Before buying auto insurance

Buying auto insurance isn't hard but it takes preparation and thought. First, car owners need to know what to expect from the insurance buying process and have a few tidbits of information ready for potential insurers. They also need to know what to ask car insurance companies before signing on the dotted line.

Questions to ask yourself:

1. What type of insurance do I need? Car owners should learn about the different types of auto insurance available because they may not need all of them. In almost every state car insurance is required before anyone can hit the road, but there's collision, comprehensive, bodily injury and property damage insurance coverage. In general, collision insurance will cover the costs of an accident no matter who caused it. Comprehensive insurance will cover the cost of repairing the car in a noncollision situation, such as a flood or if the driver hits an animal. Bodily injury coverage will pay for another person's medical expenses if there's an accident while the property damage will pay for the cost of another person's car or property, such as a fence, if it's banged up. General liability auto insurance often covers both bodily and property damage.

2. How risky am I? The price of an auto insurance policy depends on many things, but a major factor is how risky of an investment the insurer finds the car owner. People shopping for insurance should understand their age, gender, driving record, credit score and address can all affect the insurer's risk and therefore the price of a policy.

3. How much do I need? Once an owner has decided which type of coverage is best, he or she should figure out how much coverage is warranted. How much coverage is right for each person may depend on how high they want their monthly premium to be or their deductible, which is the cost he or she has to pay if an incident occurs.

Answering these questions is the first step to buying auto insurance. However, the process doesn't end there. Car owners need to be prepared to ask insurance companies a few questions to decide which will provide the best coverage at the most reasonable price.

Inquiries for potential insurers:

1. What all is covered under the policy? Before a car owner buys auto insurance, he or she should know exactly what kinds of accidents are covered and which are not. For instance, not all policies will cover flooding, which can total a car. Other policies may pay for a damaged vehicle but not a stolen one. What is covered relates back to the type of insurance in the policy, and owners need to understand when they can make a claim or when the cost of repairs will come from their own pocket.

2. When can my premiums go up? Some people think insurance companies can't raise prices in the middle of a year, but this depends on the contract. Car owners should make sure they lock in their rates for at least a year. They should also ask what factors can cause an insurer to increase the price, such as speeding tickets, accidents or a hit to the person's credit score.

3. What is my deductible? A high deductible can be hard to manage in the case of an accident. People shouldn't sign up for a policy with a deductible they're unlikely to be able to afford if something happens. A higher deductible allows for lower monthly premiums, but a slightly higher monthly price can ensure the car gets fixed or replaced when it needs to.

Can the insurer cancel the policy, and if so, when? In most cases an insurer can cancel a policy if the car owner is behind on payments, but there may be other ways for the company to cancel a policy as well. People should know exactly when an insurer can cancel their policy to make sure it never happens.

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