2010-04-13Auto Insurance Buying Guide
The premise behind an auto insurance policy is a distinct level of coverage for bodily injury liability and property damage liability from homeowner's insurance. Bodily injury liability provides protection for injuries caused by an automotive accident while property damage liability covers damage caused by an automobile to public and private property. The only area of overlap between homeowner's and auto insurance policies comes with an automotive accident on private property.
Your search for new auto insurance should start and end with a low premium price. Insurance companies use a number of factors to determine insurability including past driving history and geographic pricing restrictions. You need to utilize a similar system to locate an auto insurer that provides adequate coverage from the accident through the final bill.
Selecting the Right Insurance Company
Every driver has a different perspective on the type of auto insurance that fits their particular needs. Drivers with families and individuals who need to protect a high level of assets need to go above and beyond state insurance requirements to shield their financial and personal progress. Individuals with a low level of assets need to consider raising financial limits on certain aspects of their insurance policy to protect their livelihood. Premiums need to be considered an investment on your part toward a secure financial future.
You need to move beyond price while searching for an auto insurance policy to get the best value possible. Your investment in an insurance policy means that you are purchasing a virtual stake in the insuring company because a financially successful company can provide better service to their policy holders. Some simple research into public trading of the insurer's stocks as well as a quick call to your state's insurance regulator serve the dual purposes of recognizing an insurer's value on the market as well as their legal ability to sell policies in your state.
Your list of insurers will dwindle as you dig deeper into each provider's insurance offerings. A final list of three auto insurers is necessary before you progress into the premium quote stage to avoid excessive mailings, e-mails and phone calls from insurers to whom you express interest. It is important to compare your three final insurers on the same level of insurance coverage and customer service to find the right policy for your needs.
It is critical that you have the right information for your premium quotes to get an accurate price. Your driving record including any accidents and traffic violations in the past is important to help an insurance company determine the level of risk involved in providing a policy. You also need to keep a tally of annual mileage and mileage from home to work and back as a measure of the amount of time you spend in your car. Insurance companies also need the make, model, mileage and safety features of your car to help insurers generate an honest premium quote.
Benefits and Coverage
A good way to approach different benefit and coverage types is the creation of a benefits matrix. You can place combinations of benefit types in the vertical axis and the name of the insurer in the horizontal axis to keep track of premiums based on different coverage levels. There are six benefit types to consider as you research a new auto insurance policy:
- Bodily Injury Liability - This coverage pays legal bills and claims fees if you are involved in an accident where your car contributes to the injury or death of another motorist. You can cover other drivers of your vehicle under this liability as long as you provide expressed permission.
- Medical Payments - Medical payments cover hospital bills if you or your beneficiaries are injured in an accident. This coverage provides medical payments if you are a passenger in another vehicle or receive injuries from an automobile while acting as a pedestrian.
- Uninsured/Underinsured Motorist - This benefit type protects you and your family from accident-related injuries caused by a motorist who lacks insurance entirely, has inadequate insurance coverage or leaves the scene of the accident without making contact with law enforcement.
- Property Damage Liability - Your purchase of property damage liability helps pay attorney fees, court costs and other costs associated with an accident involving damage to another person's property.
- Collision - This coverage pays off bills for repairs of your vehicle if you collide with another vehicle or a piece of property without consideration of responsibility.
- Comprehensive Physical Damage - Comprehensive coverage for physical damage to your vehicle includes payment for repair bills made necessary by vandalism, natural causes and other issues falling outside the purview of other benefit types.
The key to picking the right benefit and coverage types with your new insurance policy is reviewing other insurance policies you currently possess. Your employer-provided health insurance may provide adequate financial coverage for emergency situations and you may be able to decrease your medical payments benefit to lower your premium. You also need to anticipate the billing and claims process following an accident to avoid unnecessary confusion. The relatively low expense of medical payments compared to other benefit types means that you may want to purchase medical payments with your insurance policy to streamline the claims process.
Reduce the Cost of your Auto Insurance
You have a full set of tools at your disposal to shop for auto insurance in the same way that insurance companies use resources to determine your insurability. The beginning of a good insurance shopping experience starts with comparison shopping similar coverage types between competing companies. You will find that insurers place a high price on different benefit types in addition to any seasonal or regional specials they provide to draw in consumers.
One of the best ways for families and professionals to cut down on the cost of auto insurance is to adjust benefit levels. You can raise the deductible on your new policy to decrease your premium which helps lower your up-front costs. It is also important to assess the Blue Book value of your vehicle along with the current market for used cars before you get an auto insurance policy. You can decrease collision coverage for heavily used vehicles that are worth less than $1,000. A final way to lower your initial insurance burden is to cut out areas of overlap like medical payments if you have sufficient health insurance for any emergency medical treatments.
There are ways to afford a great auto insurance policy through advanced planning and investment. You can purchase a vehicle with a low profile and relatively low incidents of car theft to get a discount from auto insurers. Sports cars and expensive vehicles by Mercedes and Volkswagen are heavy targets for vandalism and theft. Smart investment in a reliable and low profile vehicle can decrease the cost of auto insurance over the long term. You can also eliminate service fees and other costs associated with monthly payments by paying off the premium before you receive your insurance policy.
Consumers shopping for a deal on auto insurance can find discounted rates for a variety of demographic and technical reasons that they are not aware of. Insurance companies around the United States provide discounted monthly rates to drivers who use their car infrequently because they offer low risk investments for the insurer. These companies also reward loyal customers who update their auto insurance policy after their premium lapses to cut down on paperwork and customer turnover.
You may already own a car, truck or sports utility vehicle that possesses safety and anti-theft measures that qualify for discounted rates. New cars with side-curtain airbags, seat belts, anti-lock brakes and traction control systems provide a level of protection that is encouraging to insurance companies. Insurance companies are beginning to reward drivers with optional anti-theft measures in their vehicles. Car options like wheel locks, alarm systems, fuel cut-off systems and laser engraving protect your vehicle from the threat of theft on a daily basis.
A multitude of other reasons can eliminate high premiums for most consumers. Families with young drivers and a garage full of cars get discounted prices for coverage on multiple vehicles. These discounts are available because insurers are guaranteed premiums from multiple cars and discounts increase word of mouth within tight-knit communities. Age, good grades for university students and dozens of other reasons specific to a particular region can help you decrease your financial burden when it comes time to purchase insurance.
Tips for Students
One of the most harrowing insurance statistics for parents is that nearly one in three teenage drivers will be involved in an accident every year. Drivers under the age of 25 present an exceptionally high risk for insurance companies because of their relative inexperience and low incomes. Students around the United States often benefit from insurance laws that allow parents to claim their dependents under their premium. Many insurers offer a separate policy from parents to young drivers in order to collect high premiums commensurate with their higher risk level.
Parents and students can decrease premiums in a number of ways to counter perceptions of bad driving among teenagers. Most insurance companies have good student programs that allow a high school or college student to receive lowered premiums if they maintain a certain grade level. Parents should also encourage their student drivers to purchase used vehicles with proper safety equipment, low mileage and a reputation for overall safety to decrease the risk assessment by insurance companies.