There are ways to save and still get the right amount of coverage if you know where to look. Whether you’re new or currently-insured, here are the top 10 tips on choosing the right auto insurance coverage.
1) Choose a Reputable Company
First thing’s first. If you’re reading this, saving money on insurance is likely a major concern. However, it shouldn’t be your only concern when choosing auto insurance. Because if money were your only concern, you could shop for the most barebones deal around, regardless of the insurance provider’s quality. Do you really think that “Discount City Auto Insurance 4-Less” is going to come through for you if the unthinkable happens? Sure, the premium is nice and cheap, but when it comes time to use that coverage, you may be met with a fight. Or, even worse, tumbleweeds. Believe it or not, top-rated insurers can provide you with enough discounts to make it worth the time and effort. You’ll get quality coverage that won’t break the bank. Not sure where to start looking? You can start with this list of quality auto insurance companies.
2) Look For Discounts
As you’re looking through possible auto insurance providers, remember that there are enough out there that you likely qualify for one or two. Here are the most common auto insurance discounts.
Policy-Based Discounts
Policy-based discounts are all about your behavior as a policyholder. For example, if you pay on time, maintain continuous coverage, or pay in full every month, you’re a good candidate for a discount.
Car Safety Features
Have you outfitted your car with anti-theft technology? Is your car considered “green”? Does your car have anti-lock brakes, or is it new? All of the above can qualify you for discounts based on your car’s safety features.
Driver Safety
Discounts based on driver safety can come from your behavior while behind the wheel. Driver safety courses, low vehicle mileage, and maintaining a record free of accidents or tickets are common areas where you can find an insurance discount. Even behaviors off the road, like getting good grades or having good credit, can contribute to your rate. When you’re shopping around for insurance, you can ask about discounts for bundling policies, like home and auto, for example. As you might imagine, not all insurance companies offer all discounts. You’ll have to shop around. Check out this list of insurance discounts and the companies that offer them.
3) Understand Your Demographic
When it comes to your rate, it’s important to understand where you fit in, demographically-speaking. For example, insurance companies tend to consider young, single men who smoke a greater risk than a 48-year-old married woman with kids. Some of the demographic factors that can affect your rate are:
Age
Young folks pay more, and rates tend to decline with age until the mid-50s. Around age 60, rates start creeping back up.
Region
The zip code where you live can impact your insurance rates. Urban dwellers tend to pay higher rates than those living in less populated areas.
Gender
Women pay less than men. Contrary to the silly stereotype, women are better drivers. They’re in fewer accidents and tend to have better driving records overall, which shows in their rates.
Marital Status
Insurance companies view married people as less risky to insure than single folks. If you’re married, you’ll score a better rate from most companies.
Student Status
If you’re young, that’s a risk for auto insurers. However, if you’re young and a student, you’re presumed more responsible than others. As untrue as this may be in many instances, it’s still a way to leverage a lower rate.
4) Choose the Right Vehicle
The type of vehicle you drive plays a role in your insurance rate. Certain makes and models tend to experience higher crash rates. If you’re driving a car that has a reputation for getting into accidents, you might see a higher monthly premium. When a vehicle manufacturer touts its safety rating, it impacts insurance just as much as consumer safety. The Insurance Institute for Highway Safety website can show where your vehicle ranks when it comes to losses.
5) Choose the Right Amount of Coverage
The amount of coverage is one of the more significant factors that will affect your monthly premium. But if you’re wondering how to choose auto insurance coverage amount, much of this decision will depend on your in-state. If you live in most states, you’ll need to purchase a minimum of three basic types of coverage, per tort law: uninsured motorist, property damage liability, and bodily injury liability. For bodily injury liability and property damage, there are set minimum amounts of coverage for each state. Amounts vary by state. Typical amounts are around $20,000-$50,000 per person or up to $100,000 per accident. For property damage, the coverage can range from $20,000-$60,000, depending on which state you’re in. Some states offer “no-fault” coverage, which can vary by state. Essentially, no-fault coverage means the insurance company will pay you directly, regardless of fault. About a dozen states are considered true no-fault states, meaning they don’t require the minimum tort-based coverage. If you’re unsure how to choose auto insurance coverage limits, keep in mind optional coverage, like collision or comprehensive. This additional coverage will translate to higher rates but offer you the most return if you are ever in an accident.
6) Set the Right Deductible
If you are at a low deductible, you might want to consider raising it, especially if you drive less these days. If you carry comprehensive and collision insurance, raising your deductible from $250 to $1,000 is a big jump, but it can save you lots in the end. A raise in deductible from $250 to $1,000 can translate to a greatly reduced premium. And we’re not talking just a few percentage points. We’re talking about a premium reduction to the tune of over 50% a year. On the other hand, if you currently carry a higher deductible, you may want to tighten it up a bit. In the event of an accident, that extra $30-$50 a month can prove a wise investment if your damages prove extensive.
7) Review Your Current Rates
If you are currently in a plan, consider reviewing your rates. If any of the information in this article is new to you, you’ve likely overlooked some of the discounts mentioned above. So check your rates regularly and keep an eye out for opportunities to lower your bill. When rates rise with the economy’s ebb-and-flow, you’ll want to find ways to balance out the increases.
8) Review Your Coverage
Do you have enough coverage? Do you need to up the amount? Reviewing your auto insurance coverage regularly will help you take continuous stock of just how much you need. Recently, legions of drivers have been spending much less time on the road. Many have considered trimming the fat between not driving and being unemployed when it comes to insurance coverage. If you’re in this situation, you may be overinsured compared to how much you drive. When reviewing your coverage, consider dropping optional insurance like collision and comprehensive.
9) Maintain Good Credit
Just like a credit score can impact your coverage when you first purchase it, a credit score bump is worth reporting to your provider. Keep in mind that if your credit drops, this could impact your insurance rates as well.
10) Watch Out For Scams
Keep an eye out for scams. Insurance scams don’t just involve fraudulent claims; the road runs both ways to make some dishonest dollars. Be alert unusually low introductory rates with expiration dates and agents acting independent of a company. In general, watch out for lack of transparency of any kind. These are are all signs of possible insurance fraud.
Ask for Help
Because of the current situation, many insurance companies are showing some flexibility when it comes to keeping insurance affordable for their customers. So try asking your provider for some leeway on your payments. Recently, insurers have been known to help out by:
Extending Grace Periods
Waiving Late Fees and Penalties
Setting Up Payment Plans
Also, if you are using your vehicle as a source of extra income, companies often require you to pay for extended coverage. Insurers may be willing to waive this in light of the vast need. So if you are driving rideshare or delivering food, see if your personal auto policy can extend to your rideshare gig.
Choosing the Right Auto Insurance Coverage
Choosing the right auto insurance coverage does not have to be rocket science. A little homework is all it takes. So, don’t just sit there! Take a look under the hood and see what discounts you can find. Complete your research by reading more articles like this on our website.
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