First steps in buying auto insurance

The first step is to start thinking of auto insurance as a product. When you are drawing up a shopping list, you often plan where to go search for what you want depending on where you think you will get the best value. Some household necessities are the same whether you buy the branded or store brand. The only difference is the price. Other times, you might go from store to store looking to balance quality against price. Partly, you are looking to make your dollars go that little bit further. Partly, shopping is a fun way of passing the time.

Well, you should think of insurance policies in the same way. Just as you would not buy the first pair of pants or skirt you see, you should not buy the first policy you see. The terms and conditions in policies are the same as the fabrics and colors of clothes. Some suit you. Others hang on you like a sack and clash with the color of your hair. To get a good fit, you often have to sort through the stock in several stores.

Insurance policies are exactly the same. Bring the same enthusiasm you have for shopping in the real world to the task of buying the right policy for you. It is true that the statutory minimum policies required in each state may have more or less the same terms, but there may be big differences in the premium rates. When you move up from the bare minimum cover, those differences start to widen. There can be hundreds of dollars separating the best and worst policies. But if you do not shop around, you can never save that money.

If all you do each year is to renew the old policy, the odds are you are paying too much.

If this is your first policy and you buy the first one you see, it is a lottery whether you have found good value.

Basic rule: Do not gamble with something as important and expensive as auto insurance. Always get multiple quotes before making a decision on a new policy or a renewal. This site is the perfect place to start. Here you can get quotes from all the major insurers licensed to sell policies in your state. But before you start, there are a number of issues to think about.

Guidelines

• never pay more than you need to pay - that means you have to figure out exactly how much cover you need, so check out what the minimum requirements are for your state and then decide whether you need to top up;
• if you get in an accident, you will be glad to find you have enough liability insurance to cover the claims made against you;
• a car is often a big ticket item - can you afford to lose the cash you paid for it?
• does your auto finance package require you to carry insurance? if so, what cover is required?
• find out what discounts are available and how to qualify for them.