Smart Strategies To Find The Best Auto Insurance

Finding the best auto insurance can be a tedious task, but it's important to get the right coverage for your needs. Here are some tips to help you find the best auto insurance:

- Shop around and compare quotes: Prices vary significantly between insurance companies, so it's essential to get quotes from multiple insurers. This allows you to find the most competitive rates and choose a policy that fits your budget.

- Understand the factors affecting premiums: Your driving record, age, credit score, vehicle type, and location all play a role in determining your insurance premium. Knowing these factors can help you identify areas where you can improve to get better rates.

- Consider your liability coverage limits: Liability insurance includes bodily injury, property damage, and uninsured motorist coverage. While each state has minimum coverage requirements, you should consider choosing higher limits to protect your assets adequately.

- Evaluate insurance companies: In addition to price and coverage, research the reputation and financial stability of insurance providers. Check consumer reviews, state insurance division websites for complaint records, and financial ratings from agencies to assess their reliability.

- Look for discounts: Many insurance companies offer discounts for various factors, such as a clean driving record, good academic performance, safety features in your vehicle, and more. Taking advantage of these discounts can help lower your premium.

- Consider usage-based insurance: Usage-based insurance (UBI) tracks your driving behaviour through a smartphone app or a plug-in device to determine your premium. Safe driving habits can lead to significant savings with UBI.

Understand the factors that affect insurance premiums

Understanding the factors that affect insurance premiums is key to finding the best auto insurance. Here are the main factors that influence the cost of car insurance:

Driving History

Your driving history is a significant factor in calculating your car insurance premium. Insurance companies will look at your driving record for the past three to five years, depending on your state. If you have a history of moving traffic violations, at-fault accidents, or a DUI/DWI conviction, you will likely pay more for car insurance and may even have trouble finding coverage. On the other hand, practising safe driving habits and maintaining a clean driving record can help lower your insurance rates over time.

Age and Driving Experience

Age and driving experience play a crucial role in determining insurance premiums. Younger and less experienced drivers, especially those under 25, are considered higher-risk and tend to pay higher insurance rates. This is because they are more likely to be involved in accidents due to inexperience and risky driving habits. Insurance rates typically decrease as drivers gain more experience and enter their mid-50s, then rise again for drivers over 70.

Location

Where you live greatly affects your insurance premiums. Drivers in densely populated urban areas tend to pay more for insurance due to higher risks of theft, accidents, and vandalism. Insurance rates can vary significantly from state to state, as each state has different minimum car insurance requirements and coverage options. For example, some states require personal injury protection (PIP) coverage, which increases the cost of insurance. Additionally, your ZIP code can impact your rates, as certain areas may have higher rates of accidents, theft, or severe weather events.

Vehicle Type

The type of vehicle you drive also influences your insurance premiums. Insurance companies consider the average cost of claims for different vehicle types and their repair or replacement costs. Luxury vehicles, newer cars, and sports cars tend to be more expensive to insure due to higher replacement part costs and the perception of higher risk. On the other hand, older, base-model vehicles with high safety ratings may be cheaper to insure.

Credit History

In most states, your credit history is a factor in determining insurance premiums. Insurance companies associate lower credit scores with a higher risk of filing claims. As a result, drivers with poor credit scores often pay higher insurance rates. However, some states, such as California, Hawaii, Michigan, and Massachusetts, restrict the use of credit information in determining insurance rates.

Other Factors

Other factors that can impact your insurance premiums include your gender, marital status, annual mileage, and insurance history. Male drivers typically pay higher premiums due to a higher likelihood of risky driving behaviour. Married drivers often pay lower rates, as they are seen as more financially stable and safer drivers. Additionally, higher annual mileage can result in higher premiums, and a lack of continuous insurance coverage may be seen as a red flag by insurance companies.

Consider your liability-coverage limits

When considering your liability-coverage limits, it is important to understand what these entail and how they can affect you in the event of an accident. Liability coverage is required in most states and includes both property damage and bodily injury coverage. The limit you choose will determine how much your auto insurance provider will pay out before you have to pay out of pocket. Therefore, it is crucial to select a limit that adequately covers your assets in the event of an accident.

Bodily injury coverage will cover any injuries or deaths you cause to another party in a car accident. On the other hand, property damage coverage will reimburse the other party for car repairs and other property damages you cause in at-fault accidents. When selecting your liability limits, it is recommended to choose a limit that is higher than your net worth to ensure you are fully protected. The average liability limits in the United States are around $90,000, with $18,000 for property damage, $26,000 for bodily injury per person, and $52,000 per accident. However, it is important to check your state's specific requirements as they can vary widely.

While liability coverage is essential, it is important to note that it does not cover your own injuries, deaths, or property damage in at-fault accidents. For this, you would need additional coverage such as collision coverage and medical payments coverage, or personal injury protection (PIP). Additionally, liability coverage does not include an insurance deductible, so once your claim is approved, your insurance provider will begin liability payouts up to your selected limit. If the bodily injuries or property damages exceed your limit, you will be responsible for the additional costs.

When considering your liability-coverage limits, it is crucial to evaluate your individual circumstances, including your net worth, the value of your home and vehicles, and your ability to pay for damages out of pocket. By selecting appropriate liability limits, you can ensure that you have sufficient coverage to protect your assets in the event of an accident.

Increase your deductible

Increasing your deductible is a great way to lower your auto insurance premium. A deductible is the amount you pay before your insurance policy kicks in. By requesting a higher deductible, you can lower your insurance costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15 to 30%. Going to a $1,000 deductible can save you 40% or more.

However, it is important to ensure that you have enough money set aside to pay the deductible in the event of a claim. It is also important to shop around and compare rates from different insurance companies, as the savings from increasing your deductible may vary depending on the company.

Additionally, consider the frequency of your claims. If you don't drive often and feel you are less likely to get into accidents or sustain vehicle damage, then a higher deductible may be a good option for you. On the other hand, if you have multiple claims or expect to have frequent claims, a higher deductible may not provide as much savings.

In summary, increasing your deductible can be a strategic way to lower your auto insurance costs, but it is important to weigh the potential savings against the risk of having to pay a higher out-of-pocket expense in the event of a claim.

Consider skipping comprehensive and collision coverage

Collision and comprehensive insurance can help you pay for damage to your vehicle following an incident, regardless of who is at fault. However, you may consider dropping them if:

• Your vehicle's value is low. If your car's value has fallen below a few thousand dollars, it might be time to consider dropping collision and comprehensive coverage, especially if you have a high deductible.
• You can cover the cost of repairs on your own. If you have enough in savings to cover potential repairs, you may want to drop one or both optional coverages.
• You aren't driving your car (collision only). Collision coverage helps pay for repairs if your vehicle hits something. If the car isn't on the road, it's very unlikely it will get into a collision.

However, even if your vehicle value is low, you may consider keeping these coverages if:

• You can't afford expensive repairs. Collision and comprehensive coverage may increase your car insurance premiums, but the difference in cost may pale in comparison to what you'd need to pay should your vehicle be damaged in an accident or other type of incident.
• You rent a car when you travel. Car rental companies typically offer a collision damage waiver that, when purchased, releases you from financial responsibility if the vehicle is damaged in a collision. If you are accustomed to opting out of this additional protection because you rely on your car insurance to cover you, consider keeping collision and comprehensive coverage or buying the waiver each time you rent.

Claim your car insurance discounts

Claiming your car insurance discounts can help you save hundreds of dollars. Here are some common types of car insurance discounts and how you can qualify for them:

Driver History Discounts

If you have a good driving record, meaning your driving history is free from accidents, speeding tickets, and other violations, you may be eligible for a "good driver" discount. Most insurers will offer this discount if you have had no accidents or traffic violations in the past three to five years. Defensive driving courses can also help you qualify for this discount.

Affiliation Discounts

Your job, school, or membership in certain organizations could help lower your car insurance bill. Some insurers offer discounts to alumni from certain universities, Greek life alumni, and members of professional organizations. Military members, veterans, and federal employees may also be eligible for discounts.

Vehicle-Related Features Discounts

Insurers may offer discounts for vehicles with safety features, anti-theft devices, or alternative energy sources. For example, The Hartford offers a discount for hybrid or electric vehicles. However, you may need to have certain insurance coverage, like MedPay or personal injury protection, to qualify for these discounts.

Personal Traits Discounts

Insurers often offer discounts for full-time students who earn good grades. Age restrictions vary by carrier, but this discount is typically available to students with a B average or higher. Homeowners may also be eligible for a discount, even if they don't buy homeowners insurance from their auto insurer.

Customer Loyalty Discounts

Insurers may reward loyal customers with discounts for renewing their policies or having multiple policies or cars insured under the same policy. However, be cautious of price optimization, where insurers charge loyal customers higher rates because they are less likely to switch companies.

Policy-Related Discounts

Policy-related discounts are some of the easiest to qualify for. You may be eligible for a discount by setting up automatic payments, paying your policy in full, or switching to electronic statements. Some insurers also offer an early shopper discount if you get a quote before your current policy expires.

Frequently asked questions