Among all the insurance options out there, car insurance is one that you’re probably more familiar with. But the murky waters of insurance options, coverage, and what a company will and won’t cover, can leave you feeling a little confused. Let’s be honest: the only time we even start to care about our car insurance is when we need it. By then, you could be at risk for not having enough coverage to pay for damages, and faced with a bigger out-of-pocket expense than you’d like.
Despite our efforts to stay far away from the depths of insurance, it’s important to understand which questions to ask when shopping for insurance or purchasing a new vehicle. The more educated you are, the more you’re able to ensure your insurance meets your needs, priorities, and budget. By understanding your needs, you’re able to choose the best insurer and coverage to minimize risks, out-of-pocket expenses and save money.
When you’re shopping for car insurance, you’ll inevitably compare several insurance carriers before making a decision. Make sure to ask these 10 questions before buying car insurance or re-evaluating your current policy:
1. What type of coverage do I need?
In Arizona, a minimum of liability insurance is required on all vehicles, including golf carts, motorcycles, and mopeds. Liability insurance covers the costs of injuries, death, or legal fees as a result of an accident caused by you. If you’ve got an older vehicle, with a lower value, it’s typically ideal to forego collision or comprehensive coverage and stick with liability.
Collision covers the cost of repairs to your car, regardless of fault. Generally, you’ll need to meet a deductible before the insurance company will cover the remaining amount. Collision is usually ideal for newer vehicles.
Comprehensive coverage pays for damage to your car caused by fire, weather, vandalism, and theft. This coverage typically carries a deductible, too. Similar to collision coverage, determining whether or not comprehensive coverage makes sense for you, depends on the value of your vehicle.
Uninsured and underinsured motorist protection (UM & UIM) coverage is optional in the state of Arizona. This option is less expensive than collision and comprehensive as it covers the costs of vehicle repairs if an uninsured or underinsured driver hits you. There’s no deductible, but there’s usually a limit on how much you’ll be able to collect. Generally speaking, it’s about $3,500.
Personal injury protection pays for medical expenses and lost wages to you or your passengers if someone hits you. If you’re injured while riding as a passenger in another vehicle, it will also cover your medical expenses. This is extremely important coverage to carry, although if you’re healthy and have a disability policy, you can opt for minimum coverage.
2. What’s the risks of a claim being generated?
Your insurance rate is determined based upon several factors to determine your risk, or likelihood of generating a claim. The factors that are considered include: age, gender, driving record, criminal record, credit rating, and where you live. For example, statistics reveal that the elderly and teens are groups most at risk for causing fender benders. Therefore, their rates will be higher. If you live in a high-crime area, at risk for vandalism or theft, your rates will also be more expensive than someone who lives in a suburb. If you’ve gotten several speeding tickets, that’s also cause for spendier premiums. If this sounds like you, your best bet will be to shop around for the best value.
3. Who’s driving my car?
Will you be the sole driver, with the occasional driver? Or will someone in your household be using your vehicle? This is an often overlooked question, but it’s critical. Will your insurance cover damages if your 15-year old, who’s learning to drive, gets into an accident? What about if you’re driving your car for work activities, are any accidents you cause covered? Every insurer handles these situations differently, so make sure to ask your agent about possible scenarios that are relevant to your life so there are no surprises later on down the road.
4. What’s my deductible going to be?
A deductible is the amount of money you pay before your insurance pays the rest. The amount of your deductible depends on the amount of your premium. Some people opt to pay a lower insurance premium by raising their deductible because their risk for getting into an accident is lower. However, it’s important to consider what happens if there is an accident. If you’re unable to meet the deductible minimum, your car won’t be repaired. Think back to your risk assessment. It will help you decide if it makes more sense to pay a little extra in the possibility of an accident to reduce out-of-pocket expenses; or determine that you’ll be okay paying a little extra in the unlikely event of an accident in exchange for lower premiums.
5. Do you offer discounts?
So many insurance companies offer discounts, but it’s worth asking as several agents may not openly pass them on. Discounts are commonly given for having certain safety features in your vehicle, safe driving records, having a student achieving academic success, being in the military, or other civic service position, bundling your insurance with other types of insurance, like homeowners, and many more. All you have to do is ask.
6. What are my payment options?
Paying your annual premium in a single lump sum can be a little difficult. Most insurance companies offer, at minimum, annual or six-month premium payment options. Ask your agent about all the types of payment options available for there may be some fees if you need to make more frequent payments, or discounts available for paying up front.
7. Will my car be used for work?
If you’re using your car for business purposes, to perform business tasks or work-related activities, commercial auto insurance is vital. A personal auto policy won’t provide the proper coverage if you’re delivering pizzas, distributing mail, or transporting passengers via a ride-share service.
8. What is the value of my car?
Are you a junkyard salvage savant who revels in the cheapest transportation possible? Or are you a hot rod hobbyist who loves sporty cars? Your insurance rate will fluctuate based on the vehicle you’re driving. It’s simple: the more costly repairs or replacement will be, the higher the insurance premiums. Conversely, your junkyard gem’s origins could be unclear and therefore, uninsurable. It’s beneficial to talk to your agent before purchasing your vehicle to determine if you’re still able to afford (or insure) your new purchase.
9. Do you have a 24 hours claims service?
Accidents don’t always happen within business hours. The last thing you want is to be stressed because your accident occurred on a Saturday morning, and your insurer doesn’t open until Monday morning. Most insurance companies offer 24/7 claims services through toll-free numbers, mobile apps and web forms. It’s critical to make sure you can file a claim any time.
Another noteworthy item is to make sure you know what you need when filing a claim. Ask your agent about the items you’ll need readily available for claim forms.
10. If my car is in an accident, will you cover the replacement of original manufacturer parts?
Many drivers assume their insurers will replace damaged vehicle parts with identical parts from their original manufacturer. It’s a risky assumption as several insurance companies prefer to replace damaged parts with aftermarket parts. Aftermarket parts are parts made to fit general types of vehicles, not for specific makes and models. They’re less expensive, which is why some insurers prefer to use them. While a handful of states regulate the use of OEM parts, Arizona doesn’t. Some insurers use both kinds of parts, covering safety items like air bags, but use aftermarket parts for less-critical items like bumpers or door handles.
If it’s important to you to which parts are used to repair your vehicle, ask your agent if your policy will cover original parts or aftermarket parts.
Whether you’re about to purchase auto insurance, or looking to re-evaluate your policy you’ve had for years, it’s important to review these questions. You’d be surprised at how much you could save, or the blaring gaps you weren’t aware of. Make it an annual priority to discuss and review your policy to make sure it’s meeting your needs, priorities, and budget.
Have any questions about your brand new purchase, or your existing car insurance coverage? Give me a call and we’ll review your needs and priorities to find the right coverage within your budget. Contact me!