UPDATED: JULY 25, 2022 | 3 MIN READ
All drivers across the country are mandated to have auto insurance, and with good reason. If your car is stolen, damaged, or involved in an accident, auto insurance mitigates the risk of an excessive financial burden if you face high costs.
The goal is to be adequately covered in the event of an accident while avoiding overpaying for related expenses. When insuring your vehicle, you’ll likely want to find the best rates and coverage, but finding the right policy can be difficult and potentially overwhelming.
Whether purchasing for the first time or not, searching for the right auto insurance requires research and asking questions. Keep reading to learn more about what to look for in an auto insurance policy.
Find the Right Type of Insurance Company
Choosing which insurance company to purchase from should be based on an evaluation of your own personal needs. Different companies will cater to the needs of different drivers, so finding the right policy starts with finding the right provider.
In general, you should choose a provider that is reliable when it comes to claims filing and reasonable when it comes to price.
To compare insurance companies, consider personal circumstances such as age, resident state, marital status, car model, driving record, and credit history. The provider you choose will significantly impact how much coverage you receive at what price.
Major Auto Insurance Providers
Major auto insurance providers, such as State Farm, Geico, Progressive, and Allstate, offer numerous benefits to drivers.
Because they are larger companies, more personnel is available to provide 24/7 customer service and more accessible methods of communication. Customer satisfaction rates are generally very high, so the shopping and claims filing processes are simpler and much quicker than that of smaller companies.
Major auto insurance providers may also have better geographical representation. Low-risk drivers with good driving records and credit will likely find low premium rates and special discounts.
High-Risk Auto Insurance Companies
High-risk drivers are more likely to file claims with their insurer down the road. This includes teens or people who recently received their license, those with multiple driving violations on their record or DUI/DWI convictions, those with below-average credit, or those with specialized/high-value cars.
Some insurance companies will not cover high-risk drivers because they are generally more expensive to insure. However, smaller high-risk insurance companies or nonstandard policies will offer adequate protection for those who can’t find traditional auto insurance.
The General, Dairyland, Geico, and Direct Auto are among the most popular companies that provide nonstandard insurance.
Online Only Auto Insurance Companies
Online-only auto insurance is a coverage option for those who want a convenient and instant way to purchase an insurance policy.
These E-companies offer an online system that allows drivers to learn about, apply for, and purchase policies directly online via sets of questions. Policy servicing is typically constrained to an online space and/or a mobile app, making customer interaction much faster.
The online-only approach helps companies reduce overhead spending, as they don’t have to pay for service centers or employees. In turn, a client may be required to pay less in premium costs. However, the online-only option has some drawbacks.
Some companies may not have a telephone number available for customers to contact, leaving room for misunderstanding or miscommunication regarding claims filing.
Additionally, online-only policies make policy servicing a much more independent task, which can be confusing or overwhelming if it is not something you are used to.
Find the Right Type of Coverage
When finding the right type of coverage, you must research and evaluate how much coverage you need depending on your state. Every state has its own set of minimum auto insurance requirements, which can be found here.
It is rare for an insurance provider to offer less than the legal coverage limit, but it is important to be vigilant and informed just in case. A majority of state laws require liability insurance, but other components of car insurance are optional.
The basic components of a full coverage auto insurance policy include:
- Bodily Injury Liability covers another person’s medical expenses if you’ve injured them in an accident.
- Property Damage Liability covers property damage you cause in an accident
- Personal Injury Protection (PIP) covers medical expenses for you and/or your passengers in an accident
- Uninsured/Underinsured Motorist covers medical bills/repairs if you’re in an accident involving an uninsured or underinsured driver
- Comprehensive covers damage to your vehicle imposed while you’re not driving
- Collision covers damage to your car in an accident, regardless of fault
You may not need full auto insurance coverage, but ensure you have enough coverage for your vehicle and your needs. As mentioned previously, different driver circumstances determine what coverage is necessary and unnecessary.
For example, someone with a specialized high-value vehicle like a Mercedes or an Audi should focus on collision coverage, as repair costs for those car models are typically very high.
Someone who lives in a region with a high possibility of weather damage or crime may want to focus more on comprehensive coverage if their vehicle is damaged or stolen.
Knowing how your auto insurance policy works and what particular benefits it offers you is important. Before purchasing, be sure to review coverage, pricing, and any other policy rules that are specific to your plan.
When you enroll in an auto insurance policy, you should receive a multi-page document containing all the information about your plan. The key points are often summarized on one of the first few pages, usually the Policy Declarations page.
You’ll find information on policy limits, the policy period, insurer information, and much more.
Most Importantly: Shop Around!
There are thousands of auto insurance plans out there, so the best place to start is to compare quotes from various companies.
Searching and keeping your options open is essential when finding the right policy. Here are some tips for when you are shopping for the best auto insurance policy:
- Have your current insurance policy, driver’s license number, and vehicle registration at hand when visiting quote comparison sites
- Be well-informed about your needs as a driver
- Evaluate your driving and/or credit history to determine whether you’re high-risk or low-risk
- Look carefully at insurance options to avoid paying for unnecessary coverage
- Set a deductible that fits with what you can afford
- Ask friends or family about their personal experiences and if they have any recommendations
Beyond getting a price quote, follow up with your chosen auto insurance company. Do some research on the company to discover their reputation among customers.
Finding out how they operate in terms of customer service and claims filing can go a long way in your shopping experience. The National Association of Insurance Commissioners offers an online tool that lists reports on various insurance companies.
At least once a year or when your policy is up for renewal, compare auto insurance quotes to find out if any other insurance providers in your area offer better coverage and/or better rates.
Doing so can save you hundreds of dollars annually, especially if you’re unfamiliar with your current policy or haven’t updated your policy in a while.
Be careful not to switch insurance providers too frequently, as many companies offer discounts and other benefits for long-term customers.