Whether you’re becoming a licensed driver for the first time ever, or you’re fed up with your current provider and want to look around for a better deal, it’s important that you take the shopping process seriously. While shopping for auto insurance may not be fun, it’s something that you can’t afford to live without.
Here’s What You Need to Know
The auto insurance industry is very competitive. This is both good and bad for you, the consumer. On the one hand, it means you have plenty of options to choose from and can find a solution that fits just about any budget. On the other hand, it means some insurance providers use questionable tactics to gain customers.
Here’s what you need to know in order to be a savvy shopper.
1. Ask Lots of Questions
Before you begin shopping around for different rates and plans, you need to ask lots of questions. According to this infographic from Bankrate, there are seven specific questions you must always ask:
- How much do I drive each week?
- How old is my car?
- Am I a good student?
- Can I afford a higher deductible?
- How’s my credit score?
- Do I belong to a professional group or organization?
- Even with discounts, am I getting the best deal?
There are probably other questions worth asking, but these seven provide a good starting point. If you aren’t asking enough questions, you won’t get the best deal. That’s the simple truth of the matter.
2. Consider Coverage Options
When it comes to auto insurance, there are three basic types of coverage: liability, collision, and comprehensive. Liability insurance pays for third-party claims related to personal injury and death. It also pays any damages to another person’s property that result from your automobile accident. Collision coverage pays to repair your own car after an accident. Comprehensive coverage pays for damage incurred by fire, water, theft, vandalism, etc.
But in addition to the three major types of coverage, there are also things like full tort, limited tort, medical payments, personal injury protection, uninsured and underinsured motorist coverage, towing, glass breakage, rental, gap insurance, and more. It’s wise to familiarize yourself with all of these types before purchasing coverage.
3. Be Cautious with Specific Types of Insurance
Are you required to carry a specific type of insurance for work or legal reasons? If so, be extra cautious about shopping around. When unethical companies realize you’re cornered into a certain type of policy, they may attempt to pressure you into something.
One of the most common types of specialty insurance is SR22. People who have been caught driving without insurance, have too many speeding tickets, or have been convicted of DUIs, are frequently required to carry this insurance. Only work with companies who have good reputations.
4. Get Multiple Quotes
While it can be tempting to accept the first quote you receive, make sure you spend a little time shopping around. At a very minimum, you should receive three quotes before making a final decision.
“It is remarkable how the same driver can get substantially different quotes from different insurers,” finance and banking expert David Marlett says. “Insurers have different pricing strategies, and some focus more on driving record, while others may give more weight to credit score, type of car or location. The whole process will take less than an hour, and you can save hundreds of dollars.”
Be an Educated Shopper
It takes time to shop around, but remember that you’re essentially being paid for your time. In the end, spending a couple extra hours shopping around could save you a few thousand dollars per year, and that’s time well spent!