How to Choose Car Insurance Coverage

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If you own a car, there's no way around this–you have to have insurance coverage. It can sometimes be a bit overwhelming, though, when it comes to choosing your coverage. Deciding what type of coverage to get, negotiating deductibles, figuring out which carrier to go with--all are things that can get you easily confused, particularly if you're new to shopping for car insurance. Don't worry, though. Just keep a few simple pointers in mind when you're choosing your insurance plan.

Things You'll Need

  • Car
  • Phone and phone book
  • Determine how much coverage you need. If you have a car that has a bank loan on it, you may be required to carry full coverage on it. If your car is an old beater that you restored for a few hundred dollars, chances are that minimum liability will be fine. You may be required by law to carry more coverage on teenage drivers who live in your home. Check to find out what your state's minimum coverage requirements are. Also, determine what sort of deductible you're willing to pay. A deductible of $1,000 may seem like a lot, compared to a $500 deductible, but it could mean a significantly lower monthly premium. Remember, you only have to pay your deductible if you're at fault in an accident.

  • Look at your own driving record. When you're shopping for insurance coverage, your driving record is going to factor in. If you've had multiple accidents, or you have a long history of speeding tickets, you may find yourself paying much higher premiums than other drivers. However, just like your credit score, it's important to make sure that the information on your driving record is correct. Check with your state's Department of Motor Vehicles to see what your driving record is like. If you have points on your license, and some are about to drop off, wait until they're gone before you begin getting quotes from insurance carriers.

  • Get quotes from insurance companies. Thanks to the Internet, you can often get competitive quotes from a number of insurance carriers all at the same time. Once you've gathered some preliminary quotes, pick up the phone and start calling insurance agents in your area. Speaking to a real person will allow you to confirm the quote you've gotten online.

  • Evaluate the insurance companies. Once you've gotten some quotes you like, it's time to do a little digging. Find out if the company is reputable. Check with the Better Business Bureau in your state, and see if complaints have been filed about the company. Ask friends who might have their car insurance through the company if they've ever had any problem filing a claim, or been hit with "hidden" charges on their premiums. Call your local body shops, and ask them how the company is to work with–mechanics are happy to tell you if an insurance company is slow to pay, or doesn't pay at all, for repairs after a collision.

  • Finally, review your contract before you sign on the dotted line. Make sure you're not giving up anything important, like the legal right to sue your insurance company for nonpayment. Also, make sure there's no "after-market parts" clause in your contract. If the insurance agent is unwilling to change the contract to your satisfaction, then don't feel bad about walking away. You can always find a competitor to give you a better policy.

Tips & Warnings

  • Be sure to include uninsured motorist coverage on your policy. That way, if you're hit by someone who has no coverage of his own, you're still covered for any damages or medical bills.
  • Don't cancel your old car insurance until you're sure your new policy has gone into effect.
  • Don't let an insurance agent sweet talk you into a policy that you don't need. Know what coverage you need to have, and what you can afford, and stick to your guns.

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