When it comes to auto insurance, we all want to be adequately covered in case something bad happens.However, not all of us have the patience to shop around for the right insurance provider, so we end up spending more than we should. This article is a quick guide to buying auto insurance — it will show you how to get adequate coverage at an affordable rate and without spending a lot of time.
Step 1: Decide on how much insurance you need
Don’t simply get the exact same coverage you had with your soon-to-be former insurance provider. Your insurance needs may change from one year to another. Have you recently moved to another state? Got married or divorced? Bought a new car or sold one? Bought a new house or any other real estate property? Have you added or removed any drivers from your policy? Has your household income changed since last year? A lot of people miss out on best auto insurance options because they don’t re-assess their insurance needs every year.
When it comes to the Liability insurance, experts recommend that you shouldn’t stick to the minimum state-mandated limits. With the increasingly high medical expenses in the United States, it may be that a 25/50 Bodily Injury coverage, which is most common in the US, won’t suffice. If medical bills for all injured passengers are more than $50,000, the injured parties’ attorneys will after you for the difference. A 50/100 Bodily Injury insurance policy is more appropriate.
When it comes to Property Damage, try to go for at least $25,000 (or more, if your state requires it). Lower limits are risky — if a new car is totaled in an accident, you are likely to have to come with the difference. All in all, a 50/100/25 Liability policy should be a bare minimum if you want to rest assured that you won’t have to cover further expenses.
Step 2: Analyze your current insurance policy
After deciding how much insurance you need, read your current policy. See what you are covered for and how much you are paying for it. Put down the monthly and the yearly costs, because some quotes you will get in the next step will be given one way or the other.
Now you know where you are currently standing and know the rates you have to beat. Even if you are going for a different insurance package, you will still have a rough idea on what you are supposed to pay.
Step 3: Get quotes from some insurance providers
The easiest way to get quotes from many providers is to use an auto insurance comparison site where you simply plug in your zip code, fill in a form and get quotations from as many carriers as you have selected.
Alternatively, you can build a list of insurance companies and their websites and query each of them individually. This process will take significantly more time, since you will have one form to fill in per each company, and it doesn’t improve your chances of finding more affordable coverage. It may actually trick you into believing some companies offer cheaper rates than others because you aren’t comparing quotes for the exact same coverage. You could, for instance, find out that a Comprehensive policy with a $500 deductible is cheaper than Collision coverage with $250 deductible, but this doesn’t tell you a lot about who would be the most affordable in a head-to-head comparison. With an auto insurance comparison service, on the other hand, you can rest assured that you are comparing apples to apples, because it is the same form that gets forwarded to all insurance carriers you have selected.
Step 4: Assess the top insurers’ credibility and financial standings
Just because a certain company has offered an unbeatable deal it doesn’t mean you should close a deal with them blindly. Look them up, see what others have to say about them and what their financial situation looks like, otherwise you can end up paying a great rate for a service that will prove less than helpful when you file a claim. A less than reliable company can delay your claims, deny them for the silliest and most awkward reasons or just not pick up the phone when you have an accident at 3am.
You should, at a bare minimum, check at least one independent financial ratings service and one consumer evaluation report. Here is why:
- Financial ratings services like the ones provided by A.M. Best or Standard and Poor’s give you an overall understanding about the company’s abilities to meet their contractual obligations from a financial perspective. Whenever a company has financial trouble, such independent evaluators are among the first to know. They assign grades to each insurance carrier and offer you advice on which companies you should be working with and which you should stay away from.
- Consumer surveying services like Consumer Reports or J.D. Power help you get an overall view on what other consumers — regular people, just like you — have to say about your chosen insurance carrier. They survey customers and ask them to grade their service providers on several criteria, like the range of offerings, pricing versus value offered, accuracy of the billing process and availability of the support department.
Step 5: Close the deal with your new insurer
Once you have picked your winner, close the deal. The insurance company’s website should instruct you on what to do next. You will probably have to send in some paperwork — scanned ID with photo, proof of residence, social security details — either by snail mail or electronically. You will get your final quote after sending in all requested information.
The final quote should be very close to the figure you received online. Should there be major differences — more than 10% — then the company might be using a “bait and switch” trick: they offered you an unsustainable quote just to get your attention, and now they bill you more. If that’s the case, then move on to the next one in the list. Even if you are content with the new rate, you can never know what kind of deceiving practices they will use in future. They’ve done it once, they will do it again.
Step 6: Cancel your old policy
Once you have received all paperwork from your new carrier, don’t forget to cancel your old policy! If you have signed a direct debit agreement, you may end up being billed again.