How To Choose The Right Car Insurance

Written by: Seth Rogers
06/21/2019

car-insurance

Shopping for car insurance may not seem like a big deal, but there are many mistakes that first time buyers make when looking for coverage.  With the increasing amounts of car crashes in the United States every year, it’s become more important than ever to make sure that your car insurance has you fully covered for whatever you might need.

When looking for an affordable car insurance policy, there are several things you need to keep in mind in order to find the best plan possible.  Here are a few tips to help you find the best car insurance for your needs:

Find The Right Balance Of Coverage

The first mistake most people make when shopping for car insurance is either purchasing too much or too little coverage.  If you buy more coverage than you need, you’re wasting money, but if you don’t have enough coverage, you’ll be on the hook in the event of an accident.  If you have an old car, consider skipping collision insurance and only getting coverage for the other car in the event of an accident.  Spending a lot of money on insurance to cover the replacement of your car might be a waste if your vehicle is too cheap to make repairing or replacing it worth it.

Be sure not to get too little coverage though, as anything beyond the amount covered by insurance will come out of your pocket.  If you end up causing an accident that results in hundreds of thousands of dollars in property damage and hospital bills, but your insurance only covers $10,000, you could end up owing the difference and potentially becoming bankrupt.  Opt for a plan that has enough coverage that you can cover any expenses in case of an accident while still being able to afford the monthly premiums.

Shop Around

The best advice when searching for insurance is always to shop around.  You never want to go for the first offer you see as prices and quality of insurance vary wildly from insurer to insurer.  If you have a poor driving history, you can be charged substantially more via a traditional insurer such as Esurance or Geico. If, however, you don’t drive all that many miles, an insurance that charges by the mile such as Metromile may be the best option for you.  Compare different insurers to see what rates you qualify for and for what services.

Skip Road Service Coverage

Road service coverage may be much cheaper to get through AAA or as a part of your vehicle’s new car warranty.  Not including road service coverage with your auto policy will save you money and it will prevent anytime you use the service from being recorded on your Comprehensive Loss Underwriting Exchange (CLUE) report.  These incidents can raise your insurance and cause other insurers to charge you a higher rate if they see that you have frequent towing claims.

Update Your Policy Frequently

Anytime you have big life changes such as moving or buying a home, your car insurance rate may be affected.  If you have a shorter commute you may qualify for lower rates, so be sure to update your insurance company in the event of a move.  Becoming a homeowner may also earn you a discount on auto insurance, as homeowners are typically more financially stable.

Find The Right Balance Between Premiums And Deductibles

Your insurance premium is the amount you pay each month for coverage, and your deductible is how much you’re liable for in the event of an accident.  Choosing a plan with a low premium but too high of a deductible can result in you becoming financially endangered if you get in an accident and can’t afford to pay.

One way to make a low premium high deductible plan work for you is to invest in a larger emergency savings fund.  Having a large backup will minimize the risk of bankruptcy in the event of an accident, as you’ll have the cash ready to pay for a higher deductible.  This can be a good choice if you’re a safe driver and you want to take advantage of lower monthly premiums, but be cautious that you’re able to cover costs in case you do have to pay out of pocket.

Skip The Gimmicks

Everyone tries to upsell you extra coverage options for car insurance policies, but most of them are unnecessary wastes of money.  A deductible savings bank will earn you $50 towards your deductible for every six-month policy term that you don’t have and accident or violation.  This may sound like a decent savings, but you’re charged a higher premium if you opt for this, and you only receive it if you’re accident and ticket-free.  What this essentially means is that you’re pre-paying for an accident you may never have.

Other gimmicks you don’t need are accident forgiveness, where your insurance company won’t charge you for the first accident after coverage is purchased; or deductible dividends, which are similar to a deductible savings bank.

Don’t Get Rental Insurance

Rental insurance is an expensive and often unnecessary feature of car insurance for those who are renting a car.  If you already have a policy, you don’t need additional coverage for the rental car.  Most auto insurance policies will also cover personal use of a rental car, making rental insurance an unnecessary expenditure.  The most important thing is ensuring you have adequate liability insurance, as you want to be sure that if you hit someone while driving a rental car his or her repairs will be covered.

If, however, you don’t end up purchasing car insurance before renting a car, then you will absolutely want to get rental insurance.  Driving your own car uninsured is risky enough, but driving a rental car without insurance opens you up to endless liability and potential for lawsuit.  Car insurance is a part of being a driver, and driving while uninsured is a risk you don’t want to take.


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