If you’re like most people, you’d rather have a root canal than shop for auto insurance. It doesn’t have to be painful, though. Dispel these myths to make your shopping experience quick, pleasant, and more effective.
- 1. “X Company is cheapest.” There is no one cheapest auto insurance company for everyone. The company with the cute commercials might be great for you if you’re a safe driver, if no one in your household is under thirty, or if you have good credit. The little shop on the corner might be best if you’re under twenty-five. The company your buddy swears by may be a winner if you’ve had some serious tickets or a major accident. But no company will be good for everyone all the time; your individual circumstances impact your rates.
- 2. “Red cars cost you extra.” Not so. However, things you never considered may cost you money. If you rent rather than own your home, you might miss out on valuable discounts. If your credit is less than sterling, you may be paying a lot more than your neighbor with walk-on-water credit. If you’ve had an accident, your rates may go down some after a year has elapsed since the collision. These things aren’t deal breakers-it’s just a matter of finding an insurance carrier that rewards your strong points and minimizes your negatives.
- 3. “I’ve got a young driver in the house. I’m doomed.” Yes, you will pay more money for your auto insurance because, in general, younger drivers cost insurance companies more money. You’re not powerless, though. Many companies offer discounts for driver’s ed or for good students. You can make common-sense rules that will minimize your child’s temptation to drive dangerously: only one friend in the car, no driving after 9 p.m., additional driving permitted when a good student discount applies. Also keep in mind that the insurance company that covered you through your ticket-free 30’s may not be the best when you’re in your 40’s and have a teenaged driver. Shop around.
- 4. “They advertise on T.V. They must be cheapest, right?” Not necessarily. Most insurance carriers that advertise nationally are insurance companies. This is different from the insurance agents who may advertise locally. An insurance company has captive agents, which means that they quote only that carrier. That carrier may be perfect for you-but don’t assume that’s the case. An insurance agent, on the other hand, works with several insurance companies and can shop those companies to get you the best rate. Be sure your agent quotes you an “A+” rated insurance company; you never want to worry about whether your claim will be paid. Don’t be afraid if you’ve never heard of the company. Carriers that work with insurance agents probably don’t advertise nationally-they rely on their agents to do the selling. Don’t be afraid to ask about the company’s rating.
- 5. “Cheaper is better.” Maybe. But price isn’t everything. You can get a great rate if you skimp on liability insurance, but that’s the last place you want to cut. Liability insurance protects you against lawsuits and damages arising from an accident. It’s far better to cut the coverage you carry on damage to your car than to risk legal problems. Buying with a company that isn’t stable mean a cheap initial outlay, but if the company goes bankrupt-and yes, it does happen–you’ll need to buy other coverage and you may lose the money you’ve already paid (always purchase coverage with an “A” or higher-rated company.)
Buying auto insurance may not be much fun, but where else can you save hundreds of dollars by spending an hour making phone calls? Dispel these myths to make the most of your insurance shopping experience.