Questions to ask before getting a new auto insurance policy

You might consider getting new auto insurance for a variety of reasons. You will probably have two primary concerns: Level of protection and cost. Auto insurance tends to bring out the best and worst of people and also of the insurance industry as a whole.

Understanding the reasons behind these issues might help you ask yourself the right questions when considering new coverage.

Some important questions to ask yourself

Automobiles often play conflicting roles in our lives. They tend to evoke both love and hate in their owners. Auto insurance sometimes creates parallel feelings. Take a little time and ask yourself some questions:

• Why should I look for new auto insurance? Am I unhappy with my current coverage or cost?
• What should I expect from new insurance coverage: Better protection, rates, or claims processing?
• What problems have I had that indicate I should get new auto insurance coverage?
• What features offered by a new car insurance company might influence me to change carriers?
• Should I make cost the most important factor or should I be more concerned about quality and level of protection?

Ask these and similar questions of yourself before you start an active search for new auto insurance coverage. It is seldom beneficial to switch from one car insurance company to another every six months or one year just for cost reasons.

At the same time, it is a valid consumer complaint that many auto insurance companies have not shown much loyalty to drivers. Some companies will greatly increase insurance premiums for just one accident for drivers who have previously cost them nothing over years of safe driving.

Auto insurance companies should consider their actions, premium increases, and cancellations for those drivers who have had years of safe driving records. Ask yourself how your car insurance company has handled the loyalty issue with you personally and others.

Some important questions to ask an agent or company

Once you have decided to examine your auto insurance options, create a list of questions for agents and companies. Unless you already have serious issues with your current insurer, carefully consider the reasons for your potential desire to get a new auto insurance carrier.

Once you have decided to analyze your options, consider asking agents or companies the following questions:

How financially strong are the car insurance companies you are considering?

One of the most important considerations when evaluating any insurance company is how strong they are financially. No insurance company can protect you or pay your claims if they don't have the cash reserves to meet expected payouts.

You should seldom, if ever, consider an insurance company that has serious cash flow, cash reserve, or other financial problems. They can only help you if they are there when you need them.

What are the options for deductible amounts and what is the cost for each?

Increasing your deductible is an easy – sometimes too easy – way to reduce your auto insurance cost. However, carefully consider the real world ramifications of this approach.

Should you increase your deductible from $250 to $1,000 might save you hundreds of dollars per year on your car insurance premiums. Yet, you must understand that the next loss you have will require you to pay $1,000 of real cash before you can have your vehicle repaired.

How large a discount can I expect if I give you my homeowner's or renter's insurance coverage along with my auto insurance?

Most companies will discount both insurance policies if you allow them to insure both your car(s) and your home. Ask how much your new potential company will discount both premiums.

Should I have Personal Umbrella Policy (PUP) to complement my auto insurance?

Do you have many valuable assets that might be at risk if a serious auto accident results in a large liability award for the other party? Second homes, boats, bank accounts, or investment funds may be at risk if a court awards compensation above your auto insurance liability limits. A PUP normally protects you against a large liability award in excess of your car insurance maximums.

These are some of the questions you should ask your agent or any auto insurance companies you consider when looking for new coverage. Cost is always important, but sufficient coverage and reasonable (and fast) claims procedure and payment are even more critical. As annoying as premium payments can be, fast and fair action and payment for a claim are even more important.