How to Choose Auto Insurance in 4 Easy Steps

Did you know that you may be overpaying on your car insurance by hundreds of dollars per year?

Unfortunately, many people are paying too much for their auto insurance simply because they do not want to go through the hassle of having to shop car insurance companies and policies.

Experts recommend shopping around every few years to see if you can save on your auto insurance premiums. So, whether you’re buying car insurance for the first time or just want to save some money, here are the four easy steps to follow when choosing auto insurance.

Step 1:  Gather All the Pertinent Information

Before you even begin looking for auto insurance, you should have all the essential documentation with you to make the process smooth and hassle-free.

You’ll need your basic details – the names, addresses, and dates of birth for every driver covered by the policy, as well as everyone’s driver’s license information.

Then, you’ll also need all the information about the car you are insuring, such as the model, make, VIN, the vehicle’s safety features, as well as the current mileage and the annual mileage driven.

You’ll also need the driving history for all the drivers on the policy (including accidents, tickets, and any traffic violations). Finally, you’ll need the information on your current insurance provider and your policy coverage limits (if you have an existing policy).

Step 2: Establish How Much Coverage You Need

Before you shop around for an insurance policy, you’ll need to determine how much coverage you need.

Although every state requires some form of auto insurance, it is mandatory across all states that you have cover for your liability, but you don’t have to have coverage for the damages to your own vehicle. This is ‘state minimum’ or ‘basic’ coverage.

This basic coverage will not protect you against damage or total loss of your vehicle if you are involved in an accident – you’ll have to pay for your own vehicle’s repairs or replacement out of your own pocket. However, if your car is financed, you may be required to have comprehensive or full coverage insurance. 

When deciding what coverage you need beyond the state minimum, you’ll need to consider two things: Do you own your vehicle? And would you be able to cover the cost of repair or total loss out of pocket?

If you own your vehicle and wouldn’t be able to replace or repair it if you have an accident, you should consider purchasing comprehensive coverage.

Step 3: Shop Around

Once you’ve gathered the pertinent information and determined whether you want a basic or comprehensive auto insurance policy, you should get quotes from at least three different insurance providers.

Choosing the provider with the cheapest quote, however tempting, is rarely a good idea. Before you decide on an insurance company, check their reviews.

If you see a large number of consumer complaints against a specific company, it is probably worth it to pay slightly more for an insurance policy from another company - one that has a good track record with customers.

Step 4: Purchase Your New Policy

When you’ve chosen an insurance provider and an insurance policy that suits your needs, you can usually decide if you want to pay the total annual cost for the year or pay your premiums every month. If you choose to pay up your premiums for the year, you might be eligible for a discount.

If you are buying insurance for a new or used car, ensure that your policy is active before driving your new car off the lot. If you are changing your insurance on an existing vehicle, ensure that you cancel your old policy as soon as the new one comes into effect.     

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