What is auto insurance?

When you buy insurance coverage - called a “policy” - the insurer agrees to foot the bill for damage costs, should an accident happen. In exchange for this coverage, you have to pay your insurance agency a monthly fee, called the “insurance premium.” Usually, you’ll have to contribute a certain portion to the bill before your coverage kicks in. This is called your insurance “deductible.”

Why should I get auto insurance?

After an auto accident, the costs of damage can be tremendous. That includes your vehicle, other cars, houses and other property involved in the collision. It also includes medical bills for yourself, your passengers, people in other vehicles, and bystanders who are injured. Naturally, someone needs to pay for all of this damage. That’s where your insurance agency comes in.

Why should I change my auto insurance?

According to the Insurance Information Institute, “Prices vary dramatically from company to company, so it pays to shop around.” Even if you have tickets and accidents on your record, you can find a company that will give you a lower rate. In the end, you need to find the insurer that’s the best financial fit for you. You can’t assume the first insurer you get a quote from is the cheapest.

What are the common qualifications for discounts?

• Good driver
• Multicar
• Multi-policy/multiline
• Loyalty
• Low mileage
• Good student
• Antitheft
• Defensive driving course
• Association membership (e.g.: AARP, alumni associations)
• College student away from home

Not all insurers offer all of the discounts mentioned here. But it’s worth it to ask about them.

How can insurance rates change from city to city?

The amount of vehicle accidents in a city depends on the area. Insurance companies track the number of accidents in a particular area, down to the neighborhood/ZIP code level, and factor that into the rates they quote for your insurance. Other factors involved that may affect your rate include:

• Cities with narrow, overcrowded roads.
• Cities with many blind corners and poorly placed traffic signals.
• The amount of rain and snow the city gets.
• Different liquor laws.
• The number of teen drivers in the area.

How do I choose the right car insurance company for me?

A big difference between insurance companies is who they want as their customers. Companies target different groups of drivers. What this means is there isn’t one company that’s the best for everyone.
There are three main ways you can get a sense of an insurer’s customer service:

• Review customer-satisfaction studies from companies like J.D. Power & Associates.
• Review consumer-complaint data from state regulators.
• Ask friends and family about their experiences with their insurers.