still have a lot of freedom. Companies
may use your credit history as the sole factor in determining your acceptance
or placement into a specific company within their family of companies.
Your credit history also may be used to determine your rateseither by
itself or in conjunction with other factors. If an insurer takes an adverse
action against you as a result of something found in your credit report,
the company must tell you it has done so and must tell you which credit
bureau(s) supplied your report.
Factors from your credit report an insurer may consider include:
Major negative items (bankruptcy, foreclosures, etc.);
Past payment history;
Length of credit history;
Inquiries for credit;
Number of open credit lines;
Type of credit being used; and
Insurance companies do not have to tell you they are looking at your credit
history or get your permission to do so.
The impact of your credit history on the rates you might pay can be dramatic.
For example, when we queried Farmers for an auto insurance rate for a couple
living in Arlington Heights who had excellent credit, we were quoted an
annual premium of $1,742. For the same policy, but assuming the couple
had poor credit, Farmers quoted an annual premium of $3,338. We have found
similarly large differences with other companies.
Clearly, saving on insurance is one of many reasons that consumers need
to maintain good credit recordsfor example, by paying bills promptly,
not opening too many lines of credit, and keeping balances relatively low
on the lines of credit you do have.
You have two main considerations in choosing among auto insurance companies:
how much they charge and how good their service is. You may also want to
give some thought to a companys record on terminating policyholders, its
financial stability, and a few other factors.
Our price comparisons show annual premiums quoted by insurance companies
for four illustrative profiles in four Chicago area locations. The table
includes rates for the companies for which we received 10 or more ratings
from CHECKBOOKs survey of policyholders (described on the How We Rated
the Insurers page). The listed companies account for the vast majority
of the auto insurance business in the region.
The rates on our price comparisons were obtained whenever possible
directly from the companies websites. Some companies did not have available
online rate quotes or would not provide an online rate to us; for these
companies, our researchers called insurance agents and, without disclosing
their affiliation with CHECKBOOK, obtained rate quotes over the phone.
As you can see, the company-to-company rate differences are dramaticannual
differences of hundreds of dollars in all cases, and over $1,000 in some
cases. The rates on our price comparisons will probably not apply to
you exactly; most readers will differ in location of residence, vehicle
usage, vehicle type, or other ways. But the rates will give you a good
starting point for your own shopping. Companies with low rates on our price comparisons will likely be excellent prospects for you.
When you have identified a few possible companies, you can begin shopping
on the Web. Many companies enable you to get quotes directly from their
company websites. Or you can check the companies websites or the Yellow
Pages to locate agents. You can then ask each agent for a price quotation
for the coverage you want. Before shopping, its a good idea to make a
list of the coverages you plan to purchase.
Some independent agents sell policies offered by many companies; so one
of these agents can give you quotes from various companies. But other companies
are not available through independent brokers or agents; to get these companies
rates, which often are the lowest rates available, you have to get a quote
from a company website or contact company agents directly.
If you will be contacting agents, you may have to push hard to get reliable
information from them. For our article on homeowners insurance, we found that many insurance agents were
inept at providing accurate price quotes and that some agents could not
correctly answer even the most basic questions about coverages. For auto
insurance, most of the agents we dealt with were able to quote accurate
insurance rates, but problems still exist. Some agents quoted wildly inaccurate
rates, while others persisted in attempting to sell more insurance than
we asked for or failed to mention the most attractive available plans.
Always ask an agent whether he or she has any other plans with better rates.
In addition to seeking out companies based on their relative rankings on
our price comparisons, you may want to try using one of the insurance
comparison websites. These sites tend to sound better than they are. Insweb.com,
for example, claims it will enable you to compare quotes from the most
respected names in the industry and lists about 20 participating companies
on its website. But when one of our researchers went through the process
of entering the detailed information necessary to get a quote from Insweb.com,
the site returned quotes from only four companies. On the other hand, we
have often found that among the few returned quotes, there is at least
one quote that is competitiveespecially if you use several of the comparison
sites. The sites we found most useful were
Most insurance companies write auto policies by assigning prospective customers
to a tier depending on 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.
If you have so many accidents or violations that it is difficult for you
to qualify for coverage, you have the right to get insurance through the
states assigned risk plan (discussed below). Rates in the assigned risk
plan are often three times or more what youd pay for a preferred policy.
Companies actual underwriting practiceswhich drivers get the best rates,
which pay more, and which they wont insure at allare not publicly disclosed.
And they may include different factors.
You will want to consider price in relation to the quality of service you
can expect the different companies to provide. Probably the most important
type of service is claims handling. We give you three types of information
to help you evaluate companies service: a survey of policyholders, a survey
of auto body shops, and an analysis of complaints. Our Ratings Tables
contain our data on 21 companies or insurance groups rated by 10 or more
respondents in our survey of policyholders.
Our Survey of Policyholders
We surveyed CHECKBOOK and Consumer Reports magazine subscribers and collected
more than 2,200 ratings of individual insurance companies from policyholders
who said they had made an auto insurance claim within the preceding three
years. These consumers rated 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 of these elements.
As you can see from our Ratings Tables, there are big differences in
how companies were rated by their customers. For example, Amica Mutual,
Chubb, Liberty Mutual, and USAA were rated superior for speed of claim
payment by more than 80 percent of their surveyed customers. In contrast,
Nationwide and Progressive got superior ratings from only 47 percent
of their respective surveyed customers. (For a further description of our
policyholder survey and how its results and our other research results
should be interpreted, click here.)
Asking the Experts: Auto Body Shops
As a second way to assess service quality, we surveyed area auto body shops,
asking them to name the two insurers they considered most desirable for
treating their customers (car owners) fairly and the two insurers they
considered least desirable.
Our Ratings Tables show the number of times each company was mentioned
(either favorably or unfavorably) by area shops and the percentage of the
mentions that were favorable. As you can see, with only a few exceptions,
the body shops we surveyed agreed on which insurers they thought were fair
(or unfair) to car owners. AIG, Chubb, Country, The Hartford, State Farm,
and USAA were all highly recommended by surveyed body shops. Allstate,
Farmers, GEICO, Nationwide, and Progressive were often cited as least
desirable. It is also worth noting that in each of the seven metropolitan
areas where we publish CHECKBOOK, Progressive consistently was one of the
lowest scoring companies on this measure (see Table 2).
Another way to assess quality is to count policyholder complaints and to
look at each companys number of complaints in relation to its volume of
business. While customers might have rated a company less than superior
on our survey of policyholders even if the companys deficiencies were
minor, filing a formal complaint with a government regulatory agency presumably
reflects serious dissatisfaction.
On our Ratings Tables, we have reported counts of private passenger
auto insurance complaints filed in 2007 with the Illinois Department of
Insurance. We have also reported a complaint rate for each company. The
complaint rate is intended to take into account the fact that some companies
do much more business than others and therefore are more exposed to incurring
complaints. It is calculated as a companys number of 2007 complaints per
$1 million in 2007 direct private passenger auto insurance premiums written.
There are six companies for which we do not have a complaint count or rate.
The state releases complaint information only for companies with at least
10 complaints. We assume that the companies for which we dont have complaint
counts had fewer than 10 complaints. In those cases, we cant tell you
the complaint rate. So, for those six companies, we have reported that
the complaint count is Less than 10.
The companies listed on our Ratings Tables with the lowest complaint
rates are Country, Progressive, and State Farm, while Nationwide and USAA
have the highest complaint rates.
If the price is right and service appears satisfactory, your next question
will be whether you can be confident that the insurer will not terminate
your coverage or dramatically raise your rates because of accidents or
traffic violations. Termination by your company at best is inconvenient
and at worst can force you to pay rates hundreds of dollars higher when
you find a new company or enroll in a special plan for high-risk drivers.
There are certain legal restraints on termination in Illinoisby cancellation
With regard to cancellation, it is relatively easy during a policys first
60 days while a company checks the accuracy of its policyholders applications.
After the first 60 days, a company may cancel your coverage only for serious
problems such as failure to pay the premium, having made a misrepresentation
in obtaining the policy, having filed a false claim, or having had your
drivers license suspended.
With regard to non-renewal, the restraints on companies are much looser.
An insurer may refuse to renew your policy for any reason except your age,
gender, race, color, creed, ancestry, occupation, marital status, employer,
or physical handicap. The insurer may not base your non-renewal solely
on credit report information. Under a relatively new law in Illinois, companies
cant either non-renew or cancel a policy based on claims related to a
loss caused by a hate crime.
Insurers must follow certain procedures when canceling or non-renewing
a policy. The procedures for termination generally involve sending a notice
to the policyholder at least 30 days before the termination date (10 days
in the case of non-payment). For non-renewals, notice must be sent to the
policyholder at least 30 days before the non-renewal date for policies
in force less than five years, and at least 60 days before the non-renewal
date for policies in force more than five years. Except for cancellations
or non-renewals based on non-payment, the policyholder has the right to
protest to the Illinois Department of Insurance and usually to have the
termination action held up while the case is considered.
In fact, except in cases of non-payment of premiums, termination is relatively
rare. Accordingly, we dont recommend spending more than an extra $100
or $200 per year to have a company with a particularly good record of sticking
by its policyholders through a string of accidents or violations. And you
shouldnt have to pay even that, since some of the lowest priced companies
get high ratings on our policyholder survey for their termination practices.
On the survey, we asked policyholders who had made claims to rate their
companies on not unreasonably cutting coverage. You can see the results
on our Ratings Tables. The table shows the percent of survey respondents
who rated each company superior on this question.
Of course, termination by a company is not the only disruption you might
experience. If a company raises your rates dramatically in response to
an accident or violation or two, you may be faced with having to terminate
on your own, or take a big hit to your budget. On our customer survey,
we also asked consumers to rate companies on not unreasonably raising
premium. That is the question on which most companies scored lowest. There
was big company-to-company variation, with some companies rated superior
by 50 percent or fewer of their surveyed policyholders.
In shopping, you will want also to be alert to news of a companys financial
instability. You will not want to sign on with a company that may soon
have to cut many policyholders or raise prices sharply to stay alive. Nor
do you want a company that may go out of business soon, forcing you to
begin your shopping again. This is, of course, more of a concern now than
a few years ago.
On the other hand, there is no reason for great anxiety 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 exists in every state with the duty to assess all insurers
doing business in the state on a pro-rata basis to pay off all outstanding
claims of an insolvent company and reimburse each policyholders paid-in
premium. There is a $300,000 limit on most covered claims, with no deductible;
paid-in premium reimbursement has a limit of $10,000 per policy and is
subject to a $100 deductible.
You can check on a companys financial soundness using any of several sources:
You should be able to find copies of ratings from at least one of these
sources in the reference section of your local library. If you are unable
to find them, or if the ratings in your library are outdated, you can contact
the services directly. All four services will provide ratings over the
phone or on the Web. On the Web, you can learn about the specifics of the
rating criteria each of these sources uses.
Some individualsusually the young and those with records of accidents
or violationsfind it difficult to locate a company that will agree to
The only answer if you are one of these high-risk individuals is to shop.
Try several of the major groups and ask that you be considered for their
preferred, standard, or non-standard plans. Then try the special
publicly created insurance arrangementthe assigned risk plan for Illinois,
which is the Illinois Automobile Insurance Plan (ILAIP). The ILAIP is open
to licensed drivers who cant get coverage through the regular market,
or who cant get such coverage at rates that do not exceed those of the
ILAIP. An agent or broker 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 no matter
which company he or she is assigned to.
Dont assume that because you have been turned down by one 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
from day to day as their rates and volume of business change. To enhance
your chances, remind an agent that you or members of your family have other
business with a companyfor instance, a homeowners policy or automobile
policies for other drivers. On the other hand, dont stop shopping even
if you are accepted by a preferred company. Sometimes the high-risk companies
or the assigned risk plan offer better rates. If you must join the assigned
risk plan at a very high price, try to get other coverage after a year.