Shopping for car insurance isn’t easy. What are some factors to consider when choosing the best car insurance? This article will help you make a smart decision.
There is no doubt that the scope of coverage is the most essential part of a good car insurance policy. You should go over the terms and conditions of a policy and understand how each coverage works, meaning what it includes and excludes. There are basically two types of car insurance coverage – third party coverage and first party coverage.
Third party coverage also known as liability coverage is mandatory by Motor Vehicles Act. This means if you are found liable for someone else’s injuries or property damage, your insurance should cover it.
First party coverage cover any injuries or property damage on your side. Say someone in your car is injured, no matter you are at fault or not, your Personal Injury Protection coverage should be able to cover the hospital bills for that person. First party coverage also includes collision and comprehensive coverage. These are not mandatory for all vehicles. But if you finance or lease a new car, you will be required to carry these coverage before taking the car home. Comprehensive and collision coverage pay for the damages on your own vehicle.
Some insurance companies also provide additional coverage, such as emergency roadside assistance and rental reimbursement. You will need to choose what’s really best for you.
2. Insurance Company
Next is to choose the right insurance company. We buy insurance because we want to have a piece of mind when things go wrong. It’s expected that the insurance company will be there for us and provide assistance in settling claims. Questions you may want to look into include how good a company is known to handle a claim? For this, you need to check the claim settlement ratio of the company, which is the ratio of the settled claims in total numbers of claims made. It is also important to check the average claim settlement time of the company. You don’t want to wait for a few months before getting compensated. How available and convenient to contact the representatives? You want easy access to the resource and help whenever you need.
3. Customer service
With many advanced technologies replacing human workforce, car insurance companies should still have a good customer service team. Nobody wants to talk to a robot after an accident and seek guidance what to do next. So when doing the research, make some effort and search about the customer service rating and experience other people get. JD Power rating is a trustworthy source for this. Choose the company that have a good customer service score. It will be helpful not only at the time of purchasing but also during the claims settlement.
Price is a tricky one. You shouldn’t just look at the price of the entire policy. What’s more important is the cost to feature ratio. In other words, do an apple-to-apple comparison. You may get a quote from A company with $500 deductible and cost you $1000/year, and get another quote from B company with $1000 deductible and cost you $950. Which one do you choose? From the cost to feature point of view, I will choose company A, because it’s only $50 more but offers me lower deductible, which is an incredible value.
Also be careful about an extremely cheap policy as it may not have the essential features you may need. So before making any purchase decision, make a list of all the features you require and then narrow down the policies that cover it, and then compare the price and other services and features.
Keep in mind that many insurance companies throw in extra features that you will never use in order to get more premium dollars from you. Their main stream of profitability comes from the investment from your premium money. They will find every way to increase your premium, even by a few cents. For example, they may talk you into buying a rental reimbursement coverage when you have a second car, or opting in for Emergency Roadside assistance when you have the same service provided by your dealership. I’ve even heard people say the sales representative will make the default deductible to $500 and only mention it when doing a quick overview of all coverages at the end of the call. You should know what you really need and not blindly follow their lead.
Practically, you can also ask around and let people tell you what’s their experience with their insurance companies. Post a post on Facebook and ask people to share their insight. You can also consult a local independent agent and ask their opinion on who has the best value for the money.