Buying Auto Insurance

How to Select an Auto Insurance Company or Agent

The first step is to select a financially strong insurer.

It is important to shop around to get the best price for the coverage you need. Talk to several representatives from a number of different companies. Tell them what your insurance needs are and ask what their company will charge to cover you.

Once you have narrowed down the companies you are considering, find out if the company is permitted to do business in yours state. If they are not, do not buy the insurance and contact the Department of Insurance to let them know that company is tyring to do business in your state.

Check with rating agencies for a financial analysis, grade or rating of the insurance companies. These are conducted by several private companies and are only opinions. However, they can provide you with information about how private analysts view the financial stability of a particular insurance company. Ratings are available at most public libraries or on the Internet.

Check the company’s complaint record.  You can contact the South Carolina Department of Insurance to provide you with the number of written complaints our office has received against an insurance company.

Remember, if it seems too good to be true, it probably is.

 

Things You Should know About Buying Auto Insurance

  • How is Your Insurance Rate Determined?

Two factors determine what you pay for auto insurance. The first factor is underwriting and the second factor is rating. Insurance companies underwrite to assess the risk associated with an applicant, group the applicant with other similar risks and decide if the company will accept the application. Based on the results of the underwriting process, the rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim.

  • Several Factors Will Affect Risk Rating

Your driving record, area in which you live, gender and age, marital status, prior insurance coverage, vehicle use and make and model of your vehicle are common factors that can affect the price you will pay for your auto insurance.

  • Ask Your Agent About Discounts

Discounts are awarded because the insurance company sees you as a “better risk.”  There are some discounts you should look for: multiple vehicles, driver education courses, good student, safety devices, anti-theft devices, low mileage, good driver/renewal, auto/home package and dividends.

  • Tort System vs. No-Fault System

Each state must implement either a tort system or a no-fault system.  South Carolina implements a tort system.  The three basic coverages sold under the tort system are bodily injury liability insurance, property damage liability insurance and uninsured motorists coverage.

  • Check Into Optional Coverage

The most commonly recognized coverages, in addition to the basic liability package, are collision and comprehensive coverages. Collision coverage pays for physical damage to your car as a result of your auto colliding with an object such as a tree or another car. This is relatively expensive coverage and is not required by law. Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. This coverage will also cover broken glass and windshield damage. Comprehensive coverage is less expensive than collision, but is also optional. Other optional coverages include medical payments coverage, rental reimbursement coverage and towing and labor coverage.

  • Shop Around Before You Buy

When shopping for auto insurance, premium quotations are a useful tool for comparison of different companies’ products. When asking for price quotations, it is crucial that you provide the same information to each agent or company. The agent will usually request the following information: description of your vehicle, its use, your driver’s license number, the number of drivers in your household, and the coverages and limits you want.

  • Where to Shop

Check the newspaper and yellow pages of the telephone directory for companies and agents in your area. In addition, ask your neighbors, relatives and friends for recommendations on insurance companies and agents. In particular, ask them what kind of claim service they have received from the companies they recommend. Remember to shop around to get the best price and service.

  • For Your Protection

Once you have selected the insurance coverages you need and an insurance agent or company, there are steps you can take to make certain you get your money’s worth. Before signing an application for any insurance coverage, verify that the company and the agent are licensed to do business in South Carolina. It is illegal for unlicensed insurers to sell insurance and, if you buy from an unlicensed insurer, you have no guarantee that the coverage you pay for will ever be honored.

  • Read Your Policy Carefully

You should be aware that an auto insurance policy is a legal contract. It is written so your rights and responsibilities, as well as those of the insurance company, are clearly stated. When you purchase auto insurance, you will receive a policy. You should read that policy and make certain you understand its contents. If you have questions about your insurance policy, contact your insurance agent for clarification.