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5 Questions to Ask Before Getting Car Insurance

February 20th, 2014

car-insuranceThere’s nothing quite as taxing as shopping for a new car insurance company, let alone choosing the best policy. Getting car insurance would be so much easier if an Australian lizard could just make the decision for you. Unfortunately that’s probably not the smartest route, especially since you’re dealing with the safety of your family (not to mention that high-ticket asset you just drove off the lot).

Car insurance plans are complicated but working through a little frustration now can save you a lot of stress later, should that insurance need to be tapped. We recommend simplifying your approach by creating five questions that you can ask each insurance representative as you shop around. This way you’ll have a custom, uniform way to compare different companies and choose what’s right for you. Although your questions will vary depending on your particular situation, here are five suggestions that we created for you to modify to fit your needs and get the wheels in your head turning to create your own set of questions for car insurance agents.

1. How do you calculate my risk assessment?┬áThe amount of money you pay for car insurance is based on several factors that the insurers consider make you a “risk.” This can include age, driving record, sex, credit score, criminal history, and many other things. Each car insurance company will evaluate your risk based on a different combination of these characteristics and factors, and it’s wise to ask what they are so you can make the system work for you. For example, some companies may weigh age more than credit score, so if you’re a 40-year-old man who needs a co-signer to get an apartment you might want to choose that company. Sometimes little differences like these can make a huge difference. It’s definitely worth having a conversation about.

2. What discounts do you offer? What discounts am I eligible for? Every car insurance company offers discounts. This doesn’t necessarily mean that the agent you are speaking with will automatically give them to you. Ask your car insurance agent to tell you what discounts the company offers, and which ones you are eligible for. This way, both of your brains will be working on figuring out how to save you some money. Insurance companies give discounts for what may seem like a lot of small stuff (airbags, car alarm, garage parking, etc.) so this task may be a little tedious, but if you save the pennies the dollars will save themselves. Tip: Some car insurance companies refer to discounts as “credits” so don’t forget to ask about those, too.

3. Who is covered to drive my car under this policy? This question is one of the most overlooked, but it’s one of the most important–especially for people who have families where vehicles are shared or that are being used by new teenage drivers. If your kid mistakes the accelerator for the break while you’re teaching him to parallel park, will the insurance policy have your family’s back? If you drive your car for professional reasons like delivering pizza–are you covered? Can your friend borrow your car? Not only the insurance companies and policies but also state legislature varies widely regarding who is and can be covered under a car insurance policy. Make sure you clearly understand who’s in and who’s out before you commit.

4. If my car is damaged, will you pay for original equipment manufacturer (OEM) parts or aftermarket parts? Different insurance companies have different rules about what grade of replacement parts they will provide, should your car become damaged in an accident. Aftermarket parts are car parts manufactured in such a way that they will fit a general type of vehicle, not a specific make and model. Aftermarket parts are much less expensive than OEM parts so often insurance companies will only cover the cost of aftermarket replacement. Some insurance companies exclusively use OEM’s and others offer both options. Aftermarket parts are not necessarily bad and you should do some research about how they handle on your car. It’s definitely information that you’ll want to factor into your decision about which car insurance company to choose, though, so make sure to ask about it.

5. How much will you pay if my car is totaled? Insurance agents are a lot like lawyers–there’s a whole language you need to learn in order to really understand them. For example, some car insurance companies will cover “actual cash value” for a totaled car and others might offer “agreed-upon value.” These are two very different things. Make sure you ask which will be offered in the event that your car is totaled, and most importantly: make sure you know the valuation process for your insurance company, i.e. how they determine what your car is worth. Most policies will go by NADA guidelines, but not all do, and the language used in the contract always seems to come up short on clarity.