Buying Car Insurance: You Better Shop Around

With more and more car insurance providers offering online quotes and sign-ups, switching policies is now easier than making a three-point turn. According to a study by InsuranceQuotes.com — owned by Bankrate (RATE) — 21 percent of Americans shopped for car insurance in the past 12 months, and of the nearly 43 percent of those who switched carriers, 81 percent said cost was the primary reason. Switchers do their homework: 34 percent of shoppers obtained at least three quotes; 26 percent obtained four or more.

When to Make a Change
Some insurers charge a fee for breaking a policy mid-term. So, unless the savings from the new policy are significant to offset such fees (and the coverage is comparable), it's best to wait to start comparison-shopping until several weeks before your policy is up for review and renewal. If you decide to switch, allow enough time to for the new policy to take effect, then cancel the existing policy before its automatic renewal.

Seek Out Hidden Discounts
Do you carpool once or twice a week? Pay your insurance bill annually? Use automatic bill pay? Each of these things can provide you with significant savings. Many companies offer substantial discounts for drivers who complete a defensive driving course, or who can show proof that they've taken a course through another provider or the workplace recently.

The best ways to learn about potential discounts are to check the company's website or ask an agent. Do both: One source might provide information the other might not have.

Bundle for Savings
Have a home? Need renters insurance? Own more than one vehicle? Most insurance providers offer savings to customers who buy more than one policy from them. Add in one-payment billing, a combined deductible, and one person to answer all insurance questions, and it might seem like a no-brainer. But the old adage about putting all you eggs in one basket can apply to insurance products too: What's good for the car might not be good for the house. Review all policies thoroughly, and note any gaps in coverage (including laptops, which often require a special rider for both car and renters insurance policies).

Free Safety
Because insurance companies don't ever want to have to pay out a claim, many offer preventive education classes, online tools, and interactive sessions for policyholders on everything from disaster preparedness to smart cycling. Ameriprise, for example, offers safety tips on camping, fireworks, and grilling.

Match Games

Before switching insurance providers, contact your current insurer for a policy review, and explain that you're considering moving elsewhere for a policy with lower premiums. Sometimes an agent can offer a better rate almost immediately, especially if they know a valued customer is about to walk.

But a policy is more than just its premiums. Many providers, including Nationwide, Liberty Mutual, and Progressive (PGR), offer accident forgiveness. Some providers offer discounted rates for recurring customers in good standing. Others offer loyalty perks. If an agent can't match premiums, he or she might be able to add features to the existing policy.

Before You Sign on the Dotted Line
To avoid having to switch again in six months or a year, customers should ask their new provider, either in person, via an online chat, or over the phone, to walk through the policy step by step. You don't want to learn after an accident that something you thought was covered isn't. Many car insurance policies also cover drivers while they're riding their bicycles. Even weekend or casual cyclists should pay attention to the fine print covering two wheels.

Items in the Rear-View Mirror…
It's easy to view car insurance as simply a line item on a budget — until you need to collect. Deductibles, service, and how quickly and how well the car is repaired after an accident are important factors to consider before buying any insurance policy.

Unfortunately, it's impossible to truly know how good a value any insurance product is until making a claim on it. Only then will those discounted premiums prove to have been either an excellent investment or an avoidable calamity.

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