Mistake-Proof Auto Insurance Shopping: Finding the Best Coverage at the Best Price

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You just bought a car, and you’re excited about the great times that you are about to have. Whether you’ve bought an old used VW bus from the 70s or a fun-to-drive Mustang, you’ll need insurance before you are allowed on the road. Getting it isn’t as simple as it may seem at first. While the law requires that you invest in coverage, it offers only a little guidance about the level to aim for. You could buy a $100,000 sports car and get so little insurance as to have trouble replacing a broken windshield, or you could go over the top.

Such mistakes usually happen when you don’t put some homework into your insurance purchase. Insurance policies are meant to let you drive with confidence, but are capable of doing it only if they are correctly done. It’s no different than most other purchases — it’s up to you to find the right product for your needs.

Check the absolute basics first

The law has something to say about how much insurance you should buy at a minimum. You need to check your state’s rules for minimum auto insurance levels for liability, injury and medical coverage. According to GMT Auto Sales of Florissant, MO, in each state, it’s a different department in charge of publishing auto insurance information. In Missouri, for example, it’s the Missouri Department of Revenue.  In New York, it’s the New York DMV. You’ll need to head to the right government portal for the most up-to-date information. The information that you learn is important because you shouldn’t go below the number recommended or too far above it.

If you are leasing your car, you’ll need to take into account the leaser’s rules about how much insurance to buy, as well. Lenders will often ask that lessees get comprehensive coverage in addition to standard coverage even if the state doesn’t require it.

Once you find both the state’s figures and the leaser’s figures, you want to buy a little bit more insurance than either one of them requires. If you don’t, in some events, you may find that the cost of a lawsuit resulting from an accident or other demand for damages exceeds what your policy will pay.

Think about those add-ons, but don’t buy too many

It can be easy to get drawn into buying all kinds of attractive add-ons to your basic insurance package. Emergency roadside assistance (unless you have it from another source like AAA), loaners when your car is in for repairs, collision and comprehensive coverage for major damage and gap coverage (in the event that an accident leaves your car in a state where it is worth less than you owe on the car loan), are all very good ideas in certain cases.

Other add-ons aren’t so smart. The vanishing deductible add-on is one example. It gets you on a system where being a safe driver with a clean driving record allows you to reduce the deductible on your policy. While it may sound like a good idea, insurers cap how far they will lower your deductible. You can’t cut it by more than $500. Often, though, you will pay more than $500 on the deductible.

The rental car insurance add-on is a bad idea because your credit card usually covers it, and personal injury protection is only useful if you or your passengers do not have health insurance (it is mandatory in more than a dozen states, though).

Picking a high deductible

Choosing the deductible level to go with — the sum that you must pay towards work on your car before the insurance company will step in — is an important step in any insurance purchase decision. A high deductible level can be great in the short term, but be a bad idea in the longer run. The higher the deductible you choose, the lower the premium you need to pay. If there is an accident, though, you could be out big bucks before you get the insurance company to pick up the tab. As far as possible, it’s a good thing to go with a no-deductible or low-deductible policy. It’s a move that will save you a lot of money at some point, even if that day isn’t today.

Not taking advantage of obvious avenues for discount

When you fill out the form for coverage for your car, it’s easy to neglect to pay attention to a number of easy ways to save some money. You may not see the little checkbox that asks you if you would like to save money by paying for the entire year up front, rather than paying each month. It’s also easy to miss the discounts offered for insuring multiple cars with the same insurer, for bringing a number of different insurance needs to the same company (home, car, boat and so on), for being a good driver or a low-mileage driver. Shopping around is an excellent way to save money, but so is looking for discounts.

Bringing a little preparation and awareness to your insurance purchase can go a long way.

Andrew Morton is an insurance broker. He likes to provide insights based on his experiences by writing on the web. Look for his posts on many insurance and finance sites.