You Can Save Hundreds On Car Insurance. But Is It A Good Idea?

It seems the auto insurance industry is on the cusp of a transformation.

Tracking devices are beginning to come along for the ride, sending insurers information about every turn and brake of your drive. A startup called Metromile offers pay-as-you-drive car insurance (available so far in four states) to those who drive less than 10,000 miles a year. But these newfangled ways to insure are still nascent, since, according to a 2014 Deloitte report, people are wary of privacy issues and the potential impact on pricing. 

So the vast majority of people are still shopping for car insurance the old-fashioned way — and it’s as confusing as ever. The problem? The industry doesn’t have an MLS like for real estate or an ITA or Sabre like for flights, where all policies from every carrier can be compared in one place. Unlike shopping for a home or airline ticket, in order to get an actual auto insurance quote and not just an estimate, you need to give up a lot of data and access to your credit score, which the company doesn’t do until you’re close to buying because it costs money. 

Still, businesses are trying to simplify the process. In the last year or so, a few new services — websites The Zebra and Compare, plus an iOS app called Go — have launched to make it easier and faster for drivers to shop for cheaper traditional types of car insurance.

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The Zebra offers side-by-side comparison of more than 1,800 products from more than 200 companies across all 50 states, representing 96% of the market. That’s significantly more than competitors like 14-year-oldInsurance.com, which has 17 carriers (though none of the biggest ones like State Farm). But The Zebra serves up estimates, not actual rates. Compare offers actual rates, not estimates, but they only have 31 companies (including eight of the big 20), and in some markets, they only offer one carrier. Go is an iPhone app that can show you potentially cheaper rates within 30 seconds and also uses the motion co-processor in the iPhone 6 to come up with new offers based on your driving habits, but its quotes are much less accurate.

The biggest problem of all? These services have consumers focus on cost instead of appropriate coverage, which could lead consumers to policies that aren’t right for them.

“There are so many nuances to insurance, and people guess at the coverage levels they need and don’t realize what the repercussions are from the choices they’re making,” says Sarah Smith, the founder/broker/advisor of Options Insurance in Twin Cities, Minnesota. 

The disadvantages of these new sites underscore the fact that the smartest way to search for insurance isn’t going to be one-stop shop. Online, “people go for the cheapest option, for the lowest liability coverage, which is really dumb because you wind up exposing yourself to lawsuits,” says Liz Weston, Bankrate contributing editor and author of Your Credit Score. “On the other side of that, working with a human being is not without its problems too. Even the so-called independent insurance agents work with a definite set of companies so you’re not getting the whole universe of possible options.”

So, even if you use a service like The Zebra, Compare or Go, check out more than one site and also talk to a couple agents, especially those who represent more than just one company. Here’s how you can use these new services to your advantage while obtaining appropriate coverage.