Tips for First-Time Auto Insurance Buyers
Buying auto insurance for the first time can be overwhelming because you have so many things to consider. However, you can buy affordable and appropriate coverage if you get the basics right. Below are some useful tips for first-time buyers.
Consider Exceeding State Requirements
The first thing you should know is that the mandatory coverage that each state requires is just a minimum. For example, Mississippi requires:
- Bodily injury or death coverage of $25,000 per person
- Bodily injury or death coverage of $50,000 per accident
- Property damage coverage of $25,000 per accident
A careful look at these figures shows that a single accident can result in damages that easily exceed these figures. Say you cause an accident that damages a luxury car and causes injury to its two passengers. You might need more than the minimum will cover. Evaluate your liability exposure and increase your coverage to an appropriate level.
Consider Endorsements
You should also know that standard auto insurance doesn't cover all risks you might face on the road. Your auto insurance policy will specify the covered or excluded risks. Fortunately, your insurer can add some of the exclusions to your policy for a small fee. The insurance industry refers to additional risks as endorsements or riders. Here are some examples:
- Roadside assistance
- Rental car reimbursement
- Rideshare insurance
Evaluate your risks and buy relevant endorsements.
Compare Quotes
Your risk exposure is the basic factor that determines your auto insurance premiums. Auto insurance companies use dozens of factors to determine your risk exposure. Some companies place more emphasis on some factors than others. Thus, you may end up with different quotes even if you give the same information to different insurance companies.
Ask for quotes from different companies before buying coverage. You can make online comparisons or use an auto insurance agent for the comparison.
Ask for Discounts
In many cases, you may qualify for discounts that reduce your coverage rate. Again, insurance companies have dozens of discounts for different people. However, insurance carriers don't always advertise their discounts. Ask your insurance company or agent for all discounts.
For example, you may qualify for a good student discount if you are in school and have above-average grades. However, you might not even know about the discount if you don't ask.
Bundle Your Policies
Check if you can save some money by bundling your policies. Many auto insurance companies will give you a discount if you buy multiple lines of insurance from them. Say you have life insurance and you want to buy car insurance. You may get a discount if you buy both from the same carrier. Note that bundling doesn't always save money, so you should still compare quotes.
Scrutinize Your Policy Statement
The auto insurance company will give you a policy statement describing your insurance contract's terms and conditions. Read the statement and understand your rights and obligations. For example, the policy statement will detail mistakes that might invalidate your coverage. Knowing such mistakes will help you maintain coverage.
Be Honest
Lastly, be utterly honest with your insurance company. The insurance company will use the information you give them to determine your risk exposure and rates. Such determinations might not be accurate if you don't provide accurate information. In such a case, the insurance company might not be obligated to honor their word as stipulated in the insurance contract.
An insurance agent can help you with further information on auto insurance. The Policy Center Inc. has a wealth of experience in the insurance industry. We can get you auto insurance quotes from almost 20 insurance companies. Contact us for a quote, and you will be on your way to owning affordable coverage.
