Whether you’ve just gotten your first car, or you’re just looking to switch auto insurance companies, you should definitely do some comparison shopping. An auto insurance comparison is important, because there are many different options when it comes to insurance policies as well as policy providers. Some providers will offer you things that seem too good to be true. They probably are, but some further research can let you know for sure. First, you should look into the companies offering policies in your area.
So, there are essentially three kinds of insurance companies—international, national, and local. Each kind of company has advantages and disadvantages that really depend on what you are looking for in a company. Auto insurance comparison shopping investigates the different types of companies.
With an international company, you know that you are covered in several different countries. If you live in Northern Canada or the central part of the United States, you might not be anywhere near another country; so, you might not be driving your car into a foreign country anytime soon. However, if you live in Europe, the American Southwest, or Southern Canada, you could feasibly be in a completely different country with only an hour or two drive. That means, you will need to be covered in several different countries in case of an accident. Also, even if the accident is not your fault, different jurisdictions have different insurance requirements. You might end up in a place that does not require every driver to have insurance. That means you will need to be covered if you get into an accident. You wouldn’t want to be trapped in a different country with a non-functioning vehicle.
With a national company, you know that you are covered everywhere in the country. If you’re not going to drive out of the country very often, then this might be your best bet. Also, with a national company, you can feel fairly comfortable that it will not go out of business suddenly. You know that you will be covered everywhere in the country, and since the company has a large national profile, it is probably fairly stable. Obviously, this is not a guarantee; economic problems can arise to threaten just about any company. If the crises of 2008 are any indicator, economic problems can arise very quickly to sink large companies; however, there’s nothing you can really do to stop that.
Regional or local companies you find in your auto insurance comparison, on the other hand, are not as stable as the national or multinational companies. They do not have the massive customer base that the larger corporations have. Therefore, they’re more susceptible to volatile market forces and might be less capable of weathering a terrible economic climate. Those are some of the disadvantages. However, local companies tend to be slightly more responsive to policyholders than other organizations you might find in your auto insurance comparison. When you are dealing with a local company, they typically employ agents who are also local; so, your insurance company and your agents are from the same community as you. They usually live nearby, which means if you have an accident in your town or city, they can respond quickly. Also, since regional companies have smaller customer bases, they are more dependent on each customer. That means they’ll be a little more likely to go that extra mile for you.
Once you’ve chosen the kind of company you think is appropriate for you, the next step of your auto insurance comparison is figuring out what kind of policy is right for you. Policies tend to fall into one of a few categories: liability, extended coverage, and full coverage. Liability insurance is a broad category that typically just applies to an insurance plan that pays out money when you are at fault. That means the plan will not pay to fix your car if you are the at-fault party in an accident. Your policy will pay to fix the other person’s car, though. That’s what is meant by liability.
Extended coverage typically means you have liability to cover the other person’s car if you are at fault, as well as a limited amount of money to fix your own car. Typically, extended coverage plans will have a limit on how much they pay out when you’re at fault. That means you would be able to get your car operational again, but you probably wouldn’t have enough coverage to fix any cosmetic damage to your car. This is one of the most popular policies, because it will ensure that you can get your car back in operational condition while still keeping your premiums as low as possible.
Full coverage policies are popular for those who have newer vehicles with high values. Full coverage means that even if you’re at fault, your insurance company will pay the full price of fixing the other person’s car as well as your own. That is to say, they will pay after you pay the deductible.
So, why would someone pick one type of plan over another? Well, price is usually the biggest factor when it comes to choosing a company from your auto insurance comparison shopping.
Auto insurance comparison shopping usually comes down to price. Which company in your preferred size offers you the most coverage for the least amount of money? However, it’s not quite that simple. Your auto insurance comparison should consider the premium you have to pay as well as the deductible.
The premium is the amount you pay to your company to stay covered. This is usually either a lump sum or a regular payment. In the course of your auto insurance comparison shopping, you’ve probably found more regular payments than lump sums. Lump sums are more common for very short-term insurance, such as travel insurance.
The deductible is the amount of money you are required to pay to make an insurance claim. Premiums and deductibles tend to move in inverse proportion to each other—the higher your premium, the lower your deductible, and vice versa. Whichever option you choose from your auto insurance comparison depends on how much money you have on hand, versus how often you think you’ll have an accident.