Written by: Susan Melony
Whether it’s your first time buying car insurance or you’re ready to shop around and find a better deal, it can be a bit of an overwhelming process.
There are so many companies, all of whom say they’ll give you the best deal, but how do you know that you’re actually making a sound financial decision?
Being an informed consumer and buyer of car insurance can help you make a good choice financially while still ensuring you have the coverage you need.
One of the first steps to getting car insurance or saving money is comparing quotes. You can do this through search engines and portals or directly with insurance companies. You will have to enter some personal information to get quotes, and sometimes if you are thinking about buying a new car you can find accurate quotes for car insurance based on VIN numbers.
A car insurance quote is only an estimate, and while they are valuable during the process of shopping for and comparing car insurance, it’s important to remember that estimate factor.
Essentially getting a quote is a way for the car insurance company to determine how risky you might be to insure.
Some of the factors that can play a role in the quote you get include personal considerations like your age and driving record as well as your vehicle, your gender, and your marital status.
When you want a quote, as mentioned, you can use an online comparison tool to see information from several providers all at once. There are caveats with this that you trade for the convenience, however.
First, you may get less accurate quotes, and second, you need to be careful and read the fine print as far as how your information will be used one you input it on the website.
If you go directly to an insurer’s website they will ask for information that’s particularly relevant to how they underwrite policies.
How Accurate Are Quotes?
The accuracy of your car insurance quote is dependent on the information you provide. If you give incomplete or inaccurate information, then your quote is also going to be inaccurate.
Save yourself time in the process by having all of your information ready to input online or to give to an insurance agent.
Some consumers wonder if getting quotes for car insurance will impact their credit. A credit score pull used for an insurance quote is a soft inquiry. They show up on your report, but they don’t harm your score.
Along with considering personal characteristics about you, an insurance quote will consider the amount of coverage you’re going to need and your deductible.
Once a policy goes through the process to be finalized, it’s then your premium.
The Declarations Page
An insurance quote can be a bit confusing, particularly if you’ve never gotten one before. The main page is known as the policy declarations page.
This shows you all the details for the policy you’ve received a quote for.
There is usually a set of three numbers on a declarations page, and these show you the dollar amounts of coverage you would have under the policy. This might include maximum bodily injury coverage for each individual and all injuries as well as liability coverage for property damage.
You’ll also find general information relating to your proposed policy, such as VIN numbers, primary lien holder names for financed vehicles, drivers, discounts and deductibles if applicable.
Some of the key terms to be familiar with as you shop for car insurance include:
- Actual cash value or ACV is a term that refers to how much an insurance company will pay you in the case of a car being totaled in an accident. It’s based on the market value appraisal for the car.
- Your deductible is how much you’ll have to pay out-of-pocket before your insurance coverage kicks in. If you have a deductible of $500 and you get in an accident that causes $1,500 worth of damage, then you have to pay $500 before you receive coverage for the rest.
- The premium is how much you pay at a certain time, whether monthly, bi-annually or annually, for the cost of your insurance coverage.
This is just the beginning as far as things to know about car insurance, but it can help you at least get started with the process of comparing quotes and companies and knowing what to look for.