Comparing auto insurance policies can be a daunting task and it’s easy to overlook important details if you don’t fully understand what to look for. Whether you’re trying to save 7.5 minutes, 15% or you simply like lizards, do your research before deciding on an auto insurance policy. Buying the wrong type of coverage, or committing to the wrong carrier can cost you much more in the long run.
According to a 2014 Consumer Reports National Research survey, “price point is still the overwhelming factor in deciding on an auto insurance policy”. Although only 25 percent of those surveyed had shopped for auto insurance in the previous year, most researched only one or two companies before making their decision. While we agree price is important, it’s really only one factor of many.
Following some basic tips and familiarizing yourself with policy terms can allow you to make the right decision, the first time:
First things first. Do you need pants?
According to the 2014 Online Auto Insurance Shopping Report, 37% of consumers in 2014 said they would be likely to purchase a new insurance policy online in the future, up from 35% in 2013. While this trend may show popularity, it doesn’t show any better results for the shoppers. Online quotes can be misleading.
Often times, in an attempt to make the quoting process seem faster, the insurance carrier quotes “blindly” without collecting detalied information about the driver’s accidents, tickets, and other history that can significantly affect their final rate. They frequently add hidden disclaimers to say that additional reports will be run which could change the premium. If a customer disregards the disclaimer and takes it anyway, they do so at their own risk.
As a result, many online shoppers get a rude awakening when they think they have saved money and all of a sudden, their tickets, accidents and past claims hit the activity and their premium goes up drastically.
Online vs “brick & mortar” premium prices:
In reality, most carriers have similar rates for similar policies, particularly for creditworthy customers. Contacting a real, live agent will always allow you to fine-tune your policy to suit your needs, and your agent can inform you of ways to save money or let you know how to obtain better coverage for your specific needs.
If you are renewing an existing policy, it’s important to have your current (old) policy as well as any new research handy for reference. Discuss what coverage should be continued, removed or added for your new policy with an agent or customer service representative to be sure you are getting everything you need, and nothing you don’t. Don’t be afraid to mention something you learned from another company. Insurance agents are very aware of their competitors and should always be eager to answer your questions to help lead you to the best coverage possible.
Know what you need.
Before you begin the quoting process, know what you are required to insure. Idaho law requires a minimum amount of bodily injury liability and property damage liability insurance on your car, truck, SUV or minivan. But is that enough? Don’t be left to figure it out alone. It may help to speak with an agent about the proper coverage you need, and what options you have to package other policies together to help save money and close coverage gaps.
Know what you don’t need.
In a perfect world, we’d simply buy insurance to cover every single possible scenario that could affect your life. But the long-term cost of premiums would overshadow any benefits of coverage even if that scenario unfolds. Remember: insurance is part chance.
“Consumers should also be aware that they don’t have to buy the packages of collision and comprehensive coverage,” Howard continued. “If your vehicle is older, if you have a good driving record and if there is a low likelihood that it would be totaled in an accident, but a high likelihood of it being stolen, you could buy comprehensive but not collision.”
Know what you want.
“Look at your personal financial situation,” Dennis Howard, director of the Insurance Consumer Advocate Network (I-CAN) and former insurance adjuster, advised. “If you have extra assets to protect — and that is all insurance is doing — get enough liability coverage.” For instance, if you purchase $50,000 of bodily injury liability coverage but have $100,000 in assets, attorneys could go after your personal property in the event of an accident in which you’re at-fault.
What’s the deductable?
Higher deductibles reduce your premium because you pay more out of pocket if you have to make a claim. Raising your deductible from $500 to $1,000 can cut your premium on collision significantly. If you have a good driving record and haven’t had an at-fault accident, opting for a higher deductible on collision might be a good bet. Just make sure you can afford to pay it if your lucky days come to an end.
Know the variables.
Many times, variables in your specific situation can affect bottom line rates. Changes in your marital status, employment, teen drivers’ status or grades, new daily driving distances or new parking locations can directly alter your premium quotes. The factors that influence rates can also vary by carrier, so it’s best to ask an agent about the variables that can cause price reductions or increases before committing to a company; they should be more than willing to discuss them with you.
Know who they are.
Once you have a few comparable quotes and you know which company is offering the lowest price for the policy you want, check out the company itself to find out whether it’s reliable. You can check with Idaho’s Department of Insurance, which allows you to compare premiums for insurance companies in Idaho. You can also check on the financial stability of a company and look up the number of consumer complaints it has accumulated. Take a look at Weiss Ratings to get an independent rating of the companies you are considering. J.D. Power and Associates also offers useful consumer reviews of auto insurance companies.
Whether you’re renewing an existing policy, finding a new one, or just researching the competition for the next time around, the simple rule is to do your research. Don’t settle on the first company you speak with until you’ve explored all your options. Don’t let dollar signs (or lack of) steer you off course in finding the policy that you need, and be sure to speak with a human before deciding. If you have any questions about coverage options, please contact a Farm Bureau agent today and let us show you how we can protect you world.