What to Consider When Choosing an Auto Insurance Policy

Over two million people are injured in auto accidents every year. While it’s impossible to predict when such events will happen, having the right insurance goes a long way. Here, you’ll learn what to consider when choosing an auto insurance policy.

The Right Research

When selecting auto insurance, don’t pick the first policy you find. It pays to do some research beforehand, and to decide what kind of coverage you need. Which carriers offer the coverage? What are the state’s requirements? The answers to these questions will point you in the right direction, and an insurance agent will help by recommending policies that meet your needs.

Comparing Carriers and Quotes

After doing some research, get competitive quotes from different companies. Once a year, review your coverage and compare the renewal cost with that of policies from other carriers. And, for those who need multiple coverage types, bundling makes sense. Many carriers offer lower rates when coverage types are combined.

Deductible Options

An insurance deductible is the amount a policyholder pays before their coverage kicks in. The lower the deductible, the more you’ll pay for a policy. Most companies will gladly offer quotes with varying deductibles, which gives buyers a better idea of what to expect when purchasing a policy.

Budgeting

It’s possible to choose the right policy without spending too much money. Just focus on the quotes you receive, the level of coverage you require, and the deductible that’s affordable.

Monthly Premiums

Though it may seem intimidating at first, the concept of an insurance premium is a simple one. The premium is the amount paid each month to keep an insurance policy in effect. When choosing insurance, consider the monthly premium, as it will make up a significant portion of your transportation budget.

The Need for Comprehensive Coverage

With comprehensive coverage, you’ll be protected from damage that’s not caused by an accident, such as vandalism, theft, and natural disasters. In many cases—and especially for those financing vehicles—comprehensive coverage provides additional protection.

Gap Insurance

Driving off the lot in a new vehicle is exciting but getting an auto loan isn’t. A car is a big investment, and as such, it should be protected. If you’re in an accident before the loan is paid off, however, you’ll be responsible for the balance. Gap insurance covers the difference, so you don’t have to.

Bodily Injury Insurance

Though we hope it never happens, auto accidents are quite common. If someone is injured in a crash, bodily injury insurance pays the damages.

Claims

When accidents happen, claims are a necessity. An insurance claim contains the details of an event, including the date and time of the accident, who was responsible, and the damages that occurred.

Coverage Needs

It’s an elementary question, but it’s surprising how many drivers can’t answer it. The type of insurance coverage you need depends on your location and driving habits. Liability coverage is a requirement in most areas; it covers costs related to property damage, personal injury, or death after an auto accident. Consult an agent about the state’s requirements and coverage that may be beneficial.

What’s Covered

Being in an accident or discovering that your car has been damaged is very stressful. Depending on the policy, towing, vehicle repairs, and rental cars may not be covered. That’s why it’s important to understand how auto insurance works.

Discounts

While insurance premiums are largely dictated by deductible and coverage choices, there are ways to save. Many companies offer policy bundling discounts, as well as discounts for good students, hybrid car owners, and safe drivers. In some cases, those who pay their premiums in full can also get a discount.

Out-Of-Pocket Costs

When choosing an auto insurance policy, be sure you can afford the deductible. For instance, an accident may cause $2500 in damage to a vehicle. However, if the deductible is $3000, insurance won’t cover anything at all.

Your Line of Work

As you’re looking for coverage, the agent will ask about driving habits and history. According to underwriting guidelines, most people are required to divulge information about their jobs and the length of the daily commute. For example, most policies do not cover the damage if a person is in an accident while they’re using the vehicle for business purposes.

Consider These Factors to Get the Best Deal on Auto Insurance

Upon consideration of the above factors, most people will have the information needed to make an informed purchase decision. Whether you’re buying a policy for the first time, or you’ve had coverage and paid taxes for years, understanding auto insurance will help reduce the long-term cost of coverage.