You've gathered several insurance quotes from different providers, and you have an array of companies and policy options from which to choose. Your instincts tell you to pick the insurance policy with the lowest price, but the lowest-cost option may not contain the coverage you need. On the other hand, the highest-priced option may have extra coverage that you'll never use.

In order to find the best policy for you, compare policies based on inclusion of the coverages you need, the experience of current customers and the insurance company's financial stability. While these rules apply to comparing all insurance policies, automobile insurance will be used as the primary example in this article.

Request Detailed Quotes in Writing
Don't just rely on a phone conversation with an insurance agent. Gather quotes you are given by phone and over the internet in writing, via mail or through email. The written quote will list all coverages and terms, which will allow you to compare one policy quote with others.

Determine What Coverage You Need
"Coverage" is a term that insurance companies use to identify items covered on insurance claims. No matter what type of insurance you are looking to purchase, there are going to be coverages you need and don't need.

For example, with automobile insurance, if you have coverage for towing through your cell phone service, you won't need it on your auto insurance too. However, you may still need coverage for a rental car while your vehicle is in the repair shop. Look through the quotes you were given and compile a list of what coverages you need and don't need based on what is offered. Add a third column with what you think the coverage is worth to you, in case you'd rather cover those costs out of pocket. (For additional reading about types of coverage, see Shopping For Car Insurance.)

Next, look at the liability coverage level in your policy for you and other parties injured in an accident or natural disaster. For instance, if you are legally at fault in an automobile collision, your insurance provider is responsible for damages to your's and the other driver's cars, in addition to lost wages and medical bills associated with all parties injured in the accident. You may have chosen a policy with $25,000 in coverage for personal injury for others, but you may only have $2,500 in coverage for your own injuries. Thus, if your medical bills are higher than $2,500, you will have to pay the difference. If the bills for other parties involved are higher than your coverage limit, you could also be liable for their additional medical bills.

If your insurance covers everything that could realistically happen, it could be your deductible that is cost-prohibitive, preventing you from ever using your insurance. For instance, if you typically have $500 in your checking account and the deductible in the cheapest policy available is $2,500, you should probably rule out this particular policy as one of your options. (For more on how this works, see Why is my insurance premium so high/low?)

Customer Service
When it comes to customer service, what you are looking for in an insurance company is how well the agents from the insurance company explain to you the terms of your coverage and how expediently claims are resolved.

You can evaluate how well the terms of the contract are explained to you when you are in the comparison stage before you buy the policy. However, evaluating how well claims are handled takes some detective work.

Talk to your friends and family about which company they use for their insurance policies and if they've ever had to make a property or injury claim. If so, ask them if they were happy with how the claim was handled.

You can also peruse your state's department of insurance website for complaint ratios on the insurance companies available in your area. Be careful of giving too much credence to one company's complaint ratio being slightly higher than another's, because if the company with the higher ratio has written fewer policies in your city or state, just a few extra complaints can look like a significantly large number.

Financial Stability
While all insurance companies have their own insurance in case a large number of claims are filed at once, a company that is financially secure will be able to pay you faster. Look for companies with an "A" rating or above. You can find this rating on your state's department of insurance website as well. (For further reading, check out What To Do If Your Insurance Won't Pay.)

Once you've gathered all the information regarding coverages, customer service and financial stability, you can make an apples-to-apples comparison of insurance policies. The best policy will provide at least enough coverage that whatever accident or natural disaster happens, you will be able to recover financially and medically. The policy also should be provided by an insurance company with the customer service and financial stability to make you feel confident that it can expediently handle any future claims you might have.

Related Articles
  1. Home & Auto

    The History Of Insurance

    The first written policy appeared in Hammurabi's Code. Find out how it evolved from there.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Home & Auto

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  4. Options & Futures

    Choosing The Best Disability Insurance

    Social Security benefits can be hard to collect. Find out why you need disability insurance to protect your income, and learn how to choose the right policy for you.
  5. Options & Futures

    Top Tips For Cheaper, Better Car Insurance

    Accident, theft, vandalism - make sure your coverage will protect you when you need it most.
  6. Budgeting

    Preventing Medical Bankruptcy

    If you’re worried medical expenses could overwhelm you, there are some thing you can do to ease your concerns.
  7. Insurance

    Medicare 101: Do You Need All 4 Parts?

    Medicare is the United States’ health insurance program for those over age 65. Medicare has four parts, but you might not need them all.
  8. Insurance

    How Life Insurance Works in a Divorce

    Learn the implications of life insurance in a divorce situation, and identify the steps you should take to ensure your policies are sorted out post-divorce.
  9. Entrepreneurship

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
  10. Credit & Loans

    Pre-Qualified Vs. Pre-Approved - What's The Difference?

    These terms may sound the same, but they mean very different things for homebuyers.
  1. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  2. Does renters insurance cover water damage?

    An all-perils renters insurance policy does cover water damage, less the deductible, to personal property if the damage is ... Read Full Answer >>
  3. Does a Flexible Spending Account (FSA) cover massages?

    Flexible Spending Accounts (FSAs) cover massages for certain medical treatments. These treatments must be approved and prescribed ... Read Full Answer >>
  4. Does a Flexible Spending Account (FSA) cover Lasik?

    Flexible spending accounts (FSA) can be used to pay for qualifying LASIK procedures. LASIK is not the only laser eye surgery ... Read Full Answer >>
  5. Are Flexible Spending Account (FSA) expenses tax deductible?

    Flexible Spending Account (FSA) expenses are not tax deductible. The U.S. Internal Revenue Service (IRS) states you cannot ... Read Full Answer >>
  6. Does a Flexible Spending Account (FSA) cover acupuncture?

    A Flexible Spending Account (FSA) covers acupuncture. The Internal Revenue Service (IRS) has defined acupuncture as a qualifying ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center