Buying Cheap Car Insurance

When it comes to auto insurance, many drivers throughout the nation believe that the cheaper the policy, the better.

Saving money on a financial product like auto insurance, that you never truly want to use, is a priority, but you must also take the time to build a comprehensive policy that will provide you with protection when you get behind the wheel.

Because the coverage options and limits that you choose are so very important, all consumers must be careful when buying cheap car insurance.

Focusing on the reputability of the insurer, the coverage options you want to carry, and limits will help you build an affordable policy that provides more than minimal protection.

By following this step-by-step consumer shopping guide to buying insurance, you can have the confidence you need to purchase the best policy at the best price. Also enter your ZIP code into the FREE tool at the top of this page to start comparing quotes today!

Step One: Verifying Financial Security

When you are shopping for a consumer good, like a new television or a new washer, you may compare the price of the goods at several different stores to decide where to buy the model you are interested in.

When you are shopping for a financial product like insurance, you cannot rely on strictly price to make a purchasing decision. A financial product is a promise, and this means it is only as good as the company that offers it.

Failing to research a company's financial stability before comparing prices can land you in hot water later down the line when you need to file a claim. Competitive pricing may be important in the insurance industry, but pricing premiums too low can actually be a liability that affects policyholders.

To understand why financial stability is such an important factor, you must understand how insurance companies pay for claims.

Insurance premiums that are collected are based on risk. These premiums are deposited together into a pool that is dedicated to paying for claims that are projected by insurance actuaries. You are technically paying premiums based on your probability of having a loss, but the company understands that this may not happen. If you file a claim, the money to pay that claim will come from the pool or reserve bank.

If you do not file a claim, the money sits there and may go to pay for claims filed by someone who may have been deemed a less "risky" policyholder. While projections are never 100% accurate, the more accurate they are the more financially stable the company is. This means that the insurer will be able to cover claims when they are filed.

If you fail to verify that an insurer is financially stable before you bind your insurance, you may be paying premiums to a company that has not properly underwritten applications.

When this happens, the company can go bankrupt quickly or use practices to deny claims that would be covered by companies who collect the proper premiums. Luckily, financial ratings of insurance companies are public record.

All licensed insurance companies have a financial strength ranking through consumer sites like AM Best, where companies are evaluated based on financial records each year and assigned a letter grade. Check the score of any company that you are considering before you entrust that company to provide you with cheap car insurance.

Step Two: Review Your Current Coverage and Driving Record

You should always have the most up-to-date information when you are shopping for auto insurance. Failing to provide the right information can raise your quoted premiums once your policy has been underwritten and then issued.

If you are price shopping to save money, the last thing you want to do is switch to a company that will ultimately charge you more for coverage than what you were originally paying. Here are some details you will need to know to ensure your quotes are as accurate as possible:

• Current declarations page with coverage options and limits listed
• Names of all drivers with Driver License numbers, date licensed, and date of birth
• Previous license numbers when you were licensed in another state
• Vehicle Identification Number, odometer reading, annual mileage
• Dates of violations or accidents for each driver
• Letter of experience detailing your insurance history

Step Three: Updating Your Current Insurance Policy

It is very helpful to know how much you will be paying with your current insurer when you make specific policy changes. If you do not have enough coverage, or you have decided that you would like to raise your deductibles to save money, make sure you make these changes to your current policy before switching.

Every company has their own rating filings that are approved through the state's Department of Insurance. Each state also has their own coverage requirements, which can be verified by visiting your state's link on the National Association of Insurance Commissioners official website.

Once you review the coverage requirements, you may want to bump up coverage limits or elect to carry a coverage you were rejecting. Doing this will give you added protection for an added cost. Whatever changes you decide to make as you compare premiums, but sure to make them to your current policy. Comparing apples to apples is much more effective than comparing apples and oranges.

If you are given special discounts from a new prospective insurer, ask your current insurer whether or not they offer them. Many times, people miss out on savings because they fail to review their policies on an annual basis.

Step Four: Comparison Shopping with Reputable Insurers

Now that you know how important it is to compare apples to apples, it is time to begin searching for competitive premiums by gathering quotes from reputable insurers with secure financial rankings. You should have a list of only the most secure companies to begin comparing rates through already.

Once you have this list, you can easily begin the process of comparison shopping by using an intelligent comparison tool that connects you with only the top-rated auto insurers licensed to do business in your state. By choosing to go this route, you will only need to enter your information a single time to gain access to multiple quotes.

It is important to have all of the documentation that you need to provide accurate and error-free information as you begin to fill out a quoting tool online. There have been instances where a company has sent a higher bill than what an applicant was quoted because of missing information.

Misquotes are completely legal and are generally caused by applicants or agents filling out the wrong information. This is why accuracy and double-checking your application is so important. Have your current insurance policy, licenses, driving histories, VINs, and everything else you need to prevent a misquote scenario.

Tips on Saving Money Off of Your Insurance

As you comparison shop, it is important to take advantage of all of the savings that you qualify for. Many people are not aware of all of the discounts that exist that are designed to make auto insurance rates more competitive or affordable.

Knowing how your rate is determined and what discounts you may be eligible can help you save some serious cash. While you cannot change some rating factors (i.e: driving record, gender, age and territory), some factors are not always fixed.

A discount is a feature of a policy that is awarded to a driver because they are statistically seen as a better risk when they qualify. There are handfuls of discounts that are offered by top-rated insurers, but not all discounts are offered by every single company in the industry.

You must consider what type of niche that a company is targeting when you retrieve quotes so that you can select a company that wants your business. Typically, companies offer more discounts to people in your age group or gender class when they want your business. Some of the discounts you should look for include:

• Multi-car
• Multi-policy (When you carry more than one line of insurance with the same company)
• Safe driver, Good Driver
• Driver Safety Training (Voluntarily taking an approved driver education course)
• Good Student Discount (Students up to 25 who meet grade and enrollment requirements)
• Low mileage or pleasure usage ratings
• Daytime driver discounts (Typically for seniors)
• Mature driver training
• Anti-theft device
• Loyalty or Prior Insurance discount
• Homeowner discount
• Good credit discounts

It is important to verify which discounts are available and which may not be available in your state.

Shopping around before you buy is very important. While price is important, there are plenty of other factors to consider when you are buying cheap car insurance. You need to consider how much liability and property damage protection you need to protect your assets, what optional forms of coverage you need, and which companies will offer you quality coverage.

Once you do your homework, you can start to quote the cost of insurance in your state through several insurers and compare the numbers and the financial rankings of all of them. Simply enter your ZIP code into the FREE comparison tool located below to get started now!