There can be major differences between car insurance policies and car insurance policies currently offered in the market. Using your favorite search engine with the terms “auto” and “insurance” quickly provides a plethora of coverages, coverage levels, rates, options, payment terms, insurance carriers, and geographic availability, just to get you started. How do you choose a suitable policy with virtually unlimited choices?
First of all, remember what you are buying: risk coverage, pure and simple. You want this coverage to pay for any damage, bodily injury, medical care or death for which you are held liable. Sounds pretty serious, doesn’t it? It is. Not only is it important to insure against all the risks under which you will operate your vehicle, it is also paramount that you are indemnified (protected) against those risks by a company that has the resources to do so. While those resources include the obvious financial ones, they also include customer service and industry goodwill. An insurance company customer service team that is efficient, conscientious, and courteous can prevent many unpleasant complications. Likewise, good relationships with insurance companies within the auto insurance fraternity can greatly facilitate the handling of your claim or the claim of the injured party. In short, a lawsuit avoided is a win for all parties involved. With risk coverage as a primary consideration, all others, including costs, take a back seat. However, regardless of which selection process you use, keep the following factors in mind:
1. Buy only the insurance coverage you need and you won’t be able to insure yourself. If you drive a $2500 vehicle and collision coverage (which covers the cost of repairing YOUR car) costs $3000 a year, it should be obvious that you can self-insure the total loss of your vehicle, and do so at a profit can do. It should also be understood that any moving car, regardless of cost, is capable of causing roughly the same amount of property damage, bodily injury, or death, and that these liability coverages are a necessity for all but the super-rich and the penniless. . Many other coverage options allow you to customize your policy based on your aversion to specific risks and the quoted premiums to relieve you of those risks. Of the many factors that affect the amount of your premium, the coverage deductible you specify offers the greatest opportunity for overall premium savings. Of course, these savings don’t come for free, as you take on the risk of covering the cost of the deductible if an accident comes your way, in exchange for a reduced premium.
2. Only buy from a reputable insurance company. These companies:
- are generally companies of, and have business assets in, your country of residence, and are subject to local and state laws and court rulings;
- are registered with your state insurance commission (website URLs can be found at http://www.naic.org/state_web_map.htm;)
- have a license to do business in your country;
- compare favorably with their peers in the AM Best (http://www.ambest.com) Ratings for qualities such as:
- financial stability;
- customer service; and,
- claims handling.
3. Get the best possible price for the coverage you need. While this sounds like an endless process, it is self-limiting when limited to getting a car insurance quote from reputable insurance companies. Three auto insurance quotes should suffice, but get as many as you need to exhaust a given level of insurance company quality: if there are six top-rated firms, get six quotes for the same coverage needs, to make your selection ease. Since no two companies have the same customers, workforce or business base, no two companies have the same experience (profit and loss) and therefore no two companies will have the same cost history on which to base (future) premiums. While companies must compete with their peers in the marketplace, a number of considerations (such as whether a company made a profit or loss, reserves consumed or accumulated, or added or lost policyholders) make it possible to obtain multiple rate quotes. While many people have reported significant savings by purchasing car insurance online, it is critical that you purchase your insurance from a reputable insurance company. Remember that you are buying risk coverage here. Do not buy without checking the rating of your intended risk coverage partner.
4. Don’t invalidate your coverage by being less than completely candid during the application process. The quote an insurance company gives you is based on an assessment of a number of factors related to you and your driving. This includes your driving record; number of tickets; age; sex; marital status; Place; daily and annual mileage; vehicle use (business or private); make, model, year of manufacture, engine/hp; number of operators; number of vehicles, etc. Your driving data is public information readily available to your insurance company. You provide most, if not all, of the other assessment factors. Doing this with less than complete candor is almost certainly not in your best interest. Most reputable insurance companies will validate the information you provide. The ones that don’t are not what you want as a risk partner. Among the options available to companies that have unknowingly issued policies based on falsified information are to correct (increase) your rates or cancel your policy upon discovery of falsified information. Again, remember that you are buying risk coverage here. You don’t want to find out that your risk coverage partner dropped you because of falsified application information AFTER you’ve been in an accident or involved in a lawsuit. This situation may be a rarity, but if you were the insurance company and you were sued for millions in damages caused by a policyholder who materially misstated the factual basis on which your risk coverage contract was based, how hard would you try to invalidate the policy? to make? Enough said.
5. Consider limited membership area and group affiliate policies. Due to the small portion of the risk pie that such policies cater to, rates can be significantly better than those available to the general public. Since this type of policy targets the lowest risk groups, it invariably increases rates for all other motorists as the low risk policyholders are removed from the overall risk pool. If you fall in the area of membership for any of these policies or companies, compare their costs with your other quotes. Companies that offer highly discounted policies for preferred risk drivers include USAA (for US military personnel, retirees, spouses, veterans and their children); GEICO (for government employees); and most major insurers in partnership with many fraternal and professional organizations.
6. Examine the “bundling” of your insurance coverage needs. Some insurers offer discounts, favorable payment plans, or enhanced coverage for things like multiple vehicles, multiple drivers, homeowners insurance, renters insurance, and life insurance purchased by the same policyholder. Get quotes.
7. Take advantage of all your positive policy review factors. These earn reduced rates for: Applicants with high credit; Good students; anti-theft car alarms; anti-skid braking systems; LoJack or similar systems; Electronic stability protection; Multiple vehicles; Multiple drivers; and, for example, Safe Driver discounts.
Time to shop With the foregoing factors in mind, you are now ready to buy quotes over the internet. Www.insurance.com, or similar sites, are excellent starting points for getting multiple quotes or more detailed information on policies and coverages over the Internet. Companies such as Geico, Allstate, Hartford, State Farm, Progressive, Liberty Mutual, USAA, INA, Nationwide, Travelers and most other large companies have an online presence on the Internet, with the ability to quote. The benefit of using a multi-quote site is that the request information, which is as comprehensive as necessary for an accurate quote, only needs to be entered once, greatly reducing the time required to get the quote process started. is shortened. Once you have some basic quotes, you’ll find that the company-specific sites are very easy to navigate, especially once you’ve printed out the input data you used to get your multiple quotes. Remember, you’re looking for “apples-to-apples” quote comparisons from reputable, well-reviewed insurers. If you use the internet, avoid the ubiquitous automated calling menus; be put on hold while you wait to speak to an agent; drive halfway across town to get fares and repeat the process until you’re satisfied or exhausted. It is so much easier to identify the reputable, highly regarded insurers; click the mouse to one or two sites with multiple quotes; fill in the input data and keep a copy for later use; compare costs, features and qualities of the top insurers; and make your choice.
One last warning! We previously warned of the absolute necessity of doing business with an insurance company that has a good reputation and is well regarded by its peers. While the internet offers the opportunity to significantly reduce your premium costs, it also brings unscrupulous insurers into your field of vision who pay few claims, use delaying tactics or worse, while offering coverage at premiums well below most quotes you get. Going through one claim with one of these insurers will convince you that it’s wise to buy from a reputable, highly regarded insurer, despite any advertised savings from smaller companies. Unrealized savings, coupled with unpaid claims, free you from your premium dollars and essentially leave you confident, risking whatever damage the insurer avoids, escapes, or evades. You will find that it is much better to lower your premium in the many other ways mentioned here than to limit yourself to the quality of the company you choose to take your risk. As the headline above indicates, not all auto insurance companies and companies are the same. After trying to hammer the concept home thus far, one last reiteration seems in order: buy from a reputable, highly regarded insurer, lower your premiums with the many resources presented herein, and sleep soundly, knowing that your risk partner has you covered!