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How to Find the Right Auto Insurance for a Car

When purchasing cars, whether new or used, one important factor to consider is finding the right type of auto insurance that fits within the buyer's budget.

How to Find the Right Car Insurance

Too many new and/or young drivers scrape enough money together to purchase the car but overlook the costs involved in finding the right auto insurance coverage for the newly purchased car. Car insurance costs vary depending on a host of factors, but if young drivers take time to evaluate what is required by law and compare it with their budget; they'll be able to find the right auto insurance for their car. Read also: Classic Car Insurance: How to Protect Your Investment.

Here are a few tips for choosing the right car insurance:

Choose a Financially Sound Insurance Company

Even before considering the types of insurance coverages needed, drivers must make sure the insurance company chosen will be around when a claim occurs. Companies such as Standard & Poor's, Moody's and AM Best rate the financial stability of insurance companies. Find out how the insurance company is rated by one of those organizations before accepting coverage. Insurance Company ratings are similar to a child's report card; A is good, C is not so good.

Satisfy the State's Minimum Liability Requirements

One the most important factors to consider when purchasing auto insurance is that the coverage complies with the state's minimum liability requirements. Keep in mind that the minimum is usually just that, a minimum. It is highly recommended that drivers purchase higher liability limits. Ask the insurance agent to provide premium quotes for the cost to buy liability limits above the minimum state requirement. Drivers should purchase the highest liability limits their budget can afford. Read also: How to Compare Auto Insurance Quotes.

Read and Comply with the Vehicle Finance Contract

Auto insurance shoppers with an outstanding loan vehicle loan are subject to contractual insurance obligations. For example, many vehicle finance companies require physical damage deductibles of no higher than $500, or require an Additional Insured/Loss Payee endorsement adding the lending institution as an additional insured/loss payee. Make sure to review lease and/or finance agreement to ensure compliance with the terms of the lease.

Choose a Manageable Deductible

Because the physical damage section of the car insurance policy has deductibles on comprehensive and collisions coverages, policy holders will have to reach into their pocket to cover the deductible for every physical damage claim. When choosing a deductible, drivers must consider their budget and their budgets can handle paying various deductible amounts out of pocket fore each and every physical damage claim.

Drivers with a lot of available cash can handle a higher deductible. However, if spending an additional $250 or $500 out of pocket per claim seems near impossible, then go for a lower physical damage deductible. Keep in mind there is an inverse relationship between the deductible size and auto premiums. The lower the deductible the higher the premium and visa versa. Read also: Car Rental Insurance Coverage.

Evaluate the Age of the Car

If the car is in excess of 10 years of age, consider dropping the physical damage coverage. Dropping physical damage coverage is not a wise option for newer cars. In addition to the high cost of repair, leasing/finance contracts normally require borrowers to carry physical damage coverage.

Shop Around

When purchasing auto insurance, always get more than one quote. Don't accept the first car insurance quote unless its the best option of the several auto quotes presented. Try to get at least three insurance quotes to compare.


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