How to Shop for Personal Auto Insurance

Before I start, some information about me and my decision-making process.

1.        I am a licensed Property, Liability, Auto, Life and Health agent in the state of Texas.  I worked in the insurance industry for about 20 years.  I focused on commercial (business insurance) not personal insurance.  That does make a difference in my point of view and knowledge about personal insurance.

2.       Even with that, I have had my vehicles insured every year since I began living on my own not with my parents and that’s 50 years now.  I made sure my vehicles were always insured even before I became an insurance agent.

3.       I do understand how to look up an insurance company on the Best’s rating site (http://www.ambest.com/home/ratings.aspx).  I highly recommend this to anyone.  No matter if you can barely spell insurance, you can tell a good rating from a bad rating without much outside help.

Once you have checked out the rating for the insurance company; notice I said insurance company, not an agent.  You can search Yelp for reviews on an agent.  An agent can represent a great company but still be a lousy agent.  A good agent will not represent a bad company because that’s just bad business and he/she knows it.

So how do you get a in touch with a good agent.  Generally speaking, for personal auto insurance…that is insurance on your own car, using an agent from companies such as Allstate, State Farm, Nationwide, and other well-known companies like these is a good idea.  First, the company makes sure the agent is qualified to represent them and has the knowledge to really bring value to the people insured through their company.  By bring value, I mean that they will give you the best advice available to them and their knowledge will be based on several years of experience writing the type of coverage you are seeking.  There are also many fine independent agents.  Take your time with these agents to be sure of their experience and knowledge of the current market for insurance companies.  Any independent agent who represents a company with a good Best’s rating will typically be qualified because he/she must be accepted as an agent by that company.  Quality companies want only quality agents to represent them.

I have been reading of some very bad experiences that people have had with less well-known companies and agencies.  The time to find out your agent or company does not have a good reputation is NOT after you’ve had a loss.  Rather the time to do your search is BEFORE you buy the insurance.  A good agent will take the time to make sure you understand your choices in coverage, deductibles, premium payment plans and all the important issues to decide at the time your policy is written. 

I know we all want a cheap price because auto insurance is getting higher all the time.  This is of course because the cost automobiles goes up all the time.  The higher priced the vehicle, the higher the insurance will be.  This is easy to understand…the insurance cost to repair a Mercedes will typically be much higher than the repair to a Ford Ranger pick-up.  In addition, the liability portion of your insurance goes higher for the exact same reason.  The car YOU hit may be a high priced vehicle so the amount your insurance company must pay out to repair the car you hit will be high. 

The way to keep your insurance prices low is to be the best driver you can possibly be.  Always expect the other driver to do something stupid and don’t be “that other driver doing something stupid” yourself.  Don’t get speeding tickets, don’t drive and drink….you know what NOT to do.

If you are new to the world of purchasing auto insurance, please find a reputable agent who represents good companies to guide you with your first purchase.  Go in person, sit down, ask all the questions you need to so that you clearly understand what you will be buying.  The most important thing to know is that in the event of an accident you will have a company that will stand up and do the right thing for you and for the other party. 

Also, about deductibles….what are they for anyway?  Well a deductible is a way of making you the insured have “skin” in the game.  If you know that any accident you have, you will have to bear at least part of the cost, it will improve your thinking, your driving decisions, and your driving behavior.  No quality agent wants to insure a careless driver.  A careless driver creates headaches for everyone involved, but most of all for themselves. 

So that’s about all I can say about purchasing car insurance.  I’ll just add a simple tip on major purchases that I received a very long time ago from an older lady.  She said she always tried to buy locally because she knew the money would stay in her community and be beneficial to everyone else who lived where she lived as that money would be earned by her friends and neighbors.   The second thing she said was that she and her husband never bought the most expensive item when they were shopping for themselves.  They also never bought the cheapest.  They always shot for the mid-priced item knowing it would do the job and it would be sturdy enough to last the time they thought it should.

I hope these tips help you make quality decisions about insurance and other purchases as well.