Shopping Insurance Rates

Whether you are shopping for a brand new auto insurance policy, or just want to make sure the policy you have is well-priced and comprehensive, there are four main points of comparison when you get a quote. They are:

1. The Amount of Coverage: What are the coverage amounts, and how are they broken down? Do you have the legally required amounts of liability and uninsured motorist coverage? What about collision and comprehensive?
2. The Coverage Period: When does the coverage begin, and when does the policy end? Both dates are crucial when transferring from one insurer to another.
3. The Deductible: How much money must you pay out of pocket if you file a claim? Can you afford this amount? Is it what you agreed to?
4. The Premium: How much must you pay, and how often? Some insurers only allow payments in full (six months at a time), while others allow monthly payments. Is electronic payment a possibility?

This is all very well and good, but what do all those terms mean? Well, each of them comes from one of the three main elements of an insurance policy. Those elements are:

Coverage: This is more than just your state-required liability and uninsured motorist coverage, but also includes collision and comprehensive coverage. It is affected by factors like:

1. Type and age of car, and what features are installed – some cars require special riders or endorsements.
2. Financing (lease or car loan), if any – financed vehicles generally require full coverage (comprehensive and collision) in addition to liability, while leased cars specifically may require "gap" insurance, and paid-for vehicles may not require comprehensive at all, just collision.
3. Whether or not you own a home or business – if you do, boosting your liability coverage may be advantageous.

Deductible: This is the amount you pay out-of-pocket when you file a claim, much like the co-payment in health insurance. Most deductibles range from $500 – $1,000, but a higher deductible can reduce what you pay in premiums, while a lower one means less cash from your wallet, but higher payments every month.

Everything Else: In addition to the coverage and the deductible, there are numerous other factors that can affect your insurance rate. Among them are:

1. Your credit rating – those with poor credit may have to pay higher rates.
2. Your driving record – clean records = cheaper insurance
3. Your age, gender, and marital status (Single male drivers under 25 years old still pay the most for insurance, while Mature drivers (those who are over 55), often qualify for discounts.)
4. Your profession – certain career choices may earn you an insurance discount.
5. Defensive driving classes – generally these earn you a discount for three years.
6. Bundling – having your home and auto insurance with one company often saves you money on both.

As you can see, every quote is made up of different combinations of coverage amounts, deductibles, and other factors, so be sure to compare all the details when you are rate shopping, and – most importantly – trust your instincts: if something doesn’t feel right, ask about it.