Shopping for car insurance can be intimidating and overwhelming. For this reason, a huge chunk of the population ‘doesn’t shop around for car insurance as often as they should.’ (Source). As a car dealership and service center, we at Moon Automotive Group strongly encourage all of our customers to make sure that they are getting the absolute best insurance they can for the very best price. Much like buying a car, there are only two ways to ensure that you get the best possible deal. Those are entrusting your decision to someone who finds a good deal or you, or you do your own shopping around. We are not an insurance broker, so we cannot help you with this but we can tell you that, either way, it is important to know what you need and what options you have.
Like we said, this can be very intimidating. So to help you out, we put together this guide – borrowing from many of the experts in the financial and insurance fields. Everyone agrees that the best time to switch insurances is when you find a lower rate that gives you the same coverage you have, a comparable rate with better coverage, or you want to drop some of your coverages and find a better deal through another insurance company than what your current one offers.
Car Insurance: When Cheapest Isn’t Best
It isn’t too hard to find advertisements for cheap car insurance. However, sometimes those cheap rates might as well be false advertising – because they are literally a bait and switch. The companies do in fact offer insurance at the advertised extremely low rate, however, in many cases the coverage isn’t even the legally required state minimum. In Pennsylvania (PA) this means that every driver and on-the-road vehicle combination must have insurance with no lapse in coverage for 31 days or greater. There are big fines and serious consequences that can come without maintaining adequate insurance. Minimum insurance coverage in PA, according to the State Government, includes:
- Medical benefits at a minimum of $5,000
- Bodily Injury minimum of $15,000 (for one person)/30,000 (for the whole accident)
- Property Damage Liability minimum of $5,000
- Limited (cannot bring a claim for pain and suffering) or Full Tort (you retain your rights to sue a negligible party)
In other cases, the minimum legal coverage is legitimate, but with your age, car, driving history and credit score it may move you into a different cost category.
There are also many options in PA to add to your insurance that will bring up your premium, but which will assure that you are covered in the event of an accident. Forbes calls those who have not been in an accident ‘lucky.’ In fact the odds of having an accident in your driving life time are really high. New drivers and even experienced drivers, in ‘new’ cars are the most likely to end up needing insurance, but on average, they report, a person will statistically have an accident every 17.9 years. Insurance is basically paying for that inevitable series of lifetime accidents on the “installment plan.’ And if your accident is more than just an injury-free fender bender, you will wish you had paid a little bit more each month to cover yourself more robustly. However, at that juncture, it is too late to wish that you hadn’t gone with the cheapest insurance.
There are the normal factors that define what insurance costs, and then there are further discounts that you can apply to your quoted rate to bring it down. Most people are not at all aware of what they can do to bring down the cost of their insurance, and to even more people, figuring out how insurance is priced in the first place is a total mystery.
Shockingly, a large number of people do not even know that any discounts exist. We have uncovered some really extraordinary ones. BankRate reports that those most common rate discounts are as follows:
- Anti-theft device installed
- Anti-lock brakes
- Passive restraints
- Green vehicle
- Safe driver
- Defensive driver
- Low mileage
- Non-military affinity group
- Full payment instead of monthly
- Automatic payments
- Early signing
- Certain students
CBS, on the other hand, reports out the least known but worth knowing about, discounts.
“I can only assume people aren’t taking advantage of them because they don’t know about it,” Laura Adams, senior analyst at insuranceQuotes.com, told CBS MoneyWatch. “There is an education gap there. They don’t know these discounts exist, and you have to be proactive to ask for them.” Consumers should call their insurers every year to check if they qualify for certain discounts, given that life events, such as getting married or moving closer to a workplace, can change one’s rate… Only 13 percent of Americans have told their insurance carriers that they got married, something that can save on insurance. A married 25-year-old pays 7 percent less than a single American, for instance… Certain professions also qualify for lower rates, such as serving in the armed forces or working as a teacher, nurse or accountant.
Whether you are sticking with your insurance company or shopping for a new policy, you really need to ask the company what discounts they offer. Generally, short of a couple very common discounts, they are unlikely to prompt you with questions that have them selling you anything but the high market rate. After all, they are in it to make money.
Factors that Define How Much You Pay
Aside from discounts on rates, there are some basic factors that guide most insurance companies in setting your rates. These are not generally a mystery, but they can feel that way. To get a handle on them, and which you can influence, go through any one of the dozens of online quote processes available. Our favorites are the ones that act as an online broker, such as Consumers Advocate. These sites will ask a series of questions prior to generating a quote or a list of quotes. Those questions could include the following:
- Zip Code
- Car Make and Model
- Miles each day
- Credit Score
The insurance companies have formulas that take the answers to these types of questions into account to generate quotes. You want those quotes in writing before you have the discount conversation. A little bit of research will go a long way in savings – helping you spend less time worried about switching insurances and more time understanding exactly where your money is being spent.