How to Find the Best Auto Insurance

Auto insurance is something that most everyone is required to have, yet it’s a subject many know very little about. Often, we chose an insurer based upon word-of mouth recommendations made by family and friends because we simply don’t want the hassle of trying to figure it out for ourselves. But that isn’t always the best course of action. Insurance is a financial planning tool designed to protect our assets in the event of a loss. What might be a great policy for your neighbor, may lead to financial ruin for you.

There is no “one-size-fits-all” policy, so it is important to speak to a licensed insurance representative about your individual needs and circumstances to tailor a policy best suited for your current financial situation. By asking the following questions, you are likely to find a product to protect your assets and save yourself money in the long run.

Finding an agent

Licensed insurance agents in your state are the only people legally authorized to provide specific insurance policy information and quotes, so it is important to find one that is knowledgeable and specializes in the type of insurance you are seeking. A few key questions to ask when seeking a qualified agent include:

• Do you have an office where we can meet?

Often, it is easiest to understand the “in’s and out’s” of insurance by being able to sit down with an agent to see the coverages they are explaining and to ask questions. A face-to-face interaction often leads to discussion that can reveal exposures or answers to questions that are otherwise overlooked in a phone conversation.

• How long has this company been in business?

As in any industry, companies come and go. It’s a good idea to choose a company with an established history in your state and one with an AM Best rating of A or B. This rating reflects that company’s financial stability and ability to pay claims.

• How many companies do you work with?

Some agents work for independent agencies and represent several insurance companies while others are captive agents who represent only one company. There are benefits to both, however independent agents can often quote with several companies and may offer more options to tailor a policy best suited to your needs. Likewise, captive agencies may offer greater customer service and more significant discounts to specific groups of people.

• How long have you been an agent?

While the length of one’s career may not be a deal breaker, experienced agents often have knowledge of more discounts and company practices, that a new agent may not be familiar with. It’s also important to find an agent you trust and feel comfortable with.

• Do you offer annual reviews?

A good agent, will offer annual reviews of your policy. By reviewing your policy annually, you may discover you forgot to remove a driver who no longer lives in the household or a vehicle that has been sold. This opportunity allows you to also review coverages and make necessary changes, that can save you hundreds of dollars a year.

I’ve found an agent. What’s next?

Once you have found an agent you feel will keep your best interests at heart, there are additional questions to ask that will differ from one company to the next.

• What discounts are available to me?

There are a wide variety of discounts available for those who qualify, and those discounts vary from one company to the next. Common discounts include: age, marital status, safe driver/defensive driving classes, good student, longevity, multi-policy, anti-theft, passive restraint, air bag, annual mileage, garaging location, professional affiliations, veteran status, and student away from home discounts are most common.

• What is my risk assessment?

Your insurance rate is based on several factors that are used to determine your risk to the company- in other words, how likely the company will need to pay a claim on your behalf. Age, gender, driving record, criminal record, credit rating, marital status, homeownership, number of drivers in the household, where you live and how much you drive are all factors in determining how much you will pay for auto insurance.

• Who is covered by my policy?

This is a commonly overlooked topic and varies from state to state. Situations such as newly permitted drivers who have not yet earned their driver’s license, a neighbor or family member who borrows your car, or driving your personal vehicle to make pizza deliveries are handled differently by company and by state.

• Do you offer 24/7 claim reporting?

It is important to know what will happen if you are involved in an accident. If you are involved in an accident at 7 p.m. on Friday and you are not able to report your accident to the company until 9 a.m. on Monday, you may be faced with out of pocket expenses for towing or a rental car that would otherwise be covered by your company at the time of loss.

• Will my rates increase if I am involved in an accident?

Again, different companies and a wide variety of factors determine if you will experience a rate increase after being involved in an accident. It is best to know what a company’s policies are before a loss. This is also a good time to ask if the company offers “accident forgiveness”.

• What levels of coverage do I need?

Most states require liability coverage and establish a minimum amount that must be carried, however it is best to carry the highest level you can afford. You may also purchase physical damage coverage (comprehensive and collision). This is a particularly important question to discuss with an agent where they can offer different scenarios to determine what coverages best suit your needs. Variables to discuss include age of vehicle, salvage titles, auto loans and available deductibles for physical damage coverage. 

• What are my payment options?

Companies offer a variety of payment options including monthly, quarterly, semi-annual and annual. Many companies also offer the option to receive a paper bill or to have your payment withdrawn via electronic funds transfer (EFT). While monthly payments may be most affordable, it is important to note that substantial discounts are offered by certain companies when a policy is paid in full at renewal or if payments are automatically withdrawn from your account. Additionally, some companies will impose a fee to send out a paper bill.

Final Thoughts

Being an educated consumer is the key to not only saving money in the short term, but protecting your assets in the long term. While we may value the opinions of our friends and family, insurance is not a “cookie-cutter” consumable. It’s important to ask a trusted professional about options and coverages that will best suit your individual needs as they change over time. Life happens and it’s important to be adequately protected when it does.