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The top 7 considerations when shopping for auto insurance

Shopping for auto insurance can be a daunting task, especially for a new driver. Unfamiliar terminology, dissimilar offerings from insurance companies, often hidden discounts and some serious financial ramifications for choosing the wrong coverage can overwhelm consumers.

  1. How you save will determine what deductibles you should choose

The deductible is the amount of money you will pay when a claim is filed. If you have a $200 deductible and you have an accident that is your fault, you will be responsible for the first $200 dollars of damage. If you have a $1,000 deductible, you would pay the first $1,000 dollar of any loss.

Choosing the highest deductible will save you money on monthly premiums, but it won’t save you anything in the long run if you ever have a claim and have not put the deductible aside.

Budget-savvy consumers with adequate savings should raise their deductibles to the amount they have in their emergency savings, but if you’re not a saver, lower deductibles will work better for you.

  1. Liability vs. Collision – What do you need?

Liability coverage only covers the damage you do to other people’s property and injure you cause to other people. It provides no coverage if your car is damaged or stolen or if you are hurt in an accident. Liability coverage is solely based on your demographics and driving record.

Collision insurance covers your car and you. It takes you demographics and driving record into account, but also considers the value of your car.

  1. There are discounts for everything out there, and that includes your auto insurance.

Many vehicles come with safety features and alarm systems that will lower your premiums with most auto insurance companies:

  • ABS brakes
  • Alarm systems
  • Air Bags
  • Daytime Running Lights
  • Electronic Stability Control
  • Automatic Seat Belts

You may also save by having a good driving record, taking a defensive driving course and being a customer for a certain number of years. Ask your agent about the discounts for which you might be eligible.

  1. In many states, where rates are set by law, cheaper insurance simply means less coverage.

If you live in a state where the rates are pre-set, think twice before taking a less expensive policy because it may not give you what you need. Check the state-by-state requirements, and you can visit your state’s insurance department for more information. And if it’s your thing, learn more about trends in state regulation and insurance rates.

  1. Combining policies can save you money…

Most insurers will knock off up to 15% from both your auto and home policies if you bundle them together. Just make sure both policies provide the right amount of coverage.

  1. If you use your vehicle for work, you may not have the coverage you expect

You probably purchased a personal policy, but if you’re constantly driving as a salesperson or a pizza delivery person, make sure your policy covers your work use of your vehicle.

  1. Shop around

While you can get healthy discounts for being a long-time customer and for having more than one policy with the same insurance company, it still pays to shop around once a year. A study by found drivers saved more than $300 on policies when they switch. That shows you have to shop around.

Make sure to check out the huge insurance companies as well as regionals. The smaller companies, like Loya Auto Insurance, can usually offer better customer service.

  1. Don’t let your policy lapse

Forgetting even one monthly payment can cost you greatly. Most insurance companies view drivers who are licensed but don’t have insurance as risky or irresponsible. Because of this, if you let your policy lapse, you’ll probably pay more when you go to buy car insurance. If you are planning to let your policy expire because you want to switch car insurance companies, make sure to purchase car insurance before your current policy is canceled.

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