Car Insurance Basics

Car insurance is mandatory, which means that you have to have it. Most people look forward to dealing with an insurance agent with about the same level of enthusiasm they show for their dentist just after he mentions a root canal, but purchasing car insurance doesn’t have to be a painful experience. According to the CNN Money there are several important factors involved in choosing a company to provide you with car insurance.

Getting Started

First, and most important, you need to make sure that the company is licensed to provide insurance in your state. A reputable national or multi-state insurance company will tell you up front that they are not licensed to cover you because of where you live bit not all companies are honest.

Second, confirm the financial standing of a company before signing with them. A company in financial difficulty is far more likely to deny claims so you want to be sure that they will have the funds to pay out if the worst happens. Check their rating with Standard & Poor’s to be sure that their mark is an A or higher. If you research the company with Moody’s Investor Service, you want the company rating to be AA or higher. Also check with the Weiss Ratings to make sure your prospective insurer is not on their list of weakest companies.

Once you have found several companies licensed in your state that are financially stable, your next step is to find out what your state minimum requirements are. This can be done by calling your local Department of Motor Vehicles or visiting their website. Make or print out a list so that you can tell the insurance agent exactly what you need. If you can afford extras, consider getting rental insurance if you frequently rent cars. This does not cost very much and it will lower the fees the rental car companies charge.

Making Your Choice

Research how each of the insurance companies treats their clients. This should be done formally by looking at how they are rated by independent researchers such as J.D. Powers and Associates and Consumer Reports, but you should also talk to the people you know. Friends, family and work colleagues will all have information about their insurance companies and most people are more than willing to share their experiences.


Once you have decided on an insurance company and signed a contract with them, keep in mind that you can still negotiate individual situation. For example, should you become involved in a collision you don’t have to accept the insurance company’s assessment of what the car is now worth. You can check their estimate with a reputable car purchasing company such as to see what you can realistically get for it, and take that information back to your insurance agent.

It is especially important to shop around if your driving record is not spotless. Many states offer high-risk pool insurance, but it is very expensive and it’s not your only choice. Many solid, reputable insurance companies have found their niche insuring people that other companies would deny coverage to. They keep their operating costs down by advertising online and through mailers, and all should offer free quotes.


Image Credits : Naypong


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