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Choosing an auto insurance policy

Benjamin Franklin said "A penny saved is a penny earned." That still holds true. After you figure out how much auto insurance you should buy, compare carriers side by side. Get several car insurance quotes (Never get just one!), Then it's time to choose a policy (or not). Maybe you end up happy with what you are paying now. At least you know you are not overpaying. If you decide to go with a new carrier, read about switching your auto insurance company

Some companies quote annual, some 6 month premium. I always double the 6 month to get an annual $ I can compare.

Agent or Carrier?

There's a debate if you should go directly to an insurance company to buy or go through an agent. I say use both! Have an agent or broker save you time by pulling up multiple rates. And get quotes from multiple direct writers. You really never know who if your area is going to be cheaper for your driving record, car, claims history, etc.

Replacement vs. Actual Cash Value

People with newer cars (1 year or less) want to make sure their policy covers replacement cost not actual cash value. You will pay more, but it can be worth it, esp. if your shiny new car is totaled.

Ratings

Don't waste your time on financial ratings. They are bought by the insurance carriers. And look at how the ratings agencies warned us about real estate. They are historically late to the game, only warning you after the fact. Heck, the US owes trillions, and we are still rated AA!

JD Powers is a rating service worth reviewing. They have done an excellent job surveying which insurance companies pay, service their clients, etc.

Payment

To get a binder or online policy number, you will have to put down a portion of the annual or 6 month policy balance. You should have the option to print the proof of insurance confirmation which will include the policy number and effective date, your name, address and vehicle information and coverage.

Most of the insurance companies take major credit cards for the down payment, eCheck or Electronic Funds Transfer (EFT) from checking and/or savings accounts. Be wary or any company that wants either a check or bank wire. There are fake insurance scams out there!

Once you choose a plan, get you policy in the mail or download, then read it. Pay attention to the limitations and exclusions, or what your car insurance policy does not cover. Chances are you have a good idea what your car is covered for.

Keep shopping!

But the savings do not end once you buy. In California, we have prop 103 that protects us against excessive rate hikes. Prop 103 also mandates a 20% safe driver discount after you've been driving for 3 years without tickets. But only if you stay with the same insurer.

Don't keep the same overpriced insurer for years, until the car insurance company makes some mistake, fights a claim or mistreats you. So keep shopping for auto insurance, esp. if your driving record changes or at renewal. Get multiple auto insurance quotes, to make sure your car insurance rates stay low!

You're #1 loyalty is to yourself. So saving money on car insurance is not something you want to be lazy about. Shopping for car insurance is not like going to the mall, where you would probably overspend. The more rates you get, the more you learn about auto insurance, I will guarantee, the more money you will save.

In review:

• Shop for auto insurance, just because (you want to save)
• Get more than 5 rates
• Know the dif. between replacement cost and actual cash value
• Read your policy (boring)

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

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