Courtesy of iii.org
The vehicle you own, your personal priorities and your budget all affect your unique car insurance needs. Before comparing insurance and insurance companies, evaluate how you use your car and what risks you face to find out which options are best for you.
1. How much do you drive?
Do you absolutely need your car every day – for example to commute to work or drive the children to school and activities? Do you drive 100 miles a month or closer to 1000 or more? Make sure your policy reflects how much you use your car. If you do not drive much, you can choose a mileage-based insurance.
2. Will you use your car for work?
If you do not use your car to get to work but also to perform tasks for which you are paid, commercial car insurance is a necessity. A personal car policy will not provide coverage if you transport paying passengers through a turn-sharing service, deliver pizzas, drive as a courier or use your car for other commercial activities.
3. What type of car do you drive?
Insurers have mountains of data, and they know in exact detail what types of cars, makes and models are more or less likely to suffer damages. A flashy sports car with a powerful engine may be more likely to be stolen and its overhead costs will be higher than on a medium-sized sedan ̵
4. How much do you love your car?
If you love the look of your vehicle and are proud of its appearance, you'll probably want to fix it perfectly – or replace it with the same model – if it's damaged. This means that you will probably consider the full range of insurance – including collision, comprehensive and glass cover. On the other hand, if you drive beater, see cars only as transportation and want to save on premiums, you may prefer to limit your policy to liability.
5. Where do you live – and park your car?
Where you live will affect your insurance premiums – and that may be a factor in what coverage you buy. For example, cars parked on the street in urban areas have a greater risk of theft or vandalism, so extensive coverage may be a good option. You may find that your premium rates are lower if you move from a city to a suburb.
6. Who else will drive the car?
Generally, your car insurance covers other temporary drivers. However, if other drivers live with you and use your car – whether it's a spouse, a teenage driver or a housewife – they should be listed on your policy.
7. What are your legal obligations?
Almost all states require you to have minimum coverage liability for your car. At the very least, you must ensure that your policy follows the mandate of the state. However, coverage levels are generally quite low. Keep in mind that if you are involved in a serious accident, you could be sued for a large sum of money. Depending on your assets and financial risk tolerance, to be sure, you probably want to buy a higher level of liability protection.
8. Is your car financed or leased?
If you still owe money on your car or have to return it in good condition when a lease expires, you will probably need to insure the car for its full value – and even for all the gap between what you owe and the market value of the car. Collision and extensive will cover damage to your car – and additional insurance covers the rest.
Keep in mind that your insurance options and costs will also be affected by your age, gender and driving record. Also be aware that your credit score can also affect your insurance rates. Once you have looked at your needs and priorities and understood how insurance options will match them, you are better prepared to make an informed decision about what types and coverage levels to buy.
Now that you know your needs, here's how to choose an insurance company.