5 Tips That You Need to Keep in Mind When Buying Car Insurance

Car Insurance

Are you a first time car buyer? Do you have an uninsured car that you want to insure? It’s better to have a checklist with you when you shop for car insurance. Don’t have one? Don’’t even the basics of auto insurance? No worries, because I am here to help you.

Homework is essential

When it comes to buying auto insurance, the importance of homework cannot be overstated. You must be fully familiar with most (if not all) of the terms relevant to buying auto insurance. For example, do you know what claim settlement means? What do you think claim adjusters do? What is the difference between a normal plan and an assigned risk plan?

By the end of your homework, you’d be acquainted with the relevant terms and know exactly what these terms mean. The benefit of this is that you can’t be fooled or taken advantage of by an unscrupulous insurance agent that is desperate to sell policies for he has a monthly quota to meet.

Know damage types

As a prospective car insurance buyer, you must learn to separate one damage category from another. Do you know that in the event of a car accident, the first thing insurance companies do is quantify the damage? To do so, they use the write-0ff calculator. What is the write-off calculator? You ask.

A write-off calculator is comprised of multiple damage categories. A damage of Category A or Category B means the car is damaged beyond repair. If the accident was so severe that the car is now completely totaled, the owner of the car could expect to be compensated. Category D, Category N and Category S imply that the car can be repaired. Written-off cars have buyers, however, these cars cost less than first-hand cars, which makes a difference in the insurance payout.

Read the documents carefully

It might sound cliche but you need to read the documents very carefully. Policy documents are normally quite long and people often skip some important elements or skim through the entire length of the document. Don’t do that. Read the document thoroughly no matter how much time it takes.

When reading the documents, look for the following points.

  • What are the limits of the coverage?
  • What is the expiry date of the coverage?
  • Are there hidden costs involved?
  • Is the claim filing procedure linear or complicated?

If the document doesn’t specify anything about add-ons such as engine protector, coverage for personal accident, etc, you need to ask the agent to clarify the provider’s policy on them. Some policies don’t offer coverage when the damage is not caused by accident or head-on collision.

Credit history is important

Both your credit score and history are important. The two are basically connected. If you don’t pay your bills on time and have pending debt on your card, your credit history and credit score will both suffer. The problem is that credit score can be improved but not credit history. All the records of late bill payments will remain documented. Car insurance companies check both; your current credit score alone won’t impress them.

What are your options if you don’t have a shining credit history? You can wait while working on your score. If the insurer finds that you have been handling your card well for the last one or two years, they’d be impressed. If you can’t wait to get your car insured then be ready to pay higher premiums. This is especially true if you live in a state that allows insurance companies to use the credit-based insurance score system. California, Georgia, Oregon, Massachusetts, etc are among the states that don’t allow this system.

Outside factors matter

People tend to think that external factors such as the climate and geography of the place in which they live are not important. Nothing can be further from the truth. These are important details for home and auto insurers. The condition of the roads in your city and the municipality area are crucial for you to get coverage with a favorable premium rate. If the roads have potholes and are not ideal for driving, insurance providers will ask you for a higher premium.

Don’t hide anything. Tell your insurance agent the truth and ask him to provide you with data regarding how external conditions have determined the premium amount in the past.

These five tips aside

Following the five tips listed above can help you find the right policy for your car. But here’s the deal, don’t follow them blindly. Never, ever trust your agent. They almost always have ulterior intentions. Ask him every question that pops into your head. And be wary and use intelligence.

Final words

The car insurance market has reached a point of saturation a long time ago, which has made it a bit difficult for car owners to get desirable premium rate. However, it’s always worth a try, especially if you are following the tips shared here.