Tips for First Time Auto Insurance Buyers

July 31, 2022

Going out on your own and getting your own auto insurance might seem exciting. It’s a big step in life. You are off your mom and dad’s policy – it’s time for your own. However, you must know, now you are a bigger risk. You don’t get the discounts mom and dad received. Before you jump on any policy given to you, consider the following tips.

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Figure Out What You Need for Auto Insurance

Before you start calling insurance agents, you should figure out how much auto insurance you really need. First, look up your state’s requirements. Each state has a minimum amount of insurance they require. At the very least, you’ll need liability insurance. But, read up on your state to see what else you may need.

You should know that liability insurance comes in two forms:

  • Bodily injury coverage – This helps you pay for any damages you cause to someone else with your vehicle
  • Property damage coverage – This helps you pay for any damages you cause to property with your vehicle

Once you know the state minimum, consider what you need to cover. Do you have assets that someone could come after if you cause damage to their property with your car? If so, you’ll want to amp up your liability coverage. Do you owe money on your car? In other words, you do you have an auto loan? If so, you’ll want to have not only liability insurance, but you’ll also want comprehensive and collision auto insurance. This helps protect your investment if you were to total your car in a crash. Without the car to sell and insurance to cover you, the bank would come knocking on your door for their money.

Basically, you want to figure out the bare minimum and then amp it up based on your situation in life. The more you have to protect, the more insurance you will need.

Start Shopping as a First-Time Buyer

Once you know the basic coverage you’ll need, it’s time to start shopping. You’ll want to get several quotes from different agents. Make sure you compare apples-to-apples, though. If one agent gives you a quote for $100,000 liability insurance and another gives you a quote for $200,000 liability insurance, it won’t make sense to compare them. Specifically ask for quotes for the coverage that you want so that you know what you are comparing.

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When you receive quotes, look at the following:

  • What are the features of the plan? Are the coverages the same?
  • What is the deductible?
  • What is the insurance company’s insurance rating?
  • Does it include features you do not need?
  • Does it not include features you do need?

A few optional types of coverage you may hear about include:

  • Uninsured or underinsured motorist – This protects you in the case of an accident where you are not at fault, but the defendant does not have enough coverage to pay for the accident
  • Medical payments coverage – This helps cover the cost of medical payments as a result of the accident
  • Rental reimbursement – This helps you pay for a rental car in the event that your car has to stay in the shop for repairs
  • Roadside assistance – This provides coverage for services you need in an emergency situation on the side of the road

These types of coverage are not mandatory, but can be helpful.

You should also understand the deductible. This is the money you will pay out of pocket before the auto insurance company covers anything. The higher the deductible you take, the lower your premium. While this lowers your monthly bill, it puts you at higher risk if you are in an accident. You’ll owe more money to pay for the accident than you would if you had a lower deductible.

For example, let’s say you were in an accident and the damages to your car cost $3,000. If you have a $1,000 deductible, you would have to pay the first $1,000 in repairs. The insurance company would then pay the remaining $2,000.

If you had a $500 deductible, you would pay the first $500 and your insurance company would pay the remaining $2,500.

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Read the Fine Print

Before you sign on the dotted line, consider the following. Each insurance policy has fine print. The last thing you want is to find out a particular instance is not covered after an incident occurs. The things you want to pay the most attention to include:

  • The car that is covered
  • Any exclusions
  • The date the coverage is effective
  • The premium and how often you pay it
  • How often the premium may change

It’s best if you walk to your insurance agent in person as well. This way he can explain the policy and any nuances you must know before you decide on it.

Understand Your Premium

Your car insurance premium is based on a variety of things including your driving record, credit score, and the type of coverage you need. It also depends on the type of car you drive. If you have a sports car, you are going to pay a lot more for insurance than someone that drives a mini-van, for example.

Because insurance rates vary greatly, it helps to shop around to find the best deal.

It’s best if you secure quotes from at least 3 auto insurance agents. This way you can determine the norm for the area and the best rates for your situation. It’s also wise to shop your car insurance every few years. As you become an established client, your rates may start to increase. Shopping around can help you find lower premiums for the same type of coverage that you carry now. If you have other types of insurance, you should try to keep them with the same agent, though. This often gets you the multi-line discount, saving you even more on your car insurance.

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