Let’s play a word association game. I say, “Your auto insurance company.” What pops into your mind?
If you don’t own or drive a car, you draw a blank. That’s because you don’t have auto insurance.
For the rest of us, thinking of our auto insurance carrier can trigger one of two reactions. If you’ve never filed a claim, you may harbor neutral to negative views. You fork over large wads of cash every year and get nothing in return, right?
But if you’ve ever successfully filed a claim, a grateful smile may accompany gushing praise. You appreciate the fair, prompt service you received under trying circumstances. To top it off, your premiums didn’t go up much at renewal time. What’s not to like?
Love it or hate it?
Auto insurance is one of those rare products where you pay for it and then hope you never need it. If you never need it, you may grow to resent it.
It doesn’t help when your insurer sends jargon-filled memos letting you know of “policy amendments” and “modifications of coverage” that likely leaves you thinking, “This can’t be good.”
Plus, you dislike being bothered by those pesky ads and constant pleas for more of your business. Insurance companies also wants to insure your home, pets and even your upcoming vacation.
Yet dismissing auto insurance as annoying but necessary won’t make you a smarter consumer. A better approach is to know what you’re buying and take every opportunity to save money.
The best way to compare prices
Start by asking your existing insurer, “Do I qualify for any discounts that I’m not currently getting?” For example, if you don’t rack up high annual mileage and have a spotless record, ask about enrolling in a data-tracking program that can lower your premium.
From there, shop around. Even though it can take as long as 10 minutes to get a quote from a particular insurer (online or on the phone), it’s time well spent. You’ll be amazed at the wild price swings for the exact same level of coverage—all from well established, financially sound carriers with good-to-great reputations for customer service and claim settlement.
You can also try online comparison-shopping tools such as carinsurance.com. But calling insurance companies directly is often more revealing. Their representatives may provide more accurate, up-to-date information and walk you through various options (such as how selecting a higher deductible will reduce your premium).
After you get an initial quote, always follow up by asking, “Are there any other discounts that I might qualify for that would lower my premium?”
Many consumers don’t realize that auto insurance is a hotly competitive business. Each company can offer its own discounts, subject to approval from the state insurance commissioner.
Speaking of which, contact your state insurance department—or simply check its website—to confirm that an insurer is licensed to write auto insurance and has a clean regulatory track record in your state. Visit NAIC.org and click on your state for more information.
If you find a better deal out there, don’t celebrate just yet. Before you hop to a new insurer, check to see if your current carrier will price match the lower quote.
In an accident? Report the claim
Once you buy auto insurance, you can rest easy. Until, of course, you need it.
So will your premiums soar if you file a claim?
Maybe (it depends on a complex and ever-changing set of variables, along with what state you live in), but that fear should not prevent you from reporting an accident with another vehicle. Your insurance company requires that you report any accident involving others, as do laws in many states. Trying to keep a secret with a seemingly reasonable stranger can backfire in ways you can’t imagine.
Hey, you: Pay attention on the road!
Another smart move: avoid accidents. Your parents cautioned you to drive defensively—and they’re right. Distracted driving has led to more claims as more people continue to check their phones while on the road.
If that’s not scary enough, consider that journalist Michael Pollan estimates that 20% of all American meals are eaten in a car. Taking your eyes off the road to sweep away a crumb can cost you.
Treat auto insurance as an investment in your future. Going claim-free year after year doesn’t mean you wasted your premium. You paid for peace of mind, so bask in it.
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