Everyone knows you should carefully shop around when buying a car, but all too many drivers neglect to purchase insurance with the same level of care. Failing to thoroughly comparison-shop can leave you paying more than you need to for coverage, and far from getting the best car insurance coverage for your needs.Insurance!
Below are tips to help you seek out the best insurance coverage at the lowest rate.
What Is Good Car Insurance?
Getting cheap car insurance does not necessarily mean you bought the right type or amount of coverage.
Having “good coverage” means you don’t find yourself paying significant amounts of money out of pocket after an accident.
When you have found the right insurance provider:
You’ll feel assured that you’ll be able to handle the financial costs after an accident.
You’ll feel comfortable knowing you’re not overpaying for your car insurance.
Comparison-shopping for car insurance can help you make sure you’ve picked the right insurance coverage.
Deciding on the Best Insurance Coverage
You need car insurance to comply with state laws, to satisfy your lender or leaseholder, and to protect your assets.
Each state has different financial responsibility laws that dictate the least amount of insurance you must have. However, unless you have very few assets, the smallest amount of insurance is most likely not enough coverage. Talk to your insurance company about how much coverage and what types of optional insurance coverages might be right for you. These typically include:
Towing and labor.
NOTE: If you have a loan or lease on your car, it will typically come with coverage requirements. Be sure you understand these when reviewing your loan/lease agreement.
For more information on what your state requires, please visit our section on state car insurance requirements.
What if I Have a Loan?
While commonly believed, it is actually a myth that your car insurance will pay off your loan if your car is totaled. In reality, it will pay the fair market value.
The fair market value, or actual cash value, is the sales price minus depreciation. A car depreciates at a surprisingly rapid rate. In fact, just driving a car off the lot after purchase decreases its value by an average of 11%. During the first 5 years, the car’s value depreciates by an average of 15% to 25% every year.
In the event of a serious car accident, you can be left with substantial costs due to normal depreciation. This is where GAP and loan/lease coverage come in.
To protect yourself from having to pay a loan on a car that no longer functions, you can purchase either:
Guaranteed Auto Protection (GAP) insurance – Covers the difference between your insurance payout and what you still owe on your car loan after insurance pays, without any maximum limits.
Loan/lease payments coverage – Also covers the gap between what you owe on the car and its current value, but only covers a percentage of your car’s actual cash value in the event of a total loss. This might not be enough to cover the gap between your loan and the cash value.
Are You Getting the Best Auto Insurance Rate at Your Provider?
Your present auto safety net provider (and maybe other administration suppliers) might be holding out on you. In case you’re qualified for a lower rate, you most likely won’t be naturally given one unless you request it. In one case, the New York Times reports, one man would have been paying twice as much on his approach had he not gotten an aggressive quote somewhere else.
Mr. Mitchell was paying $2,537 a year on protection and, in the same way as other individuals, put off calling his safety net provider to survey his premium until AARP sent him something via the post office with an offer for a free quote from The Hartford, who offered him the same strategy for simply half what he was paying at Liberty Mutual—about $1,267. At the point when Mitchell called Liberty Mutual, he was told he was qualified for premium diminishments because of “guaranteeing changes” and now his rate would be just $1,207. How fascinating. Had he not called, the administrator conceded the bill would not have changed.
It truly pays to survey your approach and shop around consistently, in light of the fact that, as the article notes:
the onus is dependably on you, the customer, to do the hard work, whether it’s an expensive thing like accident coverage or littler bills from your cellphone or link supplier. It’s a basic lesson, yes, however one that merits recalling sometimes.