Shopping for car insurance can seem like a daunting task. There is unfamiliar lingo and there are so many companies vying for your attention every day. It’s hard to know where to begin. Most people dread shopping for auto insurance for this reason. And since most of the public and private insurers provide auto insurance that comes in different coverage and policies, choosing the right one for your car can be quite challenging. So compare car insurance is advisable.
Everyone knows that calling the first company you remember isn’t a good idea, especially if you’re on a budget, but it’s hard to know how to make sure that you’re adequately covered without spending too much on car insurance. Rates from different companies can be different by hundreds or even thousands of dollars per year.
Shopping around is even more important if you’ve had tickets, an accident, or if you have a questionable credit rating.
So where to start? Start here.
First, figure out how much auto insurance coverage you need. State laws tend to vary, so make sure that you know your state’s laws regarding how much coverage you’re required to have. It’s easy to find this information online.
Once you know what’s required, you then have to decide what you need above the requirements. If you’re leasing or making payments on your car, the company you’re contracted with may have auto insurance requirements. Some even require full coverage. Make sure that you’re not contractually obligated into a higher coverage car insurance policy. If you are, then you know how much coverage you need.
Also keep in mind that if you’re talking to an insurance agent, they may try to convince you to get a policy that doesn’t match with what you feel you need. Do your research and stick to your guns. Liability insurance is important if you get into an accident, because if someone else is injured, they can try to go after your assets beyond what your car insurance covers if their medical bills are higher than your liability coverage.
Your financial situation comes into play here as well. Determine what’s in your budget before you get too deep into shopping for car insurance, and try to stick as close to your figure as possible, if not lower.
Once you begin shopping, your driving habits may also become an issue. If you’ve gotten several tickets or been involved in several car accidents, this can raise the cost of your auto insurance.
However, there are other things to take into account. Older cars likely won’t need as much coverage for the vehicle, but some cars are more likely to be stolen than others. It’s important to know how much coverage you need for not just your driving habits, but your vehicle as well.
Once you’ve evaluated this information, it’s time to gather your records and start shopping. You’ll need your current car insurance policy information, your driver’s license number, and your vehicle registration. If you intend to shop online, you’ll also need access to computer and the internet. Read my other article on the benefits of shopping online.
You should pay attention to several factors:
Annual and monthly rates for different types of coverage. By keeping the coverage limits the same, you can make straight comparisons on pricing.
The auto insurance company’s payment policy is important. You should know when your payment would be due and the penalties for late payment.
Look for discounts offered by the insurance company that you qualify for.
Look for an 800 number you can call if you have questions that can’t be answered online.
Take note of things that can lower your rates, like a good driving record, a good credit score, and safety equipment on your vehicle. Certain occupations or professional affiliations can also help you get discounted auto insurance rates.
You’ll also probably want to look up the insurance company’s consumer complaint ratio from your state’s department of insurance website (every state has one, and google is your friend here), as well as their A.M Best and Standard amp; Poor’s (S P;) rating.
High risk insurers usually come out the worst in consumer complaint ratios, so you’ll want to keep that in mind. Lower rates doesn’t always mean better. As for A.M. Best and S P; ratings, they can give you an idea of your potential insurance policy holder’s financial strength ratings. For A.M. Best, it’s best to consider companies with a B+ rating or above. For S P;, the highest rating is AAA. Consider companies that have a BBB rating or above. These ratings aren’t for customer service, however, and only list the financial strength of the company. This comes into play if you ever have to file a claim.
Other places you can get good information on potential car insurance companies:
Body shops – body shops tend to work closely with insurance companies because they file claims for repairs. They can sometimes give you good information on the companies they work with.
J.D. Power and Associates’ auto insurance ratings – they do a lot of the research on the best companies for you.
Things to look for in the fine print:
Make sure your policy doesn’t infringe on your right to sue. If your policy would force you to give up your right to go to court, you can be stuck in arbitration, which can allow the auto insurance company to take advantage of you. You have two good options here. You can cross out that line and see if the auto insurance company will accept the contract, or you can take your business elsewhere.
Also try to avoid aftermarket parts requirements. If there’s a claim and they have to pay to get your vehicle repaired, they may try to cut their costs by trying to put inferior parts into your car. If the contract specifies that mechanics should use inferior parts (often given a better sounding name), you should search for a better policy.
Ultimately, your decision should rest on two factors. The reliability of the insurance company based on the criteria listed, and the price of the quote. After all the prep work, it’s not really that hard.