Why Do Car Insurance Quotes and Rates Differ?

You did your research, shopped around, and got a quote you like on car insurance. You feel great about it and decide it’s time to purchase a policy. But near the end of the process, you find out your premium is more expensive than the quote you received. This scenario isn’t uncommon because most quotes change at least a little bit by the time the policy is bound. But why is that? Why are insurance quotes and rates sometimes different? Learn the difference and find out how you can help keep your rates from going up after a quote or even at renewal time.

Quotes vs Rates

Not sure what a car insurance quote is? What about car insurance rates? Here’s a quick rundown on what these terms mean and how they’re related.

What is a car insurance quote?

A car insurance quote is an estimate of how much your car insurance may cost from your self-reported information. It's based on the coverage you select and the information you provide during the initial car insurance quote process. A car insurance quote is not a binding contract between you and the insurance company. Think of it more like a first introduction. We’re getting to know each other! 

How long does a car insurance quote last?

Once you get a quote from an insurer, how long is it good for? It could vary depending on which company you choose, but Direct Auto's last for 30 days.

What is a car insurance rate?

A car insurance rate, also known as a car insurance premium, comes after the quote. This is when auto insurance companies look at the information you provide and compare it to your Motor Vehicle Record (MVR) and other reports. These reports help insurance companies get a more complete picture of your driving, claims, and insurance history.

Insurance Quote vs Policy

Now that you understand the difference between a car insurance quote and a car insurance rate, let’s look at the difference between a quote and a policy. A policy is the final step of the process. It is the binding agreement you sign with your insurer to get covered, and it comes after you complete the application and agree to the rate. Your rate (or premium) is the actual cost of the policy you sign.

What are the reasons why your insurance premium might cost more than your quote?

Because insurance quotes are usually based on approximate information, there is often a difference between your initial quote and your finalized premium. You might get a quote for a certain price, but when the insurer verifies your information later to write your policy and something doesn’t line up, the result can be a higher premium.

Here are a few common reasons why your insurance premium and quote might not match:

Missing or Incorrect Information

Even if it’s not on purpose, failing to provide a complete, accurate picture to insurers can lead to a discrepancy between quotes and rates. Getting information wrong on a quote often stems from these two factors.

1. Incorrect driving record: When you filled out your quote, did you forget about the speeding ticket you picked up last year? Traffic violations, convictions, and car accidents stay on your driving record longer than you might realize. The length of time depends on your state and the severity of the violation. In Florida, traffic violations like speeding or reckless driving can stay on your record for at least five years. The number of years an insurer goes back into your driving history depends on the insurance company and your state. The good news is that once an accident or violation falls off your record, it usually doesn’t affect your car insurance rates anymore.
2. Not using a VIN Number: Did you accidentally say you drive a 2012 base model Nissan Rogue instead of a 2013 with all-wheel drive? It’s understandable to get confused with some vehicle models having a regular version, an XL version, and an XLS version. For the sake of getting you a quote quickly, an agent or insurer might not ask for your Vehicle Identification Number(VIN), and instead base it off the year, make, and model you give them. If you decide to get a policy, however, the insurer will need the VIN to write the policy and ensure everything is accurate for your premium.

Coverage Changes

Let's say you choose to go with your state's minimum insurance requirements during the quote process. But, when you purchase a policy, you realize you need more than liability coverage to feel at peace on the road. Adding additional coverage, like comprehensive and collision, at this point would cause your premium amount to increase.

Taxes and Fees

Taxes and fees vary from state to state and company to company. Some insurance companies charge a policy issue fee, others don't. You may not see these taxes and fees in your initial quote.

Remember that a car insurance quote is essentially an insurer’s best guess at your rate given the information you provide. Providing the correct information from the get-go is the best way to keep your insurance rate from increasing after your initial quote. You can try these three tips for more accurate quotes.

1. Check your driving record: Even if you think your record is clear, double-check it with your state’s Department of Motor Vehicles (DMV) before quoting. This is the best way to make sure a ticket has fallen off your record so you don’t end up with any surprises after completing the quote process.
2. Use a VIN number for quotes: With so many similar (but still different) models of vehicles, don’t take any risks. Use a VIN to make sure you’ve got the year, make, and exact model correct for a quote.
3. Consider the coverage you need ahead of time and get quotes periodically: Do your best to consider your situation and what you need before getting a quote. Also, if you’re shopping for insurance, get a few quotes regularly because life can change quickly. For example, don’t assume the quote you got a few months ago will suffice if you have a now-driving teen that will be using the vehicle.

How can you prevent insurance rates from increasing at renewal time?

Once your policy is in place, you can help prevent your car insurance rates from going up at renewal in several ways. 

First, drive safely and try to avoid any traffic violations or accidents. Some companies might offer accident forgiveness, but it’s always a good idea to steer clear of danger because violations and accidents will fall off your record eventually.

You can also see if you’re eligible for any other discounts at renewal time to help keep your rates low. Maybe the safe driving we mentioned above will pay off or maybe you’re ready to add another qualifying service to your policy that could give you a multi-product discount. If you have a new vehicle in the family, you might be able to get a multi-car discount.

In the end, you can’t always control the factors that impact your car insurance rate, like the car you drive and where you live. You can control other factors, though, especially when it comes to where you choose to buy car insurance. Get a free car insurance quote online or call 1-877-463-4732 today. 

More on Quotes, Policies & Savings:

• How to Compare Auto Insurance Quotes
• When & How to Update Your Policy
• What’s an Auto Insurance Down Payment?