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How to Buy Auto Insurance

Updated on January 20, 2010

Why do you need Auto insurance

 

The insurance industry is a whopping $1 trillion (yes, the one with 12 zeroes) business which is growing rapidly. There are all kinds of things you can insure, from life and health to home and your vehicle. Car insurance is one of the most popular ones that everyone who owns a car will need and is required in many, if not all, states in the U.S. If you are caught driving without auto insurance, you will face fines and possibly lose your license. Auto insurance business alone is a gigantic $160 billion industry. Insurance provides you peace of mind by assisting you and your loved ones with financial support in case of accidents, emergencies or other disasters. Your car insurance will help you protect the investment you made in your car, pay for medical expenses, pay for damages caused by theft or vandalism, protect you from potential lawsuits, etc. In this hub, I will mainly point out how to buy an auto insurance policy that gives the best value for money.

Car insurance
Car insurance

Why shop around for auto insurance

1. Not all insurance policies are created alike. The insurance prices vary vastly between companies. I personally called about seven different insurance companies when I moved from Washington to Michigan and was surprised to see the huge price difference between auto insurance policies offered by various companies for the same coverage. I finally chose AAA as they were the cheapest and provided me with the coverage I wanted.

2. There is so much competition between the auto insurance companies to get your business you can negotiate to get the best deal possible and save quite a chunk of money. There are many kinds of discounts available that can be applied on top of each other to bring your insurance premium much lower as long as you know what to ask for.

Word of caution:

You should find an insurance company that has a solid reputation for offering car insurance and also have reasonable rates. You don't want to get insurance with a company that gives the cheapest rate because auto insurance fraud is very high and millions are scammed each year with fake car insurance.

Save money on Auto Insurance
Save money on Auto Insurance

Steps to buy auto insurance

1. Determine how much car insurance coverage you need:

If you have auto insurance already, keep your current insurance policy ready to show to the agent. You should also consider changing your coverage like the deductible you have and how it has worked for you so far.

2. Go to nearby insurance agents like StateFarm, All State, AAA, Nationwide and get a quote for the coverage you need. Call them to get a quote, if you are not able to go in person.

3. Get quotes from online services like Progressive, Geico, Insweb, esurance, etc.

4. Do not forget to check auto insurance provided by the club you are a member of. Costco has a great tie-up with Ameriprise, similarly SAMS club, perhaps your bank or your university alumni status gives a discount. Liberty mutual has special discounts for many university alumnis.

5. Compare all the quotes and tabulate the details with least expensive to most expensive.

6. Ask the agents about possible discounts that may be applied to the auto insurance premium. Good driving record, having completed a safe driver course, graduate degree, having anti-theft and anti-lock bracking system in the car, certain professions and memberships may give you multiple discounts. I will write a separate hub on possible discounts that you can get on auto insurance.

7. Choose the right insurance policy that is cheap and gives you the coverage you want and make sure the company that is selling the insurance is reputable.

8. Sign up for the car insurance policy. Do not forget to keep a copy of the insurance proof in your car glovebox or in your wallet. Also, your insurance agent may be nice enough to give you an Atlas map, a local map or a bag with goodies for being a valued customer.

9. Call and cancel the old auto policy with your existing insurance provider.

Auto insurance saves money if car accident happens
Auto insurance saves money if car accident happens

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