7 Details to Remember When Buying Insurance

Portrait smiling family on beach.
••• Getty Images/Hero Images

Most people only think about insurance when a loss, injury or accident has occurred. This is the time you need financial assistance the most—your insurance company needs to come through for you, help you get treatment and restore your life. After all, this is what you pay them for.

Unfortunately, if you don’t do your homework beforehand in getting the best insurance coverage available to protect your family’s health, assets, and financial well-being you may be left with bills you cannot afford. The time to find the best insurance for your needs is before such a loss occurs.

When buying insurance, you should always comparison shop, look for discounts and services, and consider an agent. Find a plan you can afford and upgrade later; be truthful with your chosen insurance provider, and update and re-evaluate your policy when necessary.

Insurance Company Comparison Shopping

Protecting your family’s assets and financial well-being is something that you depend on your insurance company to do without question. However, you can’t trust your family’s future to just any company without checking it out first. Insurance rating organizations can help with this. Some of the top ones are A.M. Best, Weiss Ratings, Standard & Poor’s, Fitch Ratings and Demotech, Inc.

Insurance comparison shopping is not as difficult as it once was. You don’t have to interview different agents to find the best value on an insurance policy. By using comparison websites, you can view multiple quotes side-by-side to compare similar packages.

Many people stick with a preferred provider regardless of price. There is nothing wrong with this; However, if you are not loyal to one company, you may find it worthwhile to compare providers and premiums. You might be able to get a similar policy for much less somewhere else.

Many of these sites will also allow you to purchase coverage right from the website. There are many insurance comparison shopping websites available—some examples are NetQuote, CoverHound, Compare.com, and InsureMe.

Discounts and Service When Buying Insurance

Raising a family is an expensive undertaking. No one wants to pay more for insurance than they have to. One way to make sure you are getting the best deal possible is to find and take advantage of all available discounts.

There might be hidden discounts not readily seen on a website, or that agents tuck away for in-office-only clients. You can ask to see all the available discounts and the qualifications for receiving them. Common discounts that can help you find the best value on an insurance policy include multi-policy discounts, or discounts on safe driving, homeownership, or safety devices.

Cut-rate insurance prices generally mean cut-rate customer service and coverage. This is not to say that highly-rated insurance companies cannot offer affordable insurance rates, or that companies with lower rates are not able to offer competitive coverage and services. Be sure to check out the company's record with the Better Business Bureau, American Customer Satisfaction Index (ACSI), or J.D. Power & Associates.

Using an Agent When Buying Insurance

Insurance agents are associated with an insurance provider. Referred to as captive agents, they own their business, and naturally are trying to create income while generating business for the provider. Agents are more convenient than dealing with the provider because there are personal interactions and someone to answer questions.

A captive agent is one who only represents one company and will only offer you the policy options from the company they represent. Brokers and independent agents work with many companies and have more options.

You might be able to get better coverage with an agent in person. While it's possible to call the insurance provider or purchase insurance online, working with an agent might be better for your circumstances.

Independent insurance agents and brokers often represent many different companies, giving them access to more offerings for comparison than a captive agent.

An agent might quote you a final price. Sometimes, the final price is not really the final price. Your agent might be able to find a lower rate for you.

You Can Upgrade Later

There may be occasions when financial restraints prevent you from getting the coverage options you need. Insurance minimums are generally very affordable, so you should always purchase the minimum coverage required by law from your state’s Department of Insurance. Even minimum coverage can keep you from paying out of pocket.

Once you are more financially steady, you can upgrade your policy to include a more comprehensive coverage package. It doesn’t hurt to give your insurance agent a “target premium” which would be an ideal price you would be willing to pay for insurance coverage. For example, Progressive Insurance offers a feature called the “name your price tool” which will allow you to get the coverage you need at a price you can afford.

Tell the Truth

Insurance companies are not legally obligated to honor your policy and pay claims if you knowingly misrepresented the truth on your application. Cheaper premiums are not worth the risk of having your policy canceled for misrepresenting the truth. Often, the company will not outright cancel your policy but will contact you for an additional premium required to maintain coverage once the rates are adjusted.

Coverage Is Not Always Automatic

If you buy a new vehicle or add additional structures to your property, they may be automatically covered for a time. Normally, you have a specific time frame, perhaps 30-days (this could be more or less depending on your company) to contact the insurance company and let them know of your purchase.

The same goes for trading in your vehicle—the coverage will transfer to your new vehicle, but only temporarily unless you alert your insurance company. Check with your insurance agent or company for the specific notification requirements of your policy.

Any changes in your life should be followed by a call to your insurance company or agent.

Re-evaluate Your Coverage

When you have a significant life change—a major purchase, a move, marriage, divorce, or have children—your insurance coverage needs will change. Even if you’ve had no major life events, it is still worthwhile to do an annual policy check-up with your insurance agent to make any necessary changes.

Finding the best coverage to protect your family from whatever life may throw at you doesn’t have to be difficult or confusing. Use all the tools and resources available to make finding the right coverage a smoother process.