How to Choose an Auto Insurance Company

auto insurance company salesman looking at damaged carWith the endless choices for car insurance these days, one of the main battles 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 areas prior to signing up too:

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 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 important to check the financial stability of the company in question. The 4 main rating agencies, Fitch, Moody’s, Standard & Poor’s, and AM Best should all be a good place to start.

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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 layer of comfort with the agent or company you ultimately decide to insure with. Ensure that the agent will be easy to reach, and you are comfortable communicating with them.

What Determines Price of Policy?

Driving record
Simply put, the better your vehicle driving record, the lower your insurance premium.

Miles driven per year
Driving more 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 car, overall safety, and other factors also play into the cost of insuring the vehicle.

Marital status
Married people tend to get in less accidents, and therefore enjoy lower rates than singles.

Credit score
Often misunderstood by motorists, a person’s credit score is one of the main inputs an insurance company uses to set an insurance rate. At a basic level, a company views a person with poor credit is viewed as higher risk, and as such, 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.

Next we’ll cover how to save money on your auto insurance…

Posted on November 25, 2011 by in Automobiles

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