Researching auto insurance coverage and insurers can be a daunting task. There’s so much involved when lives and property are at stake. Knowing a few basics can distill the job down to a good comfort level and make it as short as possible, keeping in mind that you want to do it once, and do it right. You want full protection at the lowest cost.
First things first; does it cost anything to get a quote? Usually, no. Brokers and insurance companies are happy to give you a quote at no charge, either on the phone, in person, or online. However, some companies may charge you for a quote, particularly if you don’t choose to go with them.
The easiest way to get several comparative quotes is through an online form at websites specially designed for that purpose. It’s not just hype—you really could save yourself several hundred dollars a year by shopping for the lowest price using this kind of tool. The downside of these forms is that you must type in your personal information each time. You may not get a reply immediately, or, you may get a phone call.
You’ll need to know your driving record before you solicit quotes. If you’ve had tickets that will soon disappear from your file, postpone your search until you have a clean record again. You’ll get a much better rate for a pristine driving history.
Be aware that your credit rating will also affect your premium costs.
Before you can compare, of course, you also need to know what kind of coverage you need. Consult the laws in your state of residence to determine the minimum coverage mandated. Simply visit your state’s Department of Insurance web site.
Above those minimums, how much coverage should you get? There are three basic areas of coverage:
- Liability for your personal injury
- Liability for the injury of all others (not in your car) in an accident where you are at fault
- Liability for property damage
The first two are considered Personal Injury Protection, or PIP. It’s a good rule of thumb to choose sufficient bodily injury liability based on your personal assets but not to over-purchase out of fear. If you have $500,000 in assets then you would want to have that amount in coverage. If you don’t have sufficient coverage, however, in the event of an accident, legal teams will come after your assets to make up the difference.
The recommended guideline for the three liabilities is: $100,000/$300,000/$25,000 or 100/300/25. You will see it expressed this way when doing your research. Based on the current price of an average car, $25,000 will cover the replacement value. If you have an excellent health care plan, however, you may be able to safely reduce your personal coverage to 50/300/25.
Some states require that you purchase insurance to cover expenses in the event you tangle with either an UNinsured driver, or an UNDERinsured driver. This will cover your loss of income for a few months in the event you are unable to work due to an auto accident. You will be limited, however, on your coverage, to the amount of the liability coverage you purchased.
Go with an Agent or Right to the Top?
You may find it more cost-effective to work directly with an insurance company. The alternative is to find an agent as a middleman. Be sure to check out an insurance company thoroughly if you decide to bypass an agent.
You may still be assigned an agent to serve you if you work directly with an insurance company, but having an agent to choose a company for you and serve you is still a satisfying way to go if you just don’t want to wrap your head around all the data and take the time to research. If you have an agent who is committed to service, it could make your life a lot easier, particularly if they were recommended by a common contact.
An agent may point out key information you aren’t equipped to question when handling your coverage on your own. They get to know you and your unique requirements and are very capable of putting together the perfect policy for you. You can often negotiate their fee, but get it in writing before you move forward in the purchase of your policy.
The down side of using an agent is that the agent is, of course, in business to make money. Yes, they have access to the widest variety of policies for comparison, but some will generate more income for them than others. Hopefully yours will put your needs first and do a thorough job of researching and recommending the most cost-effective plan for you.
If you decide to go direct, without an agent, before you decide which insurance company to go with you should check out the complaint ratios which are also included on your state’s Department of Insurance website. Not all companies are as easy to work with or honor as many claims as other companies. Don’t take their marketing as an indicator of what their service policies are like, or how many complaints may have been filed against them.
J.D. Power and Associates can provide reliable ratings for insurance companies based on their service levels and their general intention to honor claims. Some will do anything to throw out a claim, while others seem togo out of their way to decide in favor of their customer.
When you think about it, your local auto repair centers are a great place to get feedback on the insurance companies. Consult a few body shops to learn who they prefer to work with. Chances are, those are the companies with the least red tape who hasten the process so you can get your car back sooner.
Now you have some basic understanding of the various aspects of auto insurance for the purpose of choosing a policy and a company or agent to serve you. It wasn’t so bad, was it?