Getting Your First Auto Insurance: What You Need to Know

You’ve never had an accident nor a motorcycle injury that required you hiring an attorney to sue someone. You also never bothered to think about getting an accident or a motor vehicle insurance policy. Those were your young, free, and single days. Now, it’s different since the wife is six months pregnant, and you’re set to move to Denver for your new job. To prepare for the latest addition to the family, you’re now giving up your motorcycle temporarily and planning to purchase a family van. It’s no longer if or when should you get a car insurance policy. It’s now a must.

Before you blindly sign anything or give in to the notion that insurance providers are all the same, these are the things that you should know as a first-time buyer.

An Overview of the Auto Insurance Business

If you haven’t been paying any attention, the auto insurance business is in the billion-dollar league industry. In 2018, the industry earned $282 billion in revenue. And if ever you find yourself in an unfortunate accident, that is where they will get the coverage due you, and it probably wouldn’t even make a dent on their yearly profit.

The number of businesses is just fewer than 8,700.

Understanding Car Insurance Policies

The first thing you need to know is that not all insurance companies are the same. The policies differ, too. There are big ones, and there are smaller regional ones. Here are a few things that you should carefully consider:

driving a car

  1. Big is not always best. The big companies that dominate the market are Allstate, Geico, Progressive, and State Farm. These four companies have cornered more than 50% of the market. Are they the best for you? Anecdotes from policyholders indicate, however, that they aren’t the best providers. Look for local or regional insurers that get high satisfaction ratings from customers. The critical thing to do is to research extensively and to shop around for the best deal without sacrificing quality service.
  2. Know the basics about the coverage. Liability, comprehensive, and collision coverage are at least the three main components that you should look for. The first one is the minimum required by law, which pertains to coverage of bodily injuries and damage to property that you caused. Comprehensive includes coverage of theft and vandalism, among others. Collision is optional, but if you are involved in one, the cost of repair will be covered to an amount specified in the policy. Remember that as your car gets older, the insured value becomes less as well.
  3. Discounts and cheaper rates. Mode of payments—semi-annual or annual—can save you a few dollars. Always ask for discounts or ways to lighten your payment load. The rates also vary from location to location. What might be cheap in one state might not necessarily be the same in another.
  4. Don’t skip payments and always pay on time. If you missed paying your phone bill or cable TV, you just get disconnected from the service. There’s nothing profound that happens that isn’t irreversible. You miss your insurance payments, your policy lapses, and then you’re in an accident. This series of events is disastrous. If you’re police lapsed, you’ll end paying for every expense from the car repair to the medical costs. That is not something that you would want to happen to you and your family.

These are just a few components about car insurance policies that you should be aware of. Have a thorough discussion with your agent about the fine prints of the document. It’s better that you know what’s covered rather than be surprised later.

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