Car insurance is an investment you make in the hopes that you never have to use it. But if you ever do need it, you assume that all the years you spent paying your premiums will step in and do its job.
Yet many people are unpleasantly surprised to find that their policies don’t cover what they thought, or that the insurance company is not on their side.
The most common way car insurance is chosen is based on finding the cheapest rates. Although it’s the typical route, it’s definitely not the best!
Before you choose your next policy, use these seven tips to avoid surprises when you need the insurance coverage you paid for.
1. Know Your Coverage Needs
Insurance agents want to sell you the policy that will make them the most money, even if it’s more coverage than you need. Of course, your policy has to include at least the minimum required by your state, but the rest is up to your unique details.
Full coverage is typically required if you have a car loan still on your vehicle. Liability coverage is required in most states by law. If your adjuster tries to add anything else to your policy, make sure you ask for clarification to decide if it’s necessary for you.
2. Use a Reputable Company
Insurance companies run the range of the old-fashioned standbys to fly-by-night cheap ones. Your perfect policy likely falls somewhere in between with a reputable, but reasonably priced, company.
One way to make sure your too-good-to-be-true premiums are coming from a legitimate insurance provider is to look up their ratings.
Check for the J.D. Power Customer Satisfaction ratings to see how they fare when it comes time to use the insurance policy. Then look into their financial strength to make sure they’ll be around for a while!
3. Watch for Exclusions
With almost any insurance policy, including automobile coverage, there are certain exclusions that you should be aware of. These vary by insurance company and state.
Exclusions might be slid into the fine print of your policy to bring your premium down, but you need to be aware of them. Common car insurance exclusions are things such as:
● Accidents that happen when an unregistered person is driving
● When a personal car is being used as a work, or commercial, vehicle
● Modifications to the car that changed the makeup or value of the vehicle without the insurance company’s knowledge
If you’re shopping for coverage based on the cheapest possible premium, your agent could slide in these exclusions to bring your rate down. Check the fine print before you sign!
4. Invest in Add-On Coverage
The opposite of exclusions, add-on coverage costs more but gives you additional protection. Some of these extras are only important if you have unique circumstances, but others could be worth the investment.
Highly recommended add-ons that are frequently worth the additional few dollars a month include:
● Personal injury protection, which covers you and your car’s occupants if medical care is needed after an accident
● Uninsured motorist coverage to protect you in case you are in a hit-and-run accident or your state has a high ratio of drivers without insurance
● Roadside assistance for the peace of mind of knowing if anything happens to your vehicle on the road, someone will come take care of the problem for you
Each of these add-ons and the others offered by your insurance company are optional. In some cases, they’re better to have and not need than to need and not have.
5. Choose Your Deductible Wisely
It can be tempting to go with a high deductible and a lower monthly payment, but which one makes better financial sense for you? Will a few dollars more each month be easier to come up or $2000 to get your car fixed if you’re in an accident?
This is an individual decision that you need to choose cautiously. If a lower deductible is a much higher premium, there may be other parts of the policy you can compromise on or you can find a different insurance company.
6. Shop Around
With the internet at your fingertips, you no longer have to settle for the rates you’re given by your local insurance agents. Now, you can shop around and get multiple quotes at once.
Keep in mind that when you cross-compare insurance premium quotes, they should be for the same coverage. Don’t forget to follow step one and check the insurance company’s reputability and ratings before you choose a policy.
7. Read Your Policy Before You Renew
Insurance companies are notorious for adding little clauses of fine print before a renewal. This isn’t necessarily deceptive. Things change over six months or a year, and the company is making adjustments for good business sense.
You don’t have that excuse. Before you sign anything, check over the policy for any revisions.
You might find sections of the policy that work in your favor. For instance, if you moved closer to your job and are driving less, your policy might have a reduced rate for less mileage.
Conclusion
Car insurance is one of those necessary bills you will have as long as you are driving your vehicle. But it doesn’t have to be a huge stress on your pocket.
These seven tips will help you find the right policy, with the right coverage, at a cost you can afford.
