If you drive a car, you need auto insurance. Point. Blank. Period. There is no getting around it. Each state sets requirements for residents to purchase at minimum liability insurance coverage. This ensures that if you damage someone else’s property while operating your vehicle, some of that is at least taken care of.

What you pay for the insurance you chose depends on a myriad of factors. Young drivers and people with extensive driving records pay more for car insurance. The only way to know which insurance company is best for you is to get competing quotes from a handful of auto insurance companies. Each auto insurance company varies in methods used for pricing policies.

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Take a look at these 6 things if you want to purchase affordable and reliable auto insurance:

1. Learn about and pick your ideal coverage:
Before you can get multiple insurance companies to quote you prices for policies you need to figure out what coverages you prefer. Once you’ve identified the coverages you require, only then can you request a quote from each company for a policy containing all of those things.
The major types of auto insurance coverage include liability, personal injury, comprehensive and collision, medical payments and uninsured/underinsured.  You most certainly want to know the minimum amount of insurance coverage the state in which you live requires. Three additional benefits people who have financed a loan to purchase a vehicle tend to enjoy are the loan/lease payoff option, roadside service and the rental car provision for instances when an auto accident occurs and the vehicle has to be repaired.

2. Find the right provider:
There are three major types of insurers—captive agents, brokers and direct providers. A captive agent solely represent one insurance company, a broker sells insurance using multiple insurance companies and a direct provider sells auto insurance straight to consumers online or via customer service representatives.

Working with a captive agent can be a more intimate relationship as he or she will take the time to learn your personal situation, recommend specific policies and will more or less have a vested interest in ensuring your are happy.

Brokers typically don’t have a biased interest in any one particular organization. They more or less pinpoint the best deal for the insurer  on a policy from several different providers.

A person can go online and deal with direct insurance companies. From the online kings like Progressive—to ones known for the local sales agents like Farmers—you save money this way because you are eliminating the middleman and fees associated with this role. Most state insurance websites contain a rate comparison tool which helps to understand average rates county-by-county for insurance coverages.

3. Check the J.D. Power Ratings:
J.D. Power and Associates collects data from individual policyholders nationwide and rates them according to coverage options, price, claims handling, satisfaction with company representatives and the overall experience. J.D. Power also publishes an annual survey of major auto insurers.

4. Ensure your provider is licensed in your state:
Providers must be licensed by the state in which they sell insurance. For added peace of mind, be sure you’re buying coverage from a licensed provider in your area by checking with your state’s department of insurance regulation. This can be done online or via phone.

5. Check financial stability and ratings:
Finding out the financial stability of an insurance company is a good way to measure if it will be able to pay any claims you submit. Cheap car insurance doesn’t mean it has to provide poor coverages. It only makes sense to research each provider’s financial strength ratings on A.M. Best, Standard & Poor’s, Moody’s or Fitch Ratings. This information is certainly most helpful when considering smaller, lesser-known providers. Note that these companies measure the insurance providers ability to pay out claims but the grade indicators have nothing to do with the company’s customer service.

Typically, ratings are as follows:

  • A++ or AAA is the best rating.
  • D is well, not so good.
  • An E rating indicates regulatory action regarding the company’s solvency.
  • F means the company is in liquidation.
  • S means the company is suspended.
  • R  means a company is under regulatory supervision.
  • NR means a company is not rated.

Just like in school, aim for a company rated at the A level and don’t go below a C.

6. Check consumer complaint ratios
Another safeguard against a poor choice in an insurance carrier is to check for consumer complaints. Most department of insurance websites publish consumer complaint ratios for the insurance providers in that state. A consumer complaint ratio tells you how many complaints an insurance company has received for every 1,000 claims its policyholders have filed. You want to choose an insurance carrier with a low consumer complaint ratio in multiple states.

Follow these steps and by the end you’ll know which insurance carrier will be best for you. Once you begin requesting policy quotes know that some carriers will quote directly online while others will call you in person or send a local agent your way. Make sure your reiterate on the phone your required coverages.

That’s it! Hopefully this will make the process of choosing an affordable auto insurance policy fast and simple.

Have you viewed my previous blog posts? Take a look: