Whether you've owned your vehicle for a while, or are thinking about buying a new one, one of the biggest considerations you have is how to go about buying auto insurance. Maybe you're wondering whether you even need it. Before accepting the first offer that comes along, or just calling the insurance company you're most familiar with, there are some things to take into account to ensure you get the best deal, and the best coverage.
1. You need it – If you're still making payments on your car, you must have insurance. Your lienholder will require it to ensure they are able to recoup any losses if your vehicle is damaged, totaled, or stolen. Most states also require a minimum amount of coverage. Even if your car is paid off, and you happen to live in a state that doesn't require any coverage, you need insurance. The small amount of money you would save by not paying a monthly premium is insignificant compared to what you would have to pay if you were at fault in an accident, or worse, if you were injured. Insurance provides protection and peace of mind.
2. Your lienholder may have certain requirements – If you're buying a new car, or thinking about switching insurers on a vehicle you're still paying for, find out if your lienholder has any requirements about the kind of auto insurance you need. Some banks will require a low deductible. They want to make sure you'll be able to pay it if you need to. This is also important to know because a lower deductible will in turn give you a higher premium. Check with your lienholder before calling any insurance companies.
3. There are several factors that determine your rates – Other than the deductible you choose, insurance companies determine your rates based on several factors such as your age, whether you've been in any accidents before, and your credit score, just to name a few. Look over these factors and know where you stand before you start asking for quotes.
4. Requesting a quote can affect your credit score – It's best to do as much research online as you can before you start requesting quotes from insurance companies. The first thing any insurance company will do before calculating a quote is check your credit. A high number of inquiries on your credit report can have a negative effect on your credit score, and it doesn't matter that they're a result of your attempt to comply with your state's auto insurance requirements. Do your homework, narrow your choices down to three or four companies, then request quotes to keep the number of credit inquiries low.
5. You can create your own discounts – Most insurance companies will offer their policyholders discounted rates for having more than one policy with them. This can be accomplished by insuring more than one vehicle, or by adding another type of policy, like homeowners insurance. Many companies will also offer discounts on auto insurance if your vehicle has anti-lock brakes, airbags, or an anti-theft device installed. Keeping all your policies with one company, and making sure your vehicle has as many of these options as possible can help you save money.
