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Auto Insurance and Consumer Rights

Like it or Not, Insurance is Necessary

You don’t need car insurance—unless you plan on driving anywhere. Whether you like it or not, auto insurance is a necessity and one that you must pay for. But a lot of options combined with a lot of companies selling various policies can make for a confusing process of obtaining the right insurance for your needs as a driver. Read on as we navigate the clutter for you, informing you of what to look for, what to steer away from, and the questions you should be asking.

First things first: Browse your state’s department of insurance website. Every state has a department of insurance, and many departments’ websites publish “consumer complaint ratios” for all of the insurance companies that sell policies in their state. This ratio tells you how many complaints an auto insurance company received per 1,000 claims filed. Just because a company is widely-known or has a respected name does NOT mean it is treating its customers as they should be.

Find out which insurers body shops recommend. Contact local body shops that you trust and ask for their recommendations. Body shop managers have a unique perspective to offer since they regularly interact with insurance adjusters. They probably have a good sense of which companies offer the smoothest process as well as the ones which have the most hoops to jump through.

Consider working with an agent. Although it’s no longer the only way to go—with companies like Geico you can purchase insurance online or over the phone—it can ensure you are working with someone who more likely has a vested interest in your happiness, meaning he will work to familiarize himself with your history and your needs. Note that there are two types of agents:

  • The captive agent: These agents represent only one insurance company (think of a State Farm insurance agent).
  • The independent agent: These agents are more like brokers. They are not tied to one agency and therefore are not particularly invested in selling you one certain policy.

If you decide to go with an agent, never feel pressured by him or her. Take the time to talk with an agent or a broker and do your online research. By doing your own outside research you may find a better deal with a company that operates direct.

Independent agents sometimes charge a fee for their services, but you may be able to negotiate that. You should agree upon any fee in writing before making a purchase. Look for agents who are certified by Independent Insurance Agents of America (Big “I”) or Professional Insurance Agents (PIA).

Whether you’re dealing with an agent or a service representative over the phone, there are a few questions you should be asking:

“What is my risk assessment?”

A driver’s age, driving record, area of residence, criminal record, and even credit rating can affect how the insurance company will decide how much of a risk that driver will be on the road. If you’re looking to insure a younger driver, you may find it difficult to get reasonable auto insurance rates because of the data about teen drivers. One solution is to talk to a variety of different insurers and shop around to get better car insurance rates.

“What are the payment terms?”

Most insurers offer mainly annual or six-month premiums. Six-month premiums can be useful because the rate may go down after six months if the insurer sees a clean record as an indication that a driver is less of a risk than previously presumed.

“What will my deductibles be?

Auto insurance deductibles are the amounts that a driver will have to pay on a claim before the insurer’s payment responsibility kicks in. A driver chooses his or her own deductibles when talking to an insurance company; the key is to find the amounts that your household will have on hand to pay off any claims.

No matter the policy you buy, in the end, make sure you understand it! Insurance companies have a reputation for offering products that their customers can’t understand. Read through all potential policies and don’t be afraid to question anything that doesn’t make sense to you. It may take time and a little frustration, but the effort will be more than worth it if the worst ever happens to you as a driver.

Happy driving!