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Buying car insurance is never a fun experience. And just having to pay for it can be a rough experience. At least, until you actually need it. That’s why it’s important to look for the best balance you can find on your car insurance. What’s the most insurance you can get while paying the least amount possible?
Well, the process is actually going to involve a bit of research on your part. Part of it is choosing the right car and then you need to look at things like your options and your budget for paying that insurance.
Age is one of the most significant factors in the cost of auto insurance. As drivers gain experience, insurance rates typically drop, as older drivers are less likely to be involved in an accident or commit a driving violation.
This chart with data from The Zebra shows the average car insurance rates by age group. It highlights that 16 to 19 year olds can expect to pay more than double their 20 to 29 counterparts. It also shows that rates decrease until the 60+ age groups. This is typically because older drivers are more likely to have slower reactions that could lead to an accident and may suffer more serious injuries in a mild to serious accident that is reflected in the insurance rates.
You should know that just about every state in the country requires you to have insurance, so you want to make sure you’re getting the right type before you start driving. We’ll take a look at some of the most important things you should know.
1. Not Understand The Policy
If you don’t know what your insurance policy actually says then you’re definitely making a big mistake. You want to make sure that you have a good understanding of the policy so that when you do have to file a claim you know what’s going to be covered and what’s not. That means looking at everything they give you.
Read the entire policy, read the fine print about exclusions and know how quick and easy it’s going to be to make a claim. Talk with your agent to make sure you understand everything that you’re reading and that you’re reading it properly.
Just because you think it means one thing doesn’t mean that’s actually what you’re getting. Never assume anything when it comes to your insurance policy. Make sure that you verify it.
2. Buying a Too Expensive Car
Maybe you decided that you could afford that beautiful, expensive vehicle, but did you actually look at the cost to insure it after you bought it? Trim levels, engine options and more can all cost more when it comes to your insurance, so it’s important that you take a closer look at the costs after the purchase.
Make sure you talk with your insurance agent and discuss some of the different types of vehicles that you’re looking at. They can give you an idea of what insurance will cost with those different vehicles so you can be prepared and make the right decision.
The key is that you’re going to have different costs to repair vehicles and some are more prone to needing repairs than others. You want to know that before you get into anything.
Next, watch out for high-risk drivers. If you’re considered high risk or someone else in your household is you may not even be able to get coverage for certain vehicles. A high-risk driver plus a high-risk car is definitely no for some insurance companies.
3. Not Knowing What You Need
Make sure you know what the laws are in your state to make sure you’re matching the minimum of what your state requires, but then take a look at what you actually need in order for you and your family to be safe in case something happens to your vehicle. It’s all about what you can afford when problems arise.
If you only cover your vehicle with the minimum you’re going to be able to drive it, but if you have an accident you’re probably not going to be doing so well financially. If you get only a small amount of insurance you’re going to be responsible for the cost over and above that amount. So, if your insurance only covers $12,000 but you cause $30,000 worth of damage, guess who’s responsible for that extra $18,000?
On the opposite side, you don’t want to spend more money than you need to when you’re buying insurance. Don’t pay a fortune when you could easily replace the vehicle for far less. You want to have coverage that makes sense in case there’s a problem, but not something that’s going to cost you more than the vehicle is actually worth.
Talking with your insurance company and your agent is a good way to get an idea of what you actually need. Talk to them about the vehicle in question and what kind of coverage is recommended. Don’t be afraid to talk with different insurance companies as well and try to avoid paying for policy add-ons that you don’t actually need. You want to save money, after all.
4. Taking The First Offer
When you go out to buy insurance you need to take a look at more than just one insurance company. If you only pay attention to one company you’re going to set yourself up for a more expensive service. Instead, you want to take a look at several different companies and get several free quotes.
Make sure that you’re shopping long before you actually need to purchase the policy.
This will keep you from making a quick decision because you are desperate. After all, is you are facing your dream car and the only thing standing between you and it is an insurance policy you could easily be tempted to sign up with the first service you find. You definitely don’t want that to happen.
Now, keep in mind that comparing insurance isn’t always as easy as you would think. Most companies don’t have an exact match to what the other companies are offering. That means you’ll need to look at different offers, deductibles, levels of coverage and more to make sure you’re comparing as closely as you can and that you’re going to get the right level of coverage for a good price.
You should also have coverage for:
- Bodily injury liability
- Property damage liability
- Uninsured/underinsured motorist
Other types to consider include comprehensive and collision. Comprehensive will cover theft, vandalism or fires or other natural disasters. On the other hand collision covers the cost of repairs if there’s any collision with someone or something.
You’ll also want to know what the requirements are for each of these policies and amounts based on your state.
Finally, don’t purchase insurance based just on how much it costs. You could end up with bigger problems down the road.
If you are responsible for an accident and find out that your insurance doesn’t cover as much as you need you’re the one responsible for it. An inexpensive policy may not help you out in these cases, so you want to be careful about what you’re getting into.
5. Falsifying Your Paperwork
When you don’t have the best record it generally feels better if you can fluff things up a bit, right? Well, it’s definitely not going to be good for you in the long run. The insurance underwriters who have to approve your policy are definitely going to find out about that speeding ticket, and the fact that you’re not actually a student.
The reason is that they actually have the legal authority to look at anything and everything that could affect your policy. That includes things like your job, your memberships, your marital status, driving record, credit score and address (and a whole lot more). So, if you lie on something you are definitely going to get caught and that’s going to increase your insurance by a lot.
6. Skipping Discounts
On the opposite side of things, it’s a bad idea not to take advantage of the discounts you do qualify for. Make sure that you look at things like good driving discounts or loyalty discounts. All of these things are going to save you a whole lot of money because the company knows you’re less likely to file a claim.
You can even get discounts for having certain safety features on your vehicle (like a car alarm or automatic locks). You want to save money wherever you can, so make sure you’re looking for any possible discounts.
7. Not Having a Good Deductible
There are generally several different options when it comes to your deductible. If you have a lower deductible you’re going to pay more for your insurance every month. A higher deductible means a lower premium each month. That makes it a great way to save some money if you’re able to come up with a higher amount in case of an emergency.
In general, you can get a deductible that goes all the way up to $2,000 a month, but if you currently have a $500 deductible just going up to $1,000 is going to make a really big difference. Just make sure that you can come up with $1,000 if there’s ever an emergency with your vehicle.
On the other hand, look at it this way. If you are paying for a lower deductible you’re going to have a slightly higher premium each month. Generally, this will be around $20 per month, which isn’t going to be a whole lot. If you have that $1,000 deductible, however, you’ll need to be able to come up with that money all at one time.
If you do want to save on your monthly premium, however, you can definitely do it by increasing your deductible.
How Buying Car Insurance Online Works?
Unless you have managed to block all media commercials, you probably know at least one or two online car insurance companies. Many traditional auto insurance companies also do business online. You can either start with a preferred vendor or simply type “online insurance” into your favorite search engine. There are likely to be many individual insurers and a few websites that allow you to compare offers from different companies.
The online car insurance websites work in a similar way. They will ask you some questions such as your ZIP code, year, make, and model, and then present you with a basic policy offering with a price quote. To allow price comparisons between offers, you can use the menu entries to change the policy options and watch the price change accordingly. You can also get an anonymous quote, but the rate won't be accurate and there will be gap compared to the final rate.
Although price quotes can be useful in comparing the relative costs of companies, they are only estimates and are subject to change due to a final review of your driving record and often your credit score. To get a final quote, you will need to provide additional information such as your driver's license number and Social Security number. Your final quote may be higher if you are at fault in recent car accidents or your credit score is lower than average.
Your credit score can play a crucial role in the cost of your auto insurance. This chart created using data from The Zebra highlights the dramatic difference in the average cost of auto insurance between good and bad credit.
Whether you are looking for minimum or full coverage, the chart shows that you can expect to pay almost double the rate if you have bad credit, compared to good credit.
If the final price quote you receive is significantly higher than the estimate, it might be worth looking for another insurer. However, keep in mind that any factors that caused the premium increase with one company may cause similar increases in final quotes from other companies. Consider getting final quotes from those companies who gave you the lowest estimates. You might not get the lowest final quote from the company with the lowest estimate.
What you should know is that there are some facts when it comes to car insurance that you can’t get around. Younger drivers are going to pay more than older drivers, for example. High-risk drivers will pay more than those with a good driving record.
Those who have a very simple policy will pay the least, but you’ll have more of your own responsibility if something happens. And if you don’t have insurance you’re going to have a whole lot of problems if you ever get into an accident or have any kind of damage to your vehicle. Even if your state doesn’t have a law against this, you’re going to be on the hook for all the costs. Make sure you’re paying attention to all of these things when you purchase your insurance.
Car Insurance Mistakes - FAQs
Fortunately, auto insurance companies usually give you the right to cancel your policy at any time. However, you will want to make sure that you provide them with plenty of notice. Although the majority of car insurance companies may refund your unused premiums, some insurance companies may charge fees if you choose to cancel in the middle of your policy term.
Although a car insurance policy is usually purchased for 12 months and paid in advance or through monthly premiums, you can still cancel at any time. Your insurance company usually charges cancellation fees and management fees. And if you buy insurance through a broker, they may also charge cancellation fees.
In most cases, the answer is no, but it depends on the insurance company and its specific policies. A standard car insurance policy is only written on the name of the person who has the legal ownership of the car. Thus, car insurance companies view this ownership as an insurable interest, which is an incentive to keep the vehicle in good condition.
In addition, many states prohibit the registration of vehicles under a different name from the insurance certificate. Therefore, you usually cannot purchase car insurance for a vehicle that is not in your name, but there might be exceptions.
- Liability: There are two forms of liability insurance: personal injury liability and property damage liability. If you are at fault in an accident, personal injury liability compensates for the injuries of other drivers and their passengers. Liability for property damage compensates for damage to other vehicles.
- Personal Injury Protection: Not every state requires or provides PIP. But where it is applicable, it will pay for medical expenses for you and your passengers, regardless of whether you were at fault in the accident.
- Uninsured/Underinsured Driver Insurance: If an uninsured driver is responsible for an accident, you may have to pay for damages. But if you have uninsured/underinsured insurance, you are covered no matter what.
Car insurance does not cover damage caused by intentional damage, general maintenance, or normal wear and tear. The minimum auto insurance coverage also does not cover the insured’s injury or vehicle damage and only provides liability insurance to cover injuries and property losses caused to others.
That said, the exact coverage varies from policy to policy. In addition, insurance companies provide additional policy additional clauses that can protect you if they are not covered by the minimum car insurance.
Anyone who earns more than $100,000 a year should consider getting an umbrella policy of at least $1 million. In doing so, you can be sure to give yourself the added protection that goes beyond what your car or homeowner’s insurance covers.
Even though you might have less than $1 million in assets, the umbrella policy will cover you for up to that amount. And in the event that you’re sued, your policy can cover defense costs — costs that often accumulate quickly.