How can shoppers feel more confident when selecting an auto insurance provider?
Whether you are a first-time shopper looking at getting a car insurance policy for your new car or you are someone who is looking at switching to a new company, one of the most critical things before you embark on the process of contacting insurance companies is to first do your own research. By this, I refer to gathering information about each driver on the policy (their name, address, license numbers, date of birth, etc.), information about the car (make, model, VIN number, anticipated annual mileage, etc.), and driving history record (tickets, accidents, etc.). Once you collect this information, it is important to look at some of the auto insurance companies you have in mind online and compare them. In particular, shoppers should look at their coverage needs liability, which is required by most states, full coverage/comprehensive insurance (important and required if your car is financed), uninsured and underinsured motorist coverage, collision coverage, personal injury protection insurance, etc. Each individual’s situation is different so it is important to evaluate what kind of coverage you need. The next step is to call up auto insurance companies, either captives (working for a single insurance company, for example State Farm), or an independent insurance agent who might represent several companies, or look up third-party comparison websites for insurance policies.
Lastly, if you feel you need to also renew/get renters’ insurance, then many companies can give you a bundled option that can save a lot of money. In short, shoppers need to be smart in doing their research, get quotes, and ask relevant questions before finalizing their auto insurance company, which would make them feel more confident of making the right decision.
What additional coverage(s) would you recommend that shoppers pay for?
- Liability insurance is mandated by most states
- Collision insurance covers you regardless of fault
- Comprehensive/full coverage insurance covers you in case of damage to cars caused by unforeseen calamities or “acts of God” — events such as hail or a fallen tree resulting from severe weather conditions, or your car hitting an animal, etc.
- Uninsured/underinsured motorist coverage is important if the other person you are involved with in an accident does not have auto insurance or their liability coverage is too low
- Medical payments coverage and personal injury protection insurance in case your insurance does not already cover medical expenses and death
Shoppers should consider that if the individual has taken a car loan, then they may be required by law to take liability, collision, and comprehensive insurance. Taking liability-only car insurance is quite risky. However, it could work well in certain cases for an individual who has economic constraints wishing to save money, provided they do not have any loan on the car, or if the value of the car being insured is very low (such as if the insurance cost is higher than the value of the car. For example, if the car’s market value is $1,200 but an annual full insurance coverage policy for such a car is costing $1,350).
Full coverage car insurance charges will vary for each customer depending on their credit history and driving and accident history. Therefore, each individual’s situation is unique. If you are a new driver or teenage driver or even someone who is risk-averse, then it is better to take comprehensive, collision, and uninsured/underinsured, along with medical payments coverage and personal injury protection, in addition to the liability insurance that most states mandate. This will give you peace of mind. If an individual is financially constrained or willing to take the risk, then they might prefer only liability insurance coverage.
What tips would you offer for someone looking to lower their car insurance rate?
It is important for all shoppers to be smart and discerning. For example, if you are a teenage driver, then certain insurance providers offer good discounts for taking driver education programs or public safe-driving courses, which can alleviate higher insurance normally charged. A teenager with good grades can qualify for a discount from the insurance company. Many insurance companies provide drivers with a device that can be installed in their cars to rate driving tendencies, along with tracking daily mileage, hard braking, rapid acceleration, etc., which can lower insurance rates. There are other ways consumers can lower their insurance rate, such as increasing your deductible (which can result in a lower monthly payment), special discounts for serving in the military, teacher/educator discounts, reducing coverage on older cars, bundling of services (auto and renters’ insurance/homeowners insurance from the same company), maintaining a good credit record, getting a low-annual-mileage discount, loyalty discount, discount on multiple vehicles, and accident-free record discount, etc. Lastly, it is important to also be on the lookout for cheaper car insurance policies at all times because the auto insurance industry is very competitive. Therefore, many companies will be pleased to get your business and looking at developing a long-term relationship with new customers.