With the hundred’s of insurers out there you can spend hours searching for the most cost effective auto insurance. The best way to start your search is getting a free quote online from an aggregator site that searches across several providers based on the search criteria you set. Based on location, driving history and desired coverage there is no one best value auto insurance provider and you need to do your homework. Further insurance premiums and criteria change regularly so always do a quick search when your insurance is up for renewal to see if you can save even more month.
As you search online however, be aware of the following costs associated with car insurance:
The Premium: The amount of money you pay the insurer for insurance coverage during the life of the policy. The insurance premium can vary widely among insurance providers, which is why experts strongly recommend getting several quotes before committing to a policy. In fact, even for the same provider you are likely to get quotes that change on a daily basis. Use the list above to get some free quotes.
The Deductible: You generally choose your desired deductible when purchasing the insurance policy, and is the amount you have to contribute if you make an insurance claim. It can range from $0 to $1000 and generally the higher your deductible the lower your premium, and vice-versa.
No two auto insurance policies are the same, but most policies will include some variation of the following standard coverage:
Bodily Injury Liability covers you in the event that you cause an accident in which another person (or people) is injured.
Property Damage Liability provides coverage in case your car damages someone else’s property – usually this means someone else’s car, but it could be a fence, light post or other piece of property.
Medical Payments covers certain medical expenses if any vehicle occupants are injured in an accident.
Collision Coverage is an optional coverage that covers damage to your car caused by impact with another car or object.
Comprehensive Auto Insurance Coverage is also an optional coverage that covers damages to your car caused by something other than a collision – like theft, fire, etc
Companies hire actuaries to figure out what to charge people and the cost of your insurance premium is based on a number of factors. Some of which (like where you live and how old you are) you have little control over but there are a number of other variables which you can control that have a big bearing on your cost of insurance. Because there are so many factors that go into figuring out a person’s insurance premium, there is sufficient variety among insurance providers to make it worthwhile to shop around for the best deal and the best cover for you. Here are some of the variable factor’s the insurance companies use when figuring your premium – most of which you have control over.
• Your driving record. The better your record, the lower your insurance. If you have a clean record for 5 or more years, you should be able to get the best rates in the market•
• Whether your car is insured for agreed value or market value. If you choose an agreed value which is less than the market value, you may get a significantly lower premium
• Type of car – age, make, model & body style. In general, a more expensive or faster car will cost more to insure, simply because owners of those vehicles tend to drive faster
• Previous claims (or no claim discount). Don’t try and hide these – all the companies have access to each other’s and local/state accident databases
• Where you live. Insurance companies base their analysis down to the street where you live. Also if you have moved recently, you may get a cheaper insurance premium, particularly if you have moved to a “safer” area
• Whether the car is parked on the street or in a garage. A garage is considered safer, so generally the insurance is lower
• Any modifications or accessories (e.g. spoilers or large speakers)
• Whether you own the car or have a loan. Some companies even look at your credit history and FICO score
• The number of additional drivers, and especially those under the age of 25.
How to Find the Best Insurance
I tend to start with insurance portals like Esurance or Insure me, because they search across a number of providers, but I have also found that if I go to specific insurance provider sites like GEICO or Allstate (see my comparison of these 2 providers) you can find certain exclusive deals not available elsewhere. That’s why it’s a good idea to review your auto insurance cover when it comes time to renew. Normally I get a couple of competitor rates quotes when my policy is due for renewal and then call the representative of my current insurance provider to see if they can match the lower price. Most of them have a +/- 10% discretion, so you can normally get a decent deal this way (and stay with your current provider), particularly if you have a good driving record. If they cannot match it, I go with the cheaper company.
No matter which insurance provider you go with, there are number of things you can do that will lower the cost of your car insurance. Use the list above as a guide when shopping around for auto insurance and to see where you can improve your “car profile” to the insurance providers. I know that by simply stating in my online quote request form that I parked my car in a garage and had an alarm system (factory) installed, I got $200 dollars off my insurance over 6 months! Not bad for about 30 minutes of online work.
Good-to-Know Auto Insurance Terms When Shopping Around
Most of these are pretty standard across providers and worth understanding when shopping around.
Bodily Injury Liability pays damages for people injured or killed in an accident for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. Each selection shows two coverage limits (e.g. $100,000/$300,000 as I chose) – the first dollar amount represents the coverage limit for any one person; the second dollar amount represents the total coverage limit for one incident or accident. Individual states have different minimum requirements for liability insurance and for lease cars.
Property Damage Liability pays for damage to other people’s property resulting from an accident caused by your auto for which you are legally responsible. It also covers your legal defense if you are sued as a result of an accident. If the property damages are high, your assets — including your home, savings and future wages — may be at risk if you are under or not insured. If you lease a car, your lease contract will typically require you to maintain minimum Property Damage Liability Coverage of $50,000.
Medical Payments coverage pays the reasonable and necessary medical, dental, hospital and funeral expenses for the insured, covered passengers and family members, who are injured in a covered auto accident, regardless of who was at fault. Coverage is also provided to the insured and resident relatives, while they are riding in someone else’s car at the time of the accident or if they are struck as a pedestrian. If you have personal health insurance (which most professional workers have) that covers most of your medical expenses, you may want to choose a lower level of coverage.
Uninsured Motorist Bodily Injury typically pays for you and your passengers’ bodily injury damages caused by an uninsured driver. The amount of coverage that you may purchase will vary depending upon the state where the policy is issued. There are a number of common exclusions to this coverage that will be detailed in your policy. Given the number of uninsured drivers, this is an important coverage, even in states with no-fault insurance.
Comprehensive coverage pays for losses to your auto not caused by collision, such as theft (like a stolen car stereo), flood, vandalism, earthquakes, explosion, fire, or other covered causes. If you have an older car, where the cash value is low, you may decide not to purchase this coverage. With comprehensive coverage, you choose a deductible – the amount that you will pay out of your own pocket – before your insurance pays your claim. For example: your car’s stereo is stolen and replacement costs are $500. If you have a $100 deductible, your insurance will cover $400 — the replacement cost minus your $100 deductible. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.
The other side to comprehensive coverage is Collision Damage coverage, which pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. You can also choose a deductible for this coverage.
Emergency Road Service (ERS) is offered by the bigger insurance companies and is a cost effective alternative to other road services such as AAA. It covers problems not typically covered by car insurance, such as towing, lockout service, and mechanical labor if you have a dead battery or get a flat tire. ERS helps to take the hassle out of unpredictable events such as a flat tire or a dead battery, and the piece of mind is worth the $10 dollars a month I would pay for this coverage