Financial Planning

Things to Consider When Shopping for Car Insurance

With a little preparation and a few questions in your back pocket, buying auto insurance can be easy.

Here are a few tips to protect yourself and your budget and put you in the driver’s seat when it comes to purchasing auto insurance.

What type of insurance do I need?

It’s important to learn about the different types of auto insurance available because you and your budget may not need all of them. In almost every state, car insurance is required before you can hit the road. Here’s a look at the different types of insurance and what they cover.

  • Collision insurance will cover the costs of an accident no matter who caused it.
  • Comprehensive insurance will cover the cost of repairing the car in a non-collision situation, such as a flood or if the driver hits an animal.
  • Bodily injury coverage will pay for another person’s medical expenses if there’s an accident, while property damage will pay for the cost of another person’s car or property, such as a fence.
  • General liability auto insurance often covers both bodily and property damage.

Am I a risk?

The price of an auto insurance policy depends on many factors including age, gender, driving record, credit score and address.

How much do I need?

Once you decide which type of coverage is best suited for you, figure out how much coverage is warranted. Coverage may depend on how high you want your monthly premium or deductible to be which is the cost you have to pay if an incident occurs.

When shopping for auto insurance providers, it’s also important to do your homework and ask questions to help you find the best coverage for the best price. For example:  

What is covered under the policy?

Understand exactly what the policy will and will not cover so you can prepare for claims versus any potential out of pocket expenses.

Will my premiums increase?

Some people think insurance companies can’t raise prices in the middle of a year, but this depends on the contract. Make sure you lock in your rates for at least a year. Ask what factors can cause an insurer to increase your price, such as speeding tickets, accidents or a hit to your credit score.

What is my deductible?

A high deductible can be hard to manage in the case of an accident. Don’t sign up for a policy with a deductible you’re unlikely to be able to afford. A higher deductible allows for lower monthly premiums, but a slightly higher monthly price can ensure your car gets fixed or replaced when it needs to.

Can the insurer cancel my policy?

Factors such as late payments may trigger a policy cancellation. Ask about what triggers a cancellation and likewise, understand your rights when it comes to canceling your policy.

Check out this instant calculator for accurate car insurance rates.

This article was written and sponsored by CoverHound, where you can compare car insurance rates in as little as 3 minutes.