Auto Insurance 101 - How to Choose Your Car Insurance Wisely and Save

Step by Step: From Choosing Your Car Insurance To Filing Your Claim

Insurance adjustor filling out form for damage report on car
••• Zigy Kaluzny-Charles Thatcher/The Image Bank/Getty Images

Choosing the right car insurance is one of the top ways to reduce your insurance costs if you know how to do it right. Understanding what makes a car insurance premium higher or lower, will also save you money on your car insurance. Sometimes people with no claims see their car insurance go up due to insurance company premium rate increases. It helps to understand how to shop and get the best price. Here are some tips to help you choose your car insurance coverage and save on the cost.

1. What Kind of Coverage Do You Need?:

Before calling the insurance company and getting your insurance quote, take the time to decide what kind of coverage you need. Every state has minimum car insurance requirements. The basic coverage is usually liability insurance, some people refer to this as one-way insurance. However, there can be some confusion when using that term, so it is always best to use the term used in your insurance policy (Liability) to make sure you understand what you are getting. It is important to know what policy limits your state requires so you can decide what policy limits you would like.

The minimum is a guideline, you can take higher limits to protect yourself.

Very often, you may decide you want liability plus comprehensive coverage, even if you don't want collision. Part of your cost will depend on your choice of adding Collision or Comprehensive coverage, or both. Learn about Comprehensive Insurance coverage here and Collision.

What Deductible Should You Choose?

If you choose comprehensive and collision coverages, you will need to decide what deductible amounts you would like. You can read more about using your deductible to save money on insurance here

Other coverages you may also be interested in are:

2. Choosing an Insurance Company:

When you are ready to select your insurance provider, besides just looking for the best car insurance premium, you will want to take some time to research what insurance company you want to go with by learning about their financial strength. This article may help: The Best Car Insurance for Price, Satisfaction and Claims

Another important aspect of choosing your insurance provider is knowing if or how they will use your credit score to determine your price. Take the time to research different companies. You may also want to look at our list of the most expensive cars to insure, which has some great information on what might impact the cost of car insurance or learn more about Finding the Cheapest Car to Insure When Making a New Car Purchase may also help.

3. Making the Call:

When you have your list of selected car insurance providers you are ready to start calling around to search for the one who can give you the best deal. It is important to have certain information such as your driver's license number, and details of any claims you have had in the past. Your current insurance company may be able to provide you with a letter of claims experience if the new company requires it. In addition, having a list of discounts to ask about can save you some extra money.

Examples of Some Discounts for Car Insurance

  • low mileage
  • winter storage discounts
  • professional, university degree, occupational or association discounts
  • good driver discounts
  • telematics discounts also known as Usage based car insurance discounts
  • green car - environmentally friendly discounts
  • alarm or tracking device discounts
  • retiree discounts
  • student discounts, or student away at school discounts

See also: Car Insurance Savings Checklist

4. Understanding Your Car Insurance Policy:

It is important to know how your car insurance policy works and how it can work for you. Here is some help in understanding your policy:

5. Filing a Car Insurance Claim:

Let's hope you never have to file a car insurance claim, but if you do it is important to learn some things before the accident comes. Learning what things you need to do when you have an auto accident can help the claims process go much smoother. Here are some claim filing tools you will want to learn before you file a car insurance claim: