It’s relatively simple to get auto insurance. You can start by shopping around to find the best deal and comparing provider quotes to narrow down your options. You’ll also need to familiarize yourself with coverage options to ensure the policy fits your needs. This comprehensive guide discusses the importance of car insurance and which coverages are available to you. It also provides step-by-step guidance you can follow to help ensure you get the best deal on a car insurance policy.
Why You Need Auto Insurance
You can be the safest driver on the road, but there’s no surefire way to avoid being involved in an auto accident. Unfortunately, these incidents often cause damage to the vehicles and individuals involved, which can cost a small fortune to cover.
Fortunately, auto insurance exists to help minimize your out-of-pocket costs. It also extends to damage resulting from theft, vandalism and natural disasters.
Types of Auto Insurance Coverage
Below is a closer look at the most common types of auto insurance coverage:
- Liability insurance: It covers damages you cause to others and their property if you’re at fault for an accident.
- Collision coverage: It covers the cost of repairing your vehicle if it’s involved in an auto accident.
- Comprehensive coverage: Comprehensive coverage covers non-collision-related damages to your vehicle, including damage caused by theft, vandalism and natural disasters.
- Underinsured/uninsured motorist coverage: It covers you if you’re hit by a driver with inadequate coverage or with no coverage at all.
- Personal injury protection (PIP): It covers medical expenses, lost wages, and other costs for you and your passengers, regardless of who is at fault.
- Medical payments: It covers medical expenses for both you and your passengers following an auto accident.
Assessing Your Insurance Needs
Choosing the proper coverage levels is vital to ensure you’re adequately protected. Here’s what to assess to gauge your insurance needs.
Evaluating Your Vehicle’s Value
Newer vehicles or high-value cars often need more comprehensive coverage. You might need collision and comprehensive coverage to protect against theft, weather damage and accidents.
Older cars or those with low market value might only need liability coverage.
Use tools like Kelley Blue Book or NADA Guides to determine your car’s current value. Also, confirm that your insurance matches the car’s worth to avoid overpaying.
Considering Your Driving Habits
If you drive long distances daily or in heavy traffic, you may need higher levels of coverage as there’s a greater risk you’ll be involved in an auto accident. But if you take more infrequent trips, you might benefit from a usage-based insurance program, which minimizes coverage costs.
Your driving record also plays a role in how much you’ll pay for coverage. So, tailoring coverage to your actual use can help you manage premium costs more effectively.
Understanding State Requirements
Each state has different minimum auto insurance requirements. Typically, these include liability coverage for bodily injury and property damage. Some states may also require uninsured or underinsured motorist coverage, personal injury protection (PIP) or medical payments coverage.
Check your state’s Department of Motor Vehicles (DMV) website for specific requirements. You want to confirm your policy complies with state mandates to avoid penalties or other issues later on down the line.
Shopping for Auto Insurance
Once you’ve determined what you need in an auto insurance policy, you should begin shopping for the right provider.
Researching Insurance Providers
There’s no shortage of car insurance companies, but not all are worth a shot. Some are rather subpar than others, so it’s vital to explore several options before purchasing a policy.
Comparing Insurance Quotes
Experian offers an auto insurance service that makes it easy to get and compare quotes from reputable providers in minutes. Consider taking advantage of this free tool to gauge if you’re currently getting the best deal or if you should take your business elsewhere. If you do decide to make the switch, Experian will coordinate with your old and new providers to finalize the switch. Navigate to the website to learn more about this free service or to sign up for a free Experian account.
Checking Provider Ratings and Reviews
Take a look at online reviews from past and current policyholders to get a feel for the level of service provided by the insurance provider. Expect a few negative reviews to appear occasionally, but if most are a cause for concern, that’s your sign to take that option off your list.
Understanding Policy Terms and Conditions
Again, it’s essential to understand the policy terms and conditions before committing to a policy. Make sure you fully understand what is covered and what is not. Look into details such as deductibles, liability limits and any additional coverage options. That way, you’ll know exactly what you’re signing up for and can avoid surprises later on down the road.
Applying for Auto Insurance
You’ve created a shortlist of car insurance companies and selected the right fit. Now, it’s time to start the application process. Here’s an overview of what to expect.
Information You Need to Apply
The auto insurance provider will request the following information when you apply:
- Name and address (for all drivers)
- Social security number (for all drivers)
- Year, make and model of the vehicle
- Vehicle identification number
- Driving history (i.e., accidents, moving violations)
- Details about your current auto insurance policy
Note: You may need to provide additional information depending on the car insurance company and coverage options you select.
Completing the Application Process
Once you have this information handy, contact the insurance provider for the next steps. In most instances, you can start the application process online, but you’ll need to speak to an agent to confirm the policy details and finalize your request for coverage. To wrap up the process, you’ll need to review the final loan quote and remit payment to activate your new policy.
Understanding the Underwriting Process
When you submit an application for auto insurance, it goes through a process called underwriting. This process involves the insurance company analyzing your information to determine your risk level. You could receive a quick decision, or it could take a few days to hear back.
Receiving Your Policy Documents
After your policy is active, the insurance company sends policy documents over to you, which typically include the policy declaration page and ID cards. Be sure to review them carefully to confirm the information is accurate.
Managing Your Auto Insurance Policy
You’ll want to manage our car insurance policy while it’s active to ensure it best suits your needs as time progresses.
Reviewing Your Policy for Accuracy
Again, it’s worth reviewing your policy details to confirm their accuracy when you sign up for coverage. You also want to do so each time you’re up for renewal.
Making Payments and Managing Billing
You must make timely payments to keep your coverage active and avoid late fees. Select a payment plan that works best for you – some providers let you pay monthly, while others only accept quarterly, semi-annual or yearly payments. Keep in mind that paying more at once could land you a discount.
Updating Your Policy for Life Changes
When life changes, your coverage needs may also change. If you relocate, get married or purchase a new car, contact your provider right away and notify them of the changes to ensure your policy is adjusted to meet your needs.
Understanding the Claims Process
If you’re involved in an accident or need to file a claim for some other reason, contact your auto insurance provider promptly. They will advise you on the next steps and what’s required to process your request. Some insurance providers offer an online option to help simplify the claims process.
Tips for Reducing Auto Insurance Costs
With rising car insurance costs, you may find that your policy premiums are on the higher end. If so, here are some strategies to help curb this expense and keep more of your hard-earned money in your pocket.
Bundling Insurance Policies
If you have multiple policies with one provider, you could qualify for a bundle discount. Some providers offer as much as 15% in cost savings, and bundling policies means you’ll only have to deal with one insurance company for your coverage needs.
Increasing Your Deductible
Another way to cut costs is to raise your deductible, or the amount you pay out-of-pocket, before your insurance policy kicks in. A higher deductible means the insurance provider assumes less risk, so you’ll likely get lower premiums.
Exploring Discounts
Policy discounts are quite common among car insurance providers. For example, you might receive a discount for having safety features in your car or if you’re a student with good grades. Contact your provider to learn more about the discounts you may be eligible for.
Maintaining a Good Driving Record
Insurers reward safe drivers with lower premiums, so it’s vital to maintain a clean driving record. More specifically, avoid traffic accidents and violations. If you have a significant history of accidents or tickets, consider taking a driving course to improve your skills and demonstrate your commitment to safe driving.
Considering Usage-Based Insurance
Usage-based insurance (UBI) allows you to pay premiums based on your actual driving habits. Insurance providers offering this option use telematics devices or smartphone apps to track your driving behavior and set rates based on your mileage, speed and braking patterns.
Common Mistakes to Avoid
Here are some mistakes to avoid when purchasing auto insurance:
Underinsuring Your Vehicle
You don’t want to overinsure your vehicle, but not purchasing enough coverage can also be costly.
Not Comparing Quotes Regularly
Insurance rates change often, so it’s best to compare quotes regularly to determine if you can get a better deal elsewhere.
Overlooking Policy Details
Understand your policy in its entirety, and be careful not to overlook key details. Otherwise, you could be in for a surprise should you need to file a claim.
Ignoring Discounts and Bundles
Policy discounts and bundles give you the opportunity to maximize cost savings when purchasing different forms of insurance coverage.
