The Smart Way to Buy Car Insurance
When you drive, you expose yourself to a range of risks. If something unexpected happens, and you end up getting into an accident or injuring someone else, car insurance will protect you from some of the financial consequences. But while car insurance is essential for any driver, it’s also one of the most expensive types of insurance to buy. According to Financial Literacy World, the average annual cost of car insurance in the United States is $1,100. Unless you have a very high income, this can be a serious strain on your budget. Fortunately, there are several methods you can use to reduce that cost and make sure that your coverage remains both affordable and effective at the same time. Here are three smart ways to buy car insurance that will keep more money in your pocket and protect you from anything unexpected:
Know the Different Types of Coverage
Before you sign the contract, it’s important to understand exactly what you’re getting with each type of coverage. Here are the main types of cover you’ll find when shopping around for car insurance:
- Liability Coverage: Liability coverage protects you financially if you are found to be at fault in an accident that injures another person or damages another person’s property. The amount you should get will depend on the laws in your state. In California, for example, drivers are required to have at least $15,000 in liability insurance per accident. Liability coverage is mandatory and can’t be declined.
- Medical Payments Coverage: Medical payments coverage is included in some car insurance policies. If you’re at fault in an accident that injures another person, this coverage will help pay that person’s medical bills. In most states, this protection is optional.
- Uninsured or Underinsured Motorist Coverage: If you get into an accident with an uninsured or underinsured driver, UM/UIM coverage will help cover your medical bills, lost wages, and other financial losses. States vary in their requirements for UM/UIM coverage. In California, for example, drivers are required to have at least $5,000 in UM/UIM coverage.
- Comprehensive or Collision Coverage: If your car is stolen or damaged by a natural disaster or weather event, or suffers a mechanical breakdown, comprehensive coverage will help repair your car or replace it with a new vehicle. Collision coverage can help you repair the damages to your own vehicle.
- Other Types of Coverage: Some car insurance policies also include other types of coverage, such as roadside assistance, towing and labor for a car accident, rental car coverage, and even car rental reimbursement.
Car Insurance Negotiate Rates
Car insurance companies make money by estimating the risk of an accident and charging accordingly. If you have a clean driving record and maintain a low risk of being involved in an accident, you can use this fact to negotiate lower rates with carriers. You can also get a discount if you use a modern method of car insurance, such as telematics or ridesharing insurance.
When negotiating rates, remember that the best way to lower your insurance costs is to maintain a low risk of being involved in an accident. That means avoiding risky driving habits, such as driving too fast, driving while distracted, or driving while intoxicated. Making smart decisions behind the wheel will not only help you get lower rates, but will also help keep you safe. If you have a clean driving record, you can also try getting a car insurance policy for a teen driver or for a senior driver to get a lower rate.
Shop Around Using an Agent
If you’re shopping for car insurance, you might be tempted to browse the Internet or make a quick phone call to a few companies to get a quote. While this is generally a good idea, it’s important to remember that insurers generally provide rates based on your individual circumstances. If you’ve had a few accidents, have a high debt-to-income ratio, or live in an area with a high rate of car theft, your rates are going to reflect those factors. If you shop around without giving the companies any information about yourself, they won’t be able to provide you with accurate quotes.
To get the best rates, you’ll need to shop around with an agent. Agents can gather quotes from a wide variety of insurers and find out all of your individual circumstances before providing you with a single rate that is applicable to all of them. This can help you find a policy that is both affordable and effective at the same time.
Lock in a Good Rate With a Fixed-term Contract
If you have a clean driving record and have managed to get a very low rate, it might be tempting to sign up for a long-term contract with that insurer. While a long-term contract might seem like a good idea, it might be better to sign up for a short-term contract. That way, if your rates go up over the course of the contract, you can simply switch to a new insurer and start over with a lower rate.
A fixed-term contract can also help you lock in a good rate. If you’re shopping around and you find a really low rate, you might want to sign up for a short contract with that insurer. This will give you time to shop around again in case rates go up. You can also use a fixed-term contract to help you get extra coverage if you’re financing a new car.
Check Out Co-operating Organizations
If you’re buying car insurance for your teen driver, you might be tempted to go with the cheapest option you can find. While it’s important to keep costs down, it’s also important to get a policy that actually gives your kid the protection they need.
To make sure your teen gets the best coverage possible, you might want to contact an organization called the National Association of Insurance Commissioners (NAIC). This organization gathers information about insurers in each state, including the minimum coverage requirements, complaints, and financial ratings. It also provides tools that let you compare coverage levels and rates from different insurers to find the best policy for your teen.
Drive Safely to Keep Costs Down
Finally, the best way to keep your insurance costs down is to drive safely. This might seem like an obvious point, but it’s also one of the most important. When you’re behind the wheel, you’re responsible for your own safety as well as the safety of everyone else on the road. If you’re driving too fast, distracted, or intoxicated, you’re putting yourself and everyone else at risk. If you’re in an accident, you could end up causing serious injuries or fatalities. You could also end up with higher car insurance rates.
Keeping your eye on the road and slowing down when you need to are the best ways to stay safe on the road and keep your insurance costs low.