The purpose of buying insurance is to transfer the risk from us (the consumer) to the insuring agency. In case of auto insurance, it is quite tricky, as it’s a balance between being adequately covered vs. paying a high premium. Here are 12 steps to follow to buy auto insurance:
An auto policy contains several terms critical to your coverage and monthly premium. As a consumer, it is critical to understand those. A synopsis of all the terms can befound at Mayanah Financial Coaching’s Blog.
For a given coverage, insurance premiums can vary wildly depending on the following 13 factors:
Based on the above list, some factors like age and location cannot be controlled. However, factors like claims, credit history and coverages can be controlled. Following are the steps to obtain favorable rates
Your driving record defines how safe you are as a driver which affects the rates widely. It is important that your driving records are clean. If you have a major violation like DUI, then your rates can go up 100% or more in some cases. You can also consider the possibility of defensive driving courses to clean up driving records. You can retrieve your driving records at the Department of Public Safety.
Required Coverage has two parts – one is mandated by the state and varies from state to state. The second part is based on personal preferences. If coverage is not sufficient in an accident, it can cost you an arm and a leg, and you may also face legal charges if your liability portion is not sufficient to cover the expenses. On the other hand, the best coverage will lead to a huge premium every month. To resolve this challenge, we recommend third party reviews by experts like Mayanah Coaches.
Identify current coverage and premiums as this will be your baseline in shopping for new rates. If you do not have the policy handy, call the provider and request them to mail you a copy.
Since providers obtain statistical information from different sources, we recommend obtaining quotes from at least 3 providers. If the quotes are not comparable, we recommend to increase the number of quotes. Usually direct sellers like Geico may be cheaper than agency based providers like State Farm or Allstate
Since most insurance policies do not use the same coverage criteria, it is important to look at them carefully. We recommend normalizing the data to compare the rates. Mayanah coaches can help you with that.
Available discounts vary from provider to provider. However, the best way to identify those is to call them and ask for the applicable discounts. The Department ofMotor Vehicles can provide you a list of common discounts in your area.
Remember that the purpose of taking an insurance is to have adequate coverage in cases of undesirable events/circumstances. Hence, availability, responsiveness and credibility of insurance companies is very critical. The National Association of Insurance Commissioners can provide details on insurance providers and their records.
Once your new policy is confirmed and in effect, cancel the old one. You need to make sure the coverage of the new one starts before the expiry of the current policy. It is better to pay a day or two of coverage to both providers instead of having a gap in coverage.
Many states require drivers to retain a copy of their insurance in their automobiles. It is also important to send a copy to your lienholder, if you have a lien on your automobile.
We recognize that this process is challenging and we are here to help you at any stage. Please contact Mayanah Coaches at (281) 435-1888 or visit us at www.themayanah.com