Steps to Buying Car Insurance

When it comes to auto insurance, you want to be adequately covered, but
you don't want to pay any more than you have to.

If you're currently spending thousands for your car insurance because of
a couple of tickets, an accident or a questionable credit rating, shopping
your policy against others may be well worth the effort.

To find the right auto insurance, start by figuring out the amount the
minimum amount of coverage require by law. This varies from state to
state. So take a moment to find out what coverage is required where you
live. Make a list of the different types of coverage and then return for the
next step. (You will find a list of each state's requirements and an
explanation of the various types of insurance in "How much car insurance
do you really need?"

Now that you know what is required, you can decide if you need any
additional coverage. So how much insurance should you buy beyond your
state's minimum?

Experts recommend that if you have a lot of assets you should get
enough liability coverage to protect them. For instance, if you purchase
$50,000 of bodily injury liability coverage but have $100,000 in assets,
attorneys could go after your assets in the event of an accident in which
you're at fault and the other party's medical bills exceed $50,000.

General recommendations for liability limits are $50,000 bodily injury
liability for one person injured in an accident, $100,000 for all people
injured in an accident and $25,000 property damage liability (that is,
50/100/25) given that half of the cars on the road are worth more than
$20,000. Here again, though, let your financial situation be your guide. If
you have no assets, don't buy excess coverage.

Another issue to consider is that the limits of any uninsured and/or
underinsured motorist coverage that you purchase cannot exceed the
limits of your liability coverage. Such coverage, he said, can be valuable,
as it will cover lost income if you're out of work for several months after
being injured in a major accident.

Your driving habits may also be a consideration. If your past is filled with
crumpled fenders, if you have a lead foot or a long commute on a
treacherous winding road, then you should get more comprehensive
coverage. Keep in mind that you don't have to buy collision and
comprehensive coverage. If your vehicle is older, if you have a good
driving record and if there is a low likelihood that it would be totaled in an
accident, but a high likelihood of it being stolen, you could buy
comprehensive but not collision.

Before you begin shopping for insurance you should check the following:
the status of your driving record, your current coverage and the premiums
you are paying.

If you can't remember how long a moving violation has been on your
record, check with your state's DMV. If your record will soon improve, and
the points will finally disappear, wait until that happens before you get
quotes. Nothing drives up the price of insurance like a bad driving record.

Also, you should contact your auto insurance company or pull out a
recent bill. Jot down the amount of coverage you have and what you are
paying for it. Take note of the yearly and monthly cost of your insurance
since many of your quotes will be given both ways. Now you have a figure
in mind to try to beat.

Now that you have made several practical and philosophical decisions, it's
time to start shopping. Bring all your records — your current insurance
policy, your driver license number and your vehicle registration.

While you're researching companies, make notes in a separate computer
file or on a piece of paper divided into categories. This will keep you from
duplicating your efforts.
·        Annual and monthly rates for the different types of coverage —
make sure to keep the coverage limits the same so that you can make
"apples-to-apples" comparisons
·        A number to call for questions you can't get answered online
·        The insurance company's payment policy (When is your payment
due? What happens if you're late in making a payment?)
·        Discounts offered by the insurance company that pertain to you
·        The insurance company's consumer complaint ratio from your
state's department of insurance Web site (more on this later)
·        The insurance company's A.M. Best and Standard & Poor's ratings
(more on this later)

Make sure you explore all options relating to discounts. Insurance
companies give discounts for a good driving record, favorable credit
score, safety equipment (for example, antilock brakes), certain
occupations or professional affiliations and more. For more guidance in
this area, check out "How to save Money on Car Insurance”
You now have most of the information in front of you that you need to
make a decision. However, there is something more to consider. You can
clearly see which company is least expensive, but when you need them to
cover a claim, what kind of job will they do? To put it another way, which is
the most reliable insurance company?

Below, we offer a number of issues to guide your thinking and help you
reach a decision:
1.        Visit your state's department of insurance and check consumer
complaint ratios and basic rate comparison surveys.
2.        Get in touch with local body shops or dealerships you trust and ask
which insurance companies they recommend.
3.        Consider contacting an insurance agent for additional information
about a particular company.
4.        Check out the financial strength ratings for an insurance company
by referring to the A.M. Best and Standard & Poor's ratings.
5.        Look over J.D. Power and Associates' consumer satisfaction
surveys reviewing auto insurance companies.
So, you've done your research, and you've decided on a company.
Before you sign, though, read the policy. In addition to verifying that it
contains the coverage you want, there are two clauses that you should
look for in the contract:
1.        Retain your right to sue. "Find out if you are giving up your right to
go to court and will be forced into arbitration if there is a disagreement
[between you and the insurance company]," one expert advised. "You're
much better off if you don't give up this right…. It makes it easier for
[insurers] to take advantage of you." If you find a clause to this effect, all
isn't necessarily lost. "At least in theory, a contract is a mutual agreement,
so you should be able to cross out that line in the policy," he said. If the
company won't agree to the policy sans clause, then you should probably
take your business elsewhere.
2.        Avoid aftermarket parts requirements. If an insurance company
has written in the policy that "new factory," "like kind and quality" or
"aftermarket parts" may be used for body shop repairs, go to another
company, one expert advised. If you own a relatively new car that you
plan to keep for a while, you will probably be much happier if you spend a
little more time researching companies on the front end rather than try to
fight the company when you have a claim.

After you lock in the insurance policy you want with the company you
select, you now have to cancel coverage with your existing insurance
company. If your state requires you to carry proof of insurance, make
sure you either have it in your wallet or the glove compartment of your car
(some experts discourage this, however — if your car is stolen, the thief
has everything he needs to prove the vehicle is his).