Choosing an Auto Insurance Company-It Pays to Shop Around
Article 2 in 10 on Car Insurance
Choosing an Auto Insurance Company: It Pays to Shop Around
Once you've decided on what type of coverage you need for your car (or cars), it's time to shop for the best deal. If your driving history is reasonably good, make a list of the types of coverages you want, and shop at least five companies. You'd be surprised by how much prices and service can vary.
How Companies Sell Car Insurance Policies
Companies sell car insurance policies in several different ways, and there's not just one right way to buy it :
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Through their own agents, such as those employed by Allstate, Farmers, Nationwide and State Farm, among others.
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Direct to the consumer with toll-free phone numbers, such as Amica Mutual and GEICO Direct .
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Through independent agents. These agents sell policies from many different companies. The Independent Insurance Agents & Brokers of America can help you locate an agent in your area.
The direct-to-the-consumer approach generally yields the least expensive auto insurance policies, but oftentimes they accept only customers with near-perfect driving records. Companies with their own local agents are usually the next most affordable.
Your state's insurance department may also offer price comparisons that show what different companies will charge for various types of coverage. Even though these comparisons may not exactly fit your situation, they can give you a good idea about which company offers the lowest auto insurance premiums.
Online Shopping
Buying an auto insurance policy online is fairly easy, but it's not always the best path to the best car insurance. Just because you see a cheap quote doesn't mean the policy will adequately cover your needs, so be sure to get quotes from several different sources. Plus, many online insurance companies will only deal with you if you have a nearly perfect driving record. Even though online quotes will usually be lower than any from an agent, be sure to double-check an agent's quote to see if you qualify for special discounts.
Membership Insurance
Some specialized companies provide insurance only to members of an organization or those who meet some special qualification. Auto insurance rates are often lower through these organizations than through other sources. For example, USAA - an association of active and retired members of the U.S. military and their families - provides insurance and other services to more than 4.6 million people. Likewise, AARP also sells auto insurance to its members.
Stability
Once you've received two or three good quotes, you'll want to check the financial stability of each company. Why? If you ever need to make a sizable claim, you want to know the insurance company will be able to pay it. To locate an insurance company's financial strength rating, turn to sources such as A.M. Best, Duff & Phelps, Moody's and Standard & Poor's. The Insurance News Network website offers free ratings from Standard & Poor's, and Moody's website lists its ratings, as well.
Ways to Cut Costs on Your Car Insurance
While car insurance is a necessity (and a law), there are some ways you can save money on your auto insurance policy.
Shop Around
Be sure to get quotes from at least three different companies to compare prices and service. You may be surprised at how much the prices will vary.
Multiple Policy Discounts
Sometimes you can get a lower rate by buying your homeowners, auto and other insurance from the same company. Many times you can also get a discount if you insure all of your family's cars with the same company.
Increase Your Deductible
If you know you can handle the out-of-pocket expense in the event of an accident, you should increase your deductible. Increasing your deductible to $500, rather than the standard $250, will cut the cost of your car insurance.
Older Cars May Need Less Coverage
Consider dropping collision coverage if you drive an older car. After a certain point, the book value of your car is less than the cost of repairing it, and the most your insurance company will pay is the car's book value.
Drive Safely
It goes without saying - a good driving record lowers your car insurance rates.
Look for Discounts
Check to see if you qualify for any of the following discounts with your insurance company (not all are offered in all states or by all insurance companies):
- Good driver
- Driver training or defensive driving courses
- Mature Driver Discount
- Multi-car discount
- Restricted mileage discount
- Anti-lock brakes discount
- Passive seat belts and air bags discount
- Anti-theft systems discount
- Good student discount
By shopping around and searching for discounts, you can save money while still getting all of the auto insurance protection you need.
