Things To Consider When Buying Auto Insurance

When you’re shopping for auto insurance, it’s easy to become overwhelmed and confused about what kind of coverage you need and should have. When you understand what each coverage means and how it could possibly affect you, shopping for auto insurance will be a simpler process. Here are some important things to consider when buying auto insurance.

Shop Around and Compare Rates and Coverage

Many people have gotten into the habit of shopping around for auto insurance, calling several different insurance companies and attempting to find the cheapest policy. However, you shouldn’t focus solely on the price, but instead, you should consider what you’re getting for the money. Sure, one policy from Company A may be $30 less a month than the policy from Company B, but perhaps Company B’s policy includes roadside assistance and rental car coverage. When buying auto insurance, it truly is about quality.

Additionally, make sure that you’re comparing apples to apples when getting quotes. It’s unfortunate, but many insurance companies will provide a quote for you with the lowest limits you can get by with legally, as well as give you high deductibles and little extra benefits so that they can give you a cheap rate. Take control of the quote and tell the insurance company what coverage you want and how much you want in. Once you identify what coverage options you need, you can tell the insurers exactly what you’re looking for and can rest assured that you’re receiving comparable, accurate quotes..

Consider What Coverage Limits YOU Feel Comfortable With

Too often, insurance companies will plug in ‘average’ amounts when quoting a policy, but you should understand what each coverage means and determine how much you feel comfortable with. For example, your state may only require liability limits of $25,000 per person and $50,000 per accident for bodily injury coverage, but when you consider how quickly medical expenses can add up, you may realize that in order to protect your assets from being taken from you, you’d feel more comfortable with higher liability limits. Ask the insurance company what each coverage means if you’re not familiar with them, and what limits are available.

Additionally, you should get quotes with a couple of different variations. For example, instead of getting a quote with only $25,000/$50,000 in bodily injury liability, also ask for a quote with $50,000/$100,000 so you can see the price difference. Often there isn’t a large difference in the price. If you’re able to buy $50,000 worth of extra coverage for only $20 more a year, you should absolutely buy higher limits. Buy the highest possible limits you can afford. On the same note, carry the highest deductible you feel comfortable with, as the higher the deductible, the lower your premium since you’re taking some of the financial risk away from the insurer by carrying a higher deductible.

Ask About Discounts

When you’re shopping for auto insurance, don’t forget to ask about what discounts are available for you and also have all required proof ready. Some typical discounts to ask about are:

  • Safety Features Discounts – Receive a discount for an alarm system, airbags, seatbelts, or other safety devices. This will be identified from the VIN, and if the alarm was custom and installed after you bought it, provide proof of the alarm and installment.
  • Good Student Discount – If there’s a full time student under the age of 24 in the household and on the policy, you may be able to get a discount if you provide proof of a 3.0 GPA.
  • Good Credit/Financial Stability Discount – Receive a discount for maintaining a good credit score.
  • Clean Driving Record or Driver Education Discount – Receive a discount for going a specified amount of time without having any accidents or violations, or for taking a driver’s education or driver’s improvement course, and have your course certificate ready.
  • Affinity Discounts – Receive a discount for being a member, employee, or volunteer of certain companies, organizations, or other activities, such as banks, credit unions, the Lion’s club, or AARP.
  • Multi-Policy Discounts – Buy your home and auto insurance from the same insurer and receive a discount for bundling policies.

Consider The Vehicle You’re Buying

People often forget that one cost associated with buying a car is the price of insurance. Obviously, buying a sportscar is going to be more expensive to insure than a mini-van, so compare the average price differences before you buy a new or used vehicle. Insurance companies calculate part of the premium based on the type of vehicle, how much it would cost to replace or repair it, and its safety record. Again, certain aspects of a car, like a factory alarm or other anti-theft devices can lead to a discount.

Consider The Insurance Company’s Reputation

Before you buy from an insurance company, it’s important to find out about the company’s financial stability and what their overall reputation is. You may find that one company has terrible customer service reviews, or that a certain company takes too long to pay claims. Also, always check what’s called the AM Best Rating, which is like the report card for insurance companies, and will tell you what the company’s financial stability is like. You can also check Standard & Poor’s reviews and read consumer magazines to find out about companies.