Understanding the Auto Insurance Process: 4 Things to Look for When Doing a Price Comparison
Nobody likes having to pay taxes, but they’re an inescapable fact of life. Likewise, if you own a car, you need to carry insurance on the vehicle. Although obtaining the best insurance can sometimes be confusing, here are four things to look for when comparing car insurance policies.
Find Out How Much Coverage Is Required
Car insurance requirements vary from state to state. Depending on your state, you may need one or all of the following types of coverage:
- Physical Damage Liability
- Bodily Injury
- No-Fault Insurance
- Personal Injury Protection
- Uninsured Motorist
- Underinsured Motorist
There are many factors that can affect what type of coverage you need. These can include the age of your vehicle and whether the car is being financed or is under lease. Be sure to check your state’s requirements for your specific situation.
Research & Compare Insurance Providers
Car insurance companies battle it out via television commercials for a reason. Insurance is a competitive world, and one insurance company may offer a better rate than another. Take time to research and compare auto insurance companies to see which offers the best coverage at the best price.
It’s a good idea to read your current policy to determine the coverage you have now so you can compare apples to apples. You may also want to add additional coverage.
Do You Need Specific Protection?
Other than meeting the insurance requirements in your state, you may also need specific coverage for your vehicle. Examples might include:
- Additional Insured: If you have a car loan and a lienholder, you’ll need to add them as an additional insured entity, because they have an interest in the vehicle until the loan is paid in full. Each finance company or bank has their own specific rules on required coverage. If you don’t know what your lienholder expects, call them and ask.
- Parked Vehicle Insurance: If you have a vehicle you don’t use, ask about affordable parked vehicle coverage. You will need to obtain total coverage, though, if you begin to drive the vehicle.
- Antique or Classic Car Insurance: Do you have a classic car or antique vehicle? If so, insurance companies can also offer you a quote on these up and above normal coverage so if damaged, you will receive replacement cost to repair or restore the vehicle.
- Vehicle Modifications Insurance: If you add performance parts, a spoiler, aftermarket sound system or carbon fiber vehicle wraps, ask the company if they offer coverage for modifications you make to the vehicle to protect them as well
- GAP Insurance: Most insurance companies offer GAP insurance at a much cheaper price than what you could get at a dealership. This is a must-do if our vehicle is financed. If your vehicle is totaled in an accident, the insurance company will only pay the fair market value of the vehicle at time of loss. For example, say your totaled car is valued by the insurance company at $10,000 but you own the lienholder $15,000. GAP insurance pays the difference between fair market value and the car loan balance.
Check the Insurance Company’s Rating
Before you make a final decision to buy a policy, check with an insurance rating service like A.M. Best. Only buy car insurance from companies that have an “A” or “A+” rating.
Shopping for car insurance is easy if you know the type of coverage required in your state and understand your current coverage. You should also make a list of any added coverage you may need and before purchasing the policy, check the company’s rating.
Category: Car Insurance
