The best time to read your auto insurance policy? Before you have an accident.
Having an accident is bad enough. Finding out you don’t have the right kind of auto insurance, or don’t have what you thought you had, can make it much worse.
So read the fine print, even if it makes your eyes glaze over, and question anything that’s either unclear or particularly important to you.
“Ask a lot of questions,” says Jeanne Salvatore, senior vice president of public affairs for the Insurance Information Institute. “Make sure you understand what it is you’re purchasing and how much.”
- Get the most coverage for the lowest premium.
- Find a company that has a reputation for being financially strong.
- Find a consumer-friendly company.
First, shop carriers. Your insurance company will be evaluating what kind of customer you are. But what’s their reputation? What have you heard from friends or relatives who’ve filed a claim? Does your state keep a record of complaints? Check with the office of consumer affairs or office of insurance.
“There’s definitely an awful lot of information online to do some comparison shopping,” says Alessandro Iuppa, president of the National Association of Insurance Commissioners and superintendent of insurance for Maine.
Check with your state insurance department to make sure the company you’re ultimately going to deal with is licensed in the state in which you live. You can reach each of the states through the NAIC Web site at: www.naic.org.
If your state keeps information or logs complaints, what’s the company’s record? One good measure: the complaints ratio, says Iuppa. While it’s not an exact science, if a company has a high complaint ratio, “it’s a red flag,” he says. If you’re considering several companies and one has a high complaint ratio, it might push you toward one of the other choices.
Go with a company that has a good financial rating. Check how A.M. Best Co. ranks your company at www.ambest.com.
Second, look at how your company will rank when it comes to cost and ease of use. Here are three important points to consider when you weigh the time/money equation:
Important points to consider
Premiums: What will you pay for the coverage you want? How does it compare with what other companies are charging? Get at least three quotes.
Discounts: You can get special discounts for all kinds of things to offset your premiums. Does your company offer any discounts? If so, for what? Have the agent run through them with you. Some common ones: clean driving record; more than one car or insurance policy with the carrier; teens with good grades or driver’s ed training; college students who leave the car at home during the school year; driving a car with special safety equipment and older drivers who’ve completed a safe-driving course.
Customer service: How do you get in touch with the company? Is there a local agent? Will they send someone out to see you? Or is it a customer service 800-number and an Internet presence? Either can be fine, but select a system that gives you peace of mind, not simply the lowest premium.
“It seems to be the older we are, the more we like a human being” to help us out, says Tena B. Crews, author of “Fundamentals of Insurance.” While “younger people are a lot more comfortable dealing with an agent by computer,” someone older might want a person in an office to sit down and talk through things, she says.
Lowest not always the best
Third, recognize that the lowest premium doesn’t make the best deal. “One of the main things is that people always look at the cost,” says Crews. “Don’t just get the minimum because your state requires it. Get the liability insurance that’s most appropriate to your situation.”
Depending on where you live and the contract you signed when you purchased or leased your car, you may be required to carry various minimums on certain types of auto coverage.
You also want to look at how the insurance fits your financial situation. “Be sure you’re buying the coverage you need,” says Iuppa. “If you’re driving a 10-year-old car, think long and hard before you add comprehensive or collision. At some point, the return is extinguished. Even if it’s totaled, you may find yourself getting a couple of hundred dollars.”
If that sounds like your car, it might make sense to start banking money for a new car fund, just in case.