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:
Comprehensive.
Collision.
Medical payments.
Uninsured/underinsured motorist.
GAP coverage.
Towing and labor.
Rental
reimbursement.
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.
Shopping Smart
Ratings
Like most consumer purchases, different insurance companies
charge different premiums for the same insurance coverage. However, all car
insurance companies do not give the same level of service or share the same
rankings.
Insurance companies are given a Best Insurance Ranking provided
by the A. M. Best Company. Since 1899, the A.M. Best Company has provided
ratings of insurance companies based on their financial stability. The stronger
the rating, the more likely the company is able to pay if you file a claim.
Rankings range from AAA down to D.
Sales Methods
Insurance companies use one of three methods to sell their
policies.
Exclusive agents:
These agents only sell the products of a single insurance carrier.
Independent
agents: These agents represent many companies and can give you multiple quotes
on car insurance to compare.
Direct market:
Sales are usually with one company and completed over the Internet, phone, or
by mail.
All three sales methods have their merits. The most
important thing is to get multiple quotes from the insurance companies you feel
most comfortable comparing, as insurance rates can fluctuate widely from
insurance carrier to insurance carrier.
What to Notice
When you compare car insurance companies, you should pay
close attention to the following:
The premium. This
is the monthly cost for your car insurance.
Applicable
discounts.
One company
may offer you discounts that others did not.
Ask each insurance company you speak with
about car insurance discounts for which you may qualify.
A. M. Best Rating.
This rating indicates the financial strength of an insurance company and their
likelihood of paying on your claim.
Customer service.
Most state
insurance departments have lists of complaints against insurance companies.
These complaints are frequently referred to as “valid complaints."
The higher the
number of complaints or the complaint ratio, the higher the likelihood of the
company violating a policy, contract, or statute.
Doing your research when shopping for car insurance quotes
can ensure you get the best rates, great coverage, and stellar customer
service. In contrast, neglecting to comparison-shop can leave you with a policy
that does little for you in the long run and can hurt financially if you get
into an accident. Informed consumers always get the best deal.
Source : http://www.dmv.org/insurance/get-the-best-car-insurance-rates.php
