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  • Writer's picturejoseph retcho

Choosing the Right Car Insurance

car between hands

Because there are so many companies selling car insurance, narrowing down the options to find the best policy for you and your family can be difficult. With each carrier claiming to provide the best value, it's easy to become perplexed. At first glance, all of the policies may appear to be the same, but there are important differences to consider. Your goal should be to find one that provides all of the benefits you require at a reasonable price.

To find the best auto insurance policy for you, follow these four steps:

Determine the Level of Protection

The cheapest policy may not be what you want. Low-cost plans may not include collision coverage, which pays to repair your own car after an accident. They may not provide comprehensive coverage, which covers damage to your vehicle that is not the result of an auto accident, such as natural disasters, theft, or vandalism.

Except for New Hampshire, all states require property and bodily injury liability coverage, according to the non-profit Insurance Information Institute. A policy that only provides the bare minimum of liability protection required by law may save you money, but it is unlikely to cover legal claims resulting from serious accidents involving property damage or injuries.

Keep in mind that not everyone's auto insurance requirements are the same. For instance, if you are leasing a car, you may require gap insurance. If your car is totaled, gap insurance will pay the difference between the vehicle's actual cash value and the remaining balance on your lease.

Examine the Financial Health of Automobile Insurers

Everyone wants a good deal on auto insurance, but low rates are useless if the company you choose is unable to pay its claims. According to Investopedia, online reports from independent rating companies such as A.M. Best, Fitch, Moody's, and Standard & Poor's can help you determine your insurer's financial health.

Each rating agency has its own set of criteria for assessing car insurance companies and their financial health.

Evaluate Several Auto Insurance Quotes

You can shop for auto insurance online, over the phone, or in person with insurance agents. Getting multiple quotes are critical because prices for the same level of coverage vary greatly. This occurs because insurance prices are determined by risk. Each carrier has its own formula for calculating the policyholder's likelihood of filing a claim.

Some insurers use insurance scores heavily to determine how likely policyholders are to file claims. Other companies may place more emphasis on the type of vehicle you drive and the cost of repairing it after an accident.

Where you live can also influence how much you pay for car insurance. Your insurance costs may be higher if your ZIP code has a higher-than-average rate of car accidents.

Inquire About Discounts

According to MarketWatch, many insurance companies offer discounts. If you have a teen on your auto policy who gets good grades, he or she may be eligible for a lower insurance rate. Some insurance companies provide discounts to drivers who meet annual low-mileage thresholds or enroll in driver education classes. If your vehicle has an anti-theft device, you may also be eligible for a discount.

Make a point of requesting a list of all available discounts. It could make a significant difference in the cost of your insurance policy.

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