The word shopping brings thoughts of
immediate fervour to most people. But if you combine the word shopping
with insurance as in "shopping for car insurance " it produces the
opposite force. The thought of shopping for automobile insurance makes
the eyes glaze over and the heart rate drop to the pace of a
slumbering couch potato.
Couch potato? Indeed. Doug Heller, a consumer
advocate at The Foundation for Taxpayer & Consumer Rights (a
California-based consumer advocacy group) and a recognized insurance
issues specialist, told us that too often "people purchase car
insurance by calling the number on the silver screen."
But wait, this is important stuff! You want to
be adequately covered if you get in an car crash. And you certainly
don't want to pay more for vehicle insurance than you have to. Maybe
waiting for a solution to be beamed into your television is not the
How can you stay alert while searching through
this cloudy subject? Just remember: There is money to be saved. How
much? Hundreds, even thousands, per year. For example, one of the
authors typed all of his auto insurance information into a comparative
auto insurance service. The quotes (for very basic coverage on two old
vehicle) ranged from $1,006 to $1,807 a difference of $801 a year.
If you're currently dumping thousands into your car insurance
companies coffers because of a couple of tickets, an car crash, or a
questionable credit score, shopping your policy against others may be
well worth the effort.
see it this way you can convert the money you
save into purchasing of something you've lusted after for a long time.
Hold that goal in your mind. Now, let's begin.
Before you can shop for better service, you have
to decide what you need. The first step in finding the right
automobile insurance for you is to figure out the amount of coverage
you need. This varies from state to state. So take a moment to find
out what coverage is required where you live. Make a list of the
different types of coverage and then return for the next step. (You
will find a list of each state's requirements and an explanation of
the various types of auto insurance in "How Much car insurance Do You
Really Need?". Also, check out "Little-Known But Important insurance
Issues" as it has a glossary of basic insurance terminology.)
Now that you know what is required, you can
decide what if anything you need in addition to that. Some people
are quite cautious. They base their lives on worst-case scenarios. car
insurance companies love these people. That's because car insurance
organizations know what your chances are of being killed or maimed,
and how likely it is for your vehicle to be damaged or stolen. The
information the auto insurance firms has collected over previous
decades is crunched into "actuarial tables" that give auto insurance
adjustors a quick look at the probability of just about any
It is important to keep in mind that the basis
of automobile insurance is a difference of opinion between you (the
insured) and them (the insurance organizations). You believe you will,
at some point, probably get in an car crash. The insurance company
believes you probably won't. And the vehicle insurance chance event,
is willing to take your money to prove you wrong.
So how much automobile insurance should you buy
beyond your state's minimums?
"Look at your personal financial situation,"
Dennis Howard, director of the Insurance Consumer Advocate Network
(I-CAN) and former insurance adjuster, advised. "If you have assets to
protect and that is all car insurance is doing get enough
liability coverage." For instance, if you purchase $50,000 of bodily
injury liability coverage but have $100,000 in assets, attorneys could
go after your treasures in the event of an accident in which you're
at-fault and the other party's medical bills exceed $50,000.
D howard noted that his general recommendation
for liability limits are $50,000 bodily injury liability for one
person injured in an car crash, $100,000 for all people injured in an
fortuity and $25,000 property damage liability (that is, 50/100/25)
given that half of the automobiles on the road are worth more than
$20,000. Here again, though, let your financial situation be your
guide. If you have no assets, don't buy excess coverage.
Another issue Dennis mentioned is that the
limits of any uninsured and/or underinsured motorist coverage that you
purchase cannot exceed the limits of your liability coverage. Such
coverage, he said, can be valuable, as it will cover lost income if
you're out of work for several months after being injured in a major
Your driving habits may also be a circumstance.
If your past is filled with crumpled fenders, if you have a lead foot
or a long commute on a treacherous winding road, then you should get
more comprehensive coverage.
"Consumers should also be aware that they don't
have to buy the package [of collision and comprehensive coverage]," D
howard, said. "If your vehicle is older, if you have a good driving
record and if there is a low likelihood that it would be totaled in an
chance event, but a high likelihood of it being stolen, you could buy
comprehensive but not collision." Seems like good advice for all of
the 1989 Toyota Camry owners reading this article this has been the
most stolen vehicle in the nation for several years (it's often stolen
for parts). But we would expect that most of them on the road have
well over 100,000 miles.
At this time, a rather sobering point needs to
be interjected. Just having car insurance doesn't protect you from
absolutely anything bad that might happen. First, the insurance firms
needs to back up the claims that they make in the fine details of the
contract. TV ads show folksy adjustors at the scenes of natural
disasters passing out claims checks like coupons for cocktail wieners
at a supermarket. But, in case you haven't noticed, real life is a bit
different from TV ads. If you have an fortuity, your insurance
organizations will take a close look at your claim before mailing you
a check. And the check may be written for an amount much smaller than
you had hoped. For this reason, you should be intimately familiar with
the terms of your policy and call the organizations with any questions
you might have.
Now that you have made several hard-nosed and
philosophical decisions, it's time to start shopping. Begin by setting
aside about an hour for this task. Bring all your records your
current insurance policy, your driver license number and your vehicle
registration. Drink plenty of coffee. Have a phone at your elbow. And,
of course, power up your computer.
Begin with the online services. If you go to
InsWeb.com or other auto insurance quote sites, you can type in your
information and get a list of comparative price quotes. The form takes
about 15 minutes to complete. If this bores you, just remind yourself
that you are saving money and you can use that money to buy something
nice for yourself. If the entire shopping process takes you two hours
to complete, and you save $800, you're effectively earning $400 an
A few things to keep in mind: (1) When you use
quote web sites, you may not get instant insurance price quotes. Some
companies may contact you later by e-mail, and some that are not
"direct providers" may put you in touch with a local agent, who will
then calculate a quote for you. (A "direct provider," like Geico,
sells an vehicle insurance policy to you directly; other companies
like State Farm sell insurance through local agents. We'll discuss the
pros and cons of each later.) (2) It's not easy to get quotes from
these sites in all states if you live in New Jersey, for instance,
you'll probably find it faster to pick up the phone, since most
insurers currently don't provide online price quotes for this state.
You can also try getting car insurance quotes
from some of the insurance firms listed on the Edmunds.com Web site
Esurance, Geico, or Progressive. The forms will take about 10 minutes
each to complete.
Of course, there are many other insurers that
you can contact online. But remember, while you're researching
organizations, make notes in a separate computer file or on a piece of
paper divided into categories. This will keep you from duplicating
your efforts. When you visit the different online insurance sites you
should take note of several things:
An 800 number to call for questions you
can't get answered online
The car insurance organizations payment
policy (When is your payment due? What happens if you're late in
making a payment?)
Discounts offered by the insurance
organizations that pertain to you
The auto insurance organizations
consumer complaint ratio from your state's department of automobile
insurance Web site (more on this below)
The insurance firms A.M. Best and Standard &
Poor's ratings (more on this below)
Once you have exhausted your online options,
it's time to work the phones. Those companies you haven't been able to
get an online price quote from should be contacted. Surprisingly,
doing this process verbally can actually go faster than the online
counterpart, providing you have all the information regarding your
driver license and vehicle registration close at hand. When you get a
price quote, be sure to confirm the price. Also, ask them to fax or
e-mail the quote to you as a record.
While talking to the auto insurance
organizations telephone salespeople, make sure you explore all options
relating to discounts. automobile insurance organizations give
discounts for a good driving record, favorable credit score, safety
equipment (for example, antilock brakes), certain occupations or
professional affiliations, and more. For more guidance in this area,
check out "How to Save Money on auto insurance."
Always bear in mind that your mission isn't just
to buy the cheapest vehicle insurance out there; it is to buy the
cheapest vehicle insurance and still receive adequate coverage and
service. "You don't want to pay to get a great deal on insurance and
then not get your car repaired after an chance event," Heller noted.
Your final selection should depend on two
a. the reliability of the auto insurance
organizations based on the criteria above;
b. the price of the quote.
We can all find the lowest premium, but it may
not be immediately obvious how to determine whether a organizations is
reliable. When we say "reliable," we're talking about how the insurer
treats you, the customer. Particularly, how will the firms deal with
you when you file a claim? Will you be paid the full amount to which
you are entitled? And will you be paid promptly?