Car Insurance Calculator Explained

It's a known fact that shopping around is one of the key ways to saving big money with car insurance. You simply cannot afford not to analyze many offerings before making up your mind.

The old-fashioned way of shopping for car insurance was a long and tedious process. You had to pick a copy of the local Yellow Pages, build a list of insurance carriers and call them one by one or, worse, drive over to their headquarters and get a quote in person. You can clearly see how this takes you a couple of hours with only half a dozen companies – what if you want to analyze 20? How about 30? How about 100?

The good news is that the Internet is your new best friend these days. It's not only that all companies have a strong online presence, but also that there are many tools designed by third-party services to make your life easier.

Introducing the car insurance calculator

As the name suggests, a car insurance calculator is a tool designed to compute an estimate on your insurance rates, based on the details you give. Most major players on today's market offer you such a tool on their websites – you simply have to fill in your zip code, name, the car make, model and manufacturing year, some brief information on your driving history and the system will give you an approximate rate. Once you mail in the required paperwork, you will be given the actual quote.

Moreover, car insurance calculators have the capability of connecting to many insurance providers and fetching data from all of them at the same time. You will see later how this helps.

Benefits of using a car insurance calculator

Car insurance calculators are the new way of shopping online for car insurance. We all live busy lives and cannot (or should) not be bothered with spending lots of time with mundane tasks. Here are the main benefits of using such a system.

You save time

Offline insurance offices work regular hours, just like you do. If you work from 9 to 6 and get home around 7pm, you can hardly find any open stores. They might work on Saturdays though, or you should leave work early. But there is not much shopping around you can do on weekends or in that hour you manage to cut from your workplace – it might take you one whole month to do a proper market analysis.

You may have better chances with calling them up but, again, this is a lengthy process. You will have to reach an agent, put forward your insurance needs, fill out a form over the phone and wait to be called back for the quote. Try putting down 20+ quotes from companies who call you at random times of the day and see what kind of sense you can make out of it.

With an insurance calculator, however, you can shop around at any time of day or night, right from the comfort of your home or office, and organize your information as you please.

You get to compare quotes head to head

Querying insurers one by one leads to another major hassle – you can never be sure you are comparing apples to apples. You could end up trying to match a collision policy with $750 deductible and free towing coverage against one with $1,000 deductible and no extra options.

If you use an auto insurance calculator that forwards the same form to all companies, you will know that the quotes are for the exact same coverage.

You don't have to deal with unscrupulous sales people

Sales agents receive a commission of their sales, next to the flat-rate paycheck. In case you wondered how come the sales guy is so fun to talk to and why he complements you on your new haircut, here is the secret: it's all a sales technique. While he is laughing at your jokes and giving you tips on how to save on insurance, as if he was your friend, he is analyzing you and building up the sales pitch. At the end of the day, you may be left with more insurance than you need, and he has more money to put food on the table.

Shopping online rules out the human factor. The computer won't try to trick you into buying unnecessary coverage, it just gives you what you ask for.

Limitations of car insurance calculators

Insurance comparison tools come with some disadvantages, but these are definitely outnumbered by the benefits. Here are some of the problems you may run into.

A limited range of companies

You will only get quotes from the companies the online tool queries. There could be others that offer you better rates, and you won't know about them. There is a workaround though – the system will show you the companies it got quotes from, so if you know others, you can always query them the old fashioned way.

Price isn't always the only factor

The system gives you a list of quotes, sorted by price. It won't, however, do further research on the companies, and this will be your job. Cheap isn't always the best – you could end up buying insurance from a company that will go bankrupt tomorrow, or one with a solid financial status but who will treat you like dirt, stall claims or even deny them for the most absurd reasons.

To make sure you really landed on the best deal, check out the company's financial ratings offered by A. M. Best and the customer evaluations brought to you by J. D. Power or Consumer Reports.