With the endless choices for car insurance these days, one of the main challenges can be choosing the right company for your needs. Although price often weighs heavily into the decision, it is important to explore a few other factors prior to signing up, too.
Before choosing an auto insurance company, consider licensing, financial strength, customer service, and level of comfort doing business with them. Let’s dive deeper into each aspect of the right insurance provider.
Picking an Auto Insurance Company
1. Licensing
Insurance companies are not licensed to operate in all states automatically. It is important to purchase insurance only through companies licensed in your state. To check, visit your State Insurance Department website for a list.
2. Financial Stability
When you need your insurance company, you want them to be around and have the resources to fulfill their end of the deal. For this reason, it is necessary to check the financial stability of the company in question. The main rating agencies, including Fitch, Moody’s, Standard & Poor’s (S&P) Global, and AM Best, are all good places to start. Most insurance companies list these ratings directly on their website, but a quick online search can also yield the results.
3. Service
The service side of any insurance company is an important consideration when shopping for coverage. Talking with current customers, as well as reading reviews can help gauge the character of the firms in question. In addition, the state insurance department should have records of complaints against companies in comparison to their policies.
4. Comfort
You should feel a degree of comfort with the agent or company you ultimately decide to use to insure your vehicle. Note things like the accessibility of your agent or company, as well as the level of communication they have with you on the phone or via e-mail. If you have trouble getting in touch with your agent or the insurance company for a quote or review of coverage, there is likely to be the same delay and frustration when you need to make a claim for benefits.
What Determines the Price of an Insurance Policy?
In addition to doing some due diligence on an insurance company before signing on the dotted line, it’s important to understand how auto insurance is priced. Although the cost of a policy should not be the only factor in your choice, it can be the deciding piece if two insurance companies are providing the same level of service or amount of coverage. Here are the factors used to determine the cost of your insurance coverage.
Driving Record
Simply put, the better your vehicle driving record, the lower your insurance premium. You present a lower level of risk to the insurance company if your driving history is free of recent tickets or accidents.
Miles Driven Per Year
Driving more throughout the year, whether commuting to work or for personal reasons, means more opportunities for accidents. For this reason, the less you drive per year, the lower your premium.
Your Location
Insurance companies look at trends around where you live to determine the risk of the area. This includes the number of accidents, thefts, lawsuits, as well as costs of medical coverage, among others.
Your Age
The younger the driver, historically the more likely they are to get in accidents. Drivers under the age of 25 typically have higher premiums.
Your Vehicle
The likelihood of theft, cost of the car, overall safety, and other factors also play a role in determining the cost of insuring the vehicle.
Credit Score
Often misunderstood by motorists, a person’s credit score is one of the main factors an insurance company considers to set an insurance rate. At a basic level, a company views a person with poor credit as a higher risk, and as such, premiums are priced higher. Information such as payment history, bankruptcies, outstanding debt, and length of credit history are all used as tools for determining an auto insurance policy’s cost.
For more details regarding cost savings for auto insurance, be sure to check out this resource on how to save money on your auto insurance.
