4 Factors to Consider When Picking the Best Auto Insurance

Auto insurance commercials tend to show you how friendly, responsive, and cooperative they are while they’re wooing you, but don’t be fooled. These ads do little to help you decide which auto insurance policy you should depend on to protect your family–they aren’t telling you the whole truth.

To know which one is best, you need to compare the four most important parts of an auto insurance policy. Understanding these factors will help you match your needs, options and budget with the right insurance policy. Factors to consider include:

  1. Insurance carrier: The company that writes the check when you file a claim is your Insurance carrier. Many carriers specialize in car insurance only. For the best deals, look for a carrier that insures home, life, rental, and more options. By bundling insurance with one carrier, you can reap some deep discounts. Consult the insurance regulatory agency in your state to find information on licensing, complaints, and violations leveled against an insurer. You can also check out sites like The Simple Dollar to get a feel for a company’s reputation and customer service philosophy.
  2. Coverage Type: Determine coverage types based on your vehicle ownership status, type of car, and state regulations. Coverage types fall into the following categories:
    • Liability: The lowest level of coverage, affords coverage for what you damage, but not for you or for your property. If you hit a telephone pole, it’ll pay to fix the pole, but not your car or any injuries you sustained.
    • Collision: As its name implies, it covers damages related to a collision. It covers you whether it was your fault or not. If you hit a telephone pole, it’ll pay to fix the pole and the damages to your car, but not for your injuries.
    • Comprehensive: You guessed it: comprehensive pays for everything! A requirement for a financed vehicle, comprehensive covers damage to your car, damage you inflict, medical bills for injuries, even loss, theft, or vandalism. If you hit a telephone pole, it’ll pay to fix the pole, your car, your medical bills, and possibly lost work.
  3. Deductible Amount: The deductible is how much you have to pay before the car insurance kicks in. Most states have minimum limits set, so start there. As you might imagine, the lower the deductible, the higher the payments and vice versa. This part of selecting car insurance isn’t so much a function of your insurance company, it’s more about your own risk tolerance. Choosing a low deductible may put a hole in your budget, but should disaster strike, you’ll have to come up with less out of pocket. On the other hand, a high deductible might be budget-friendly, but leave you scrambling to come up with thousands of dollars in the midst of a crisis.
  4. Premium payments: The term and amount you pay for insurance is your premium payment. Insurers offer an array of flexible payment options, some that even save you money. For example, paying for a 12-month car insurance policy in full can save you hundreds over paying for it via monthly payments. You can also snag a discount with some companies for paying electronically. The car insurance premium calculation takes into considerations multiple factors: driving record, type of car, level of usage, age of driver, some insurers even include credit scores in calculating your premium.

Once you’ve determined what you’re looking for in regards to your auto insurance, lay out your options into a spreadsheet or a chart to help you make apples-to-apples comparisons. Compare everything, from the cost of a given policy to the protections and coverage provided. When you do your research ahead of time, you’re certain to save cash in the long run.