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How to Shop for Best Car Insurance

The right time to shop for insurance is BEFORE you buy a vehicle, trade in a vehicle, add drivers to your policy or renew your policy.

Comparison shopping is the key to getting the most for your insurance dollar. Consumers think nothing of price shopping for televisions, radios or appliances to save $20 or $30, but fail to shop around for car insurance where 100s of dollars can be saved. There are 1000s of car insurers (or insurance companies) licensed in the United States, so there are several locations to shop.

Before purchasing a car, determine your insurance costs. This is the first cost-savings step in buying car insurance. When you are shopping around for a new or used car, make sure you factor in the cost of insurance as well. Top-end vehicles are more expensive to insure.

Understand what insurance plan you are buying. Before you begin calling to ask for price quotes, you need to familiarize yourself with the insurance coverage you are buying. It is important to know which coverages local law requires you to purchase and those coverages that you can choose to buy.

Look for more information. Many resources offer more knowledge about insurance. In addition to referring to the State Insurance Administration�s car insurance rate guide, also you can seek information from consumer groups, consumer publications (i.e. Consumer Reports) and the Internet.

However, insurers may use your credit history to find out what rate you will be paying for your car insurance. Not every insurance companies use credit history and you may get car insurance through insurance companies that do not use credit. For those insurers that do use credit history, they are required to inform you at the time you apply for the insurance that they will consider your credit history. If you request, an insurer must tell you how much of your premium is as a result of your credit score.

Credit reports are used to determine the type of financial risk you present. Reviewing your credit report will help inform you of your standing when you apply for certain credit and certain types of insurance, as well as permit you to correct any errors you identify. You are allowed to review your credit report at no charge once every 12 months. For questions or to make corrections to your credit report, you should contact the Federal Trade Commission, or any of these credit reporting agencies: TransUnion, Equifax, or Experian.

For those insurers that use credit history to determine a part of your premium, they are needed to review your credit history every two years, or you can ask the insurance company to do so once during your policy term. The insurance company may only give you the benefit of any improvement in your credit history; it can't be used to raise your premium even if your credit deteriorates from what it was when you applied for your policy.

Do comparison shopping:

� Contact several insurers or contact insurance agents and brokers. Agents/ agencies have contractual arrangements with insurance companies to sell insurance on behalf of the insurance companies. Brokers do not have this kind of arrangements, but work with agents to locate or broker insurance on the consumer�s behalf. In either instance, your insurance policy is with the insurance company itself and not the agent/agency or broker. Insurers, agents, agencies and brokers are listed in the Yellow Pages and advertise in newspapers.

� Ask your family members and friends for suggestions regarding buying car insurance. In addition, many banks, employers and special interest groups offer insurance directly to their members.

� The Internet also offers a variety of insurance information. Many insurers have web sites and/or work with non-affiliated quoting vendors to offer insurance premium quotes on-line.

Ask for price quotes:

In order to make an apples-to-apples price comparison, you have to supply the same information to each insurer or insurance agent. The following information is normally requested: make/model/year of the vehicle you wish to insure, average annual miles driven, the region in which you live, the types of coverages and limits for those coverages that you wish to purchase and driving record (accidents or violations) of the vehicle operators. This information is required to provide you an accurate quote.

Ask about deductibles:

A deductible is the amount you agree to be responsible for in case of damage to your vehicle (i.e. accident, fire or vandalism). If you select a high deductible, you may pay more money out-of-pocket for any damage; however, your insurance premium should be lower.

Ask for Discounts:

Once again, to help keep rates down, ask what discounts the insurer offers. Make sure you provide all information that may result in a discounted premium (e.g. security devices, safety devices, good driving record, good student, defensive driving courses, multi-vehicle or multi-policy discounts, etc.).

Protect yourself from insurance fraud:

After you have picked an insurer, contact the State's Insurance Administration to check that the insurance provider is licensed to sell insurance in your State. It is illegal for unlicensed insurance companies to sell insurance. If you choose to use a insurance agent, also check that the insurance agent is licensed.

Financing Insurance:

Not everyone can afford to pay their insurance premiums in advance; therefore, many insurance companies offer installment plans. Additionally, your premium may be financed by a premium finance company in exchange for your agreement to pay interest and service charges.

Whether you select an installment plan or a premium finance company, ask the following questions before purchasing the policy:

� How much are the monthly installments? � How much is the downpayment? � How many months will payments be made (i.e. six or 12 months)? � What is the interest rate on the premium payments (if the payments are financed)? � What other costs or fees are associated with financing the premium? � Does the insurer offer an installment plan? Is there an installment charge or service fee? � How much is the total payment over the period of the policy? � Is a premium finance company financing the payment?

Other considerations: Price is a key factor in choosing an car insurer; however, other factors also deserve consideration. Some consumers prefer to deal with a insurance agent that has an office in the same community or with an insurer that has a claims office nearby. Customer service is also a important consideration.

Additionally, you should know how long the insurance company or insurance agent has been operating in in your State, how quickly claims are processed and how often complaints were filed against the insurance company or insurance agent. Some of this information may be obtained directly from the insurance company or insurance agent. You may also contact the State Insurance Administration in writing to get some complaint information.