After months of saving up, taking driving lessons and passing your driving test you've reached the coveted stage when you finally have your own car. Before you can hit the road, auto insurance is top of your to do list! But looking for an auto insurance company can be a tricky topic if you haven't done it before and aren't sure what to look for. To help you on your quest to find the best auto insurance, I have compiled a list of ten questions to ask both auto insurance companies and yourself to find out which car insurance is right for you.
1. What type of coverage do I need?
Each state has its own requirements, but in most states (49 of them plus the District of Columbia) auto liability insurance coverage is mandatory. This can be divided into two different types: bodily injury liability (BI), and property damage liability (PD). In the event of an accident where you are at fault (i.e. you caused the accident) BI will pay for bodily injuries sustained by third parties, and depending upon which state you're in this can include not only medical expenses but also wages lost as a result of injuries. In this scenario your PD would pay for any property damage to others, including not only the other person's vehicle but also any damage to fences or walls, etc. In both cases your insurance would only pay up to a certain amount, i.e. the amount for which you are covered. It's important to note that this type of coverage does not cover, for example, damage to your own vehicle in such a scenario, and therefore additional coverage such as collision and comprehensive auto insurance is definitely worth considering.
2. How high is my risk?
Risk assessment by auto insurance companies is based on a number of factors, such as age, sex, occupation, where you live and how long you've been driving for. Rates for first time drivers are likely to be high, and people with criminal records are also going to be marked as a higher risk. The greater the risk, the higher your premiums. Here you can find out how to lower your risk and get auto insurance discounts.
3. Who will my policy cover?
If you want to share your vehicle with your family or a partner then you need to get additional coverage. Depending on the extra individuals added to your policy (i.e. younger or first time drivers) this considerably raise your premiums, although drivers considered a lower risk may not affect it much
4. How high do I want my deductibles?
If you are involved in an accident then you have to pay a certain, pre-agreed amount – a deductible – towards repairing the damage or treating injuries before your auto insurance company will cover the rest of the costs. While it may be tempting to have a low deductible so that in the event of an accident the insurance covers the costs immediately, having a higher deductible can substantially lower your premiums - which can lead to big savings over time. Read my in-depth article to find out if car insurance deductibles are right for you.
5. Can I qualify for any discounts?
There are a number of ways you can lower your monthly premiums so it's always worth asking your auto insurance company which discounts you are eligible for. If you are a student, discounts can apply for getting good grades and being classed as a good student. Other auto insurance discounts can be given for extra safety features you car might have such as an alarm or air bag, and they can apply for taking out multiple types of insurance with the same company. There are so many ways to get discounts, so make sure to ask your auto insurance provider which ones you are eligible for and if you can have multiple discounts at once.
6. What are my payment options?
Auto insurance is a big financial commitment, so working out how you're going to pay for it is essential. Most auto insurance companies offer the option of paying in an annual lump sum or paying half of your annual amount every six months. The most common payment frequency is a per month basis since it tends to make budgeting more realistic, however in the long run this could make your annual costs more expensive. If you can afford to pay the annual fee in one go, however, this can usually mean you qualify for a discount (the only type of discount that almost every auto insurance provider will offer up-front), so if you can foot the bill all at once it's advantageous to do so.
7. How will the value of my car affect my premiums?
Another factor to consider when it comes to calculating your premiums is the amount the auto insurance company will value your car at. If you choose a very flashy, expensive car, your premiums could be unaffordable, but bought second hand from an unreputable dealer can mean the car's origins may not be traceable, making the car uninsurable. When buying a car these are key points to consider and it pays off to research which car models come with lower insurance rates.
8. Is your claims service open 24/7?
One of the most crucial points when making a claim is timing. Reporting an accident to the police and your auto insurance company ASAP is vital, so auto insurance companies which are closed on weekends can be problematic. Most companies now offer a 24/7 online and telephone claims reporting service, so make sure your chosen company does too.
9. What type of repairs will you provide?
If your vehicle is damaged most people would expect their car parts to be replaced with manufacturer's originals, probably like the ones which were there before, aka "original equipment manufacturer" (OEM) parts. When repairing a car after an accident though this is often not the case, and "aftermarket" parts which are designed to fit a general type of car and not a specific make and model, may be used instead because they're cheaper. Consider how much the origin of the replacement parts matters to you before settling on a company, and bear in mind that many auto insurers use a mixture of both OEM and after-parts, depending on the repair type (e.g. safety equipment would be OEM parts).
10. Can I meet with you in person?
Although we're used to conducting a lot of it not the majority our day-to-day businesses over the net or the phone, the option to call into an office and speak to a person is usually always preferable. Meeting in person can also result in better deals, and help avoid miscommunication.
Once you've asked yourself and your potential auto insurance providers these top questions the elimination process should become much easier! For a helping hand in finding the best auto insurance rates for you we've searched the web for some of the best deals on the market. To compare auto insurance in your area just select your state from the box below to get started!