First Time Auto Insurance Buying Tips
Auto insurance isn’t something you need until you need it. When you do, you better have adequate coverage. Otherwise you’ll pay out of your own pocket for any accident-related expenses that aren’t covered by your auto insurance policy (and that can be costly).
Determine your needs
The most important tip is figuring out how much and what type of coverage you need. Since it’s your first time purchasing auto insurance and you may be unfamiliar with state laws and different coverage options, consider working with an experienced auto insurance broker or agent. Together you can figure out the value of your assets, your liabilities, how different deductibles affect your insurance rates and out-of-pocket costs, who will be insured, and other factors affecting your needs such as children, marriage, divorce, retirement, income fluctuations, aging parents, self-employment and more. If you’d rather not work with someone, you’ll find online tools including worksheets and calculators to help estimate your auto insurance coverage needs.
Shop around
Once you have a grasp of the amount and type of coverage that’ll offer the most protection for your situation, request quotes from several auto insurance companies so you can compare costs and coverage. As you review the quotes, you’ll notice considerable variation in the cost. Keep in mind that the lowest cost premium isn’t necessarily the best. The quote may be lower because it offers less coverage than another quote. Always be sure the quotes you get include comparable types and amounts of coverage.
Something else to investigate before purchasing an auto insurance policy is the insurance agency’s financial strength. If you ever file a claim, you want assurance that the company is financially capable of paying it. Standard & Poor’s, Moody’s, and A.M. Best are the three big insurance rating agencies. Their ratings are available online and in insurance company literature. They can also be accessed at public libraries.
Review carefully before signing
Auto insurance policies are legally binding contracts so always know what and how much coverage you’re purchasing, who’s covered, the coverage period, the cost (or premium), and procedures for reporting loss or filing claims before signing. If there’s something you don’t understand, research it or ask an agent for clarification.
Finally review your auto insurance policy periodically and modify your coverage when needed to better reflect any changes in your life.