Auto Insurance

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Auto Insurance

There are ways to find the best and the least expensive auto policies. You can find auto insurance quotes online, or you can work with an agent in your area.

Your insurance company will be evaluating you as a customer to make sure you are a good deal for them. You should do likewise. A company that is in bad shape could be a nightmare if you need to file a claim. They could offer terrible customer service or endless runarounds; or worse, they could be unable to cover your claim. You can check with the insurance department in your state to learn the health of insurance companies you are interested in. An important thing to check: the number of consumer complaints. If they are high, that could be a sign to move on to another company.

Also, look up companies’ financial ratings. A popular source of ratings is the A.M. Best Co., which you can find online at www.ambest.com.

Get quotes from several companies and compare prices and coverage levels.

Save on your car insurance

Auto insurance premiums can be a big expense for some people but not others. You can improve your chances of getting the best deal by following some basic tips:

• If you don’t yet have a car or you are considering buying a different one, think about the type of car. Sports cars and luxury cars cost more to insure. So do 4-wheel drive vehicles. Vehicles that have higher rates of accidents or that are targeted more by thieves typically have higher insurance rates.
• Considering a hybrid or electric vehicle? You may be eligible for an insurance discount.
• Consider how much you use the car. You might get discounts if you put low mileage on the car; you will be considered less of a risk that way. You might also have access to a pay-as-you-go option at the company.
• Improve your credit score. Insurers may use your score to determine your premium. If your score is bad, pay down excessive debts and collection accounts. Always pay your current financial obligations on time, every time.
• Do what you can to avoid traffic violations and tickets.
• Increase your deductible. Save up money and keep it handy in case you need it. You might be able to increase your deductible a little bit more after that.
• Premiums are less expensive for used cars than for new cars.
• If there is a teenager on your policy, that could raise your rates. But many carriers offer discounts for good grades, safety driving programs, and installed monitoring devices.
• If your car is older, consider reducing or dropping collision and/or comprehensive coverage.
• Research all available discounts. You can get discounts if you install anti-theft devices and if you have airbags and anti-lock brakes.
• Can you consolidate your policy with others under the same company? If so, you may qualify for a discount.

Gap Insurance

You may think your car insurance is enough to protect you. But often, it is not. If you buy a new vehicle, the moment you drive it off the lot, it becomes a used vehicle and its value begins to decline precipitously. In the first year, that drop in value is in the double-digit percentages, as high as 30%. But in the event of a total loss from accident or theft, your auto insurance is designed to pay your lender the auto’s current cash value, not the loan balance. So, if you owe $25,000 on the loan, but the current cash value is only $15,000, you can see the conundrum you would be in if you totaled the car. You’d still owe the lender $10,000.

If you don’t have the money to cover that, that’s where gap insurance steps in. The insurer pays that difference to the lender.

Your insurance company may already offer gap insurance as an add-on, so it pays to at least inquire about it. You can also buy it at the dealership, though it costs more there.