What to Look for in an Auto Insurance Plan
Shopping for auto insurance can feel overwhelming. Whether you're a first-time car owner or considering switching providers, understanding what to look for—and what to avoid—can help you secure the best coverage for your needs. This article explores key factors to consider, common mistakes to avoid and important details about the claims process. Keep reading to learn what to look for in an auto insurance plan.
What to Look for When Shopping for Auto Insurance
When comparing auto insurance policies, pay attention to the following factors:
- Coverage types. Ensure that your policy includes essential coverage such as liability, collision, comprehensive, personal injury protection (PIP) and uninsured/underinsured motorist coverage.
- Policy limits. Check the maximum amount your insurance will pay for each type of claim. Higher limits provide better protection but may come at a higher cost.
- Deductibles. This is the amount you must pay out of pocket before your insurance kicks in. Lower deductibles mean less upfront cost in case of an accident, but they often lead to higher premiums.
- Premium costs. Compare quotes from multiple providers, but don't choose based on price alone. A cheap policy may not provide adequate coverage.
- Discounts. Many insurers offer discounts for bundling policies, maintaining a good driving record, installing safety features or being a student or military personnel.
- Customer service and claims satisfaction. Read reviews and check ratings from agencies like J.D. Power and the Better Business Bureau (BBB) to gauge how well the insurer handles claims.
- Roadside assistance and additional perks. Some policies offer extras like rental car reimbursement, roadside assistance and accident forgiveness, which can add value to your coverage.
What to Avoid When Choosing Auto Insurance
When getting a new auto insurance plan, there are certain items and actions you should try to avoid.
- Underinsuring yourself. Opting for the bare minimum required by your state can leave you financially vulnerable in the event of an accident.
- Ignoring policy exclusions. Some policies may not cover certain types of damages or drivers. Make sure to always read the fine print carefully.
- Choosing the cheapest option without research. A low-cost policy may come with slow claims processing, poor customer service or gaps in coverage.
- Not checking the insurer's financial stability. Companies with poor financial health may struggle to pay claims.
- Skipping the fine print on discounts. Some discounts may have strict eligibility requirements, so verify whether you qualify before counting on them.
Understanding the Claims Process
If you're involved in an accident, the claims process typically follows these steps:
- Report the claim. Contact your insurer as soon as possible and provide details about the accident, including photos, police reports and witness statements if available.
- Investigation and assessment. The insurer will assign a claims adjuster to review the evidence, interview involved parties and determine fault.
- Estimate and repair process. The insurer may require you to get repair estimates from approved body shops. Some insurers directly pay the shop, while others reimburse you after you cover the cost.
- Claim approval or denial. Based on the evidence, the insurer will either approve the claim and issue a payout or deny it due to policy exclusions, lack of coverage or disputed liability.
- Receiving payment. If approved, your insurer will send a payout based on the policy coverage limits and deductibles.
How Are Payout Decisions Made?
Payouts depend on several factors, including:
- Fault determination. If you are at fault, your policy will cover damages according to your liability limits.
- Policy coverage. The payout amount is subject to your policy's specific coverages and limits.
- Car value and repairs. If your vehicle is totaled, the insurer will pay the actual cash value (ACV) of the car minus your deductible.
- Medical expenses. If you have medical coverage, the insurer will cover expenses up to the policy limit.
Can a Claim Be Reversed?
Yes, a claim decision can sometimes be overturned under certain circumstances:
- Appealing a denied claim. If your claim is denied, you can request a detailed explanation and provide additional evidence or documentation to challenge the decision.
- Third-party review. Some insurers offer arbitration or an independent review process.
- Legal action. If all else fails, you can consult an attorney to determine if legal action is viable.
Final Thoughts
Finding the right auto insurance requires a balance of affordability, comprehensive coverage and reliable claims processing. By carefully evaluating policies, avoiding common mistakes and understanding the claims process, you can make an informed decision that provides the protection you need.
Keep reading for tips on what to check for when buying a used car.