Regardless of the reason, something brought you here, which means you’re probably considering buying auto insurance.
At RiskWell, we help people get new policies or adjust their current policies every day, so this is right in our wheelhouse. If you aren’t familiar with the process, we know how confusing it can be.
That’s why we want to help you understand the process step-by-step below, so when you come to us (or another agent or carrier) you are more informed and confident about the insurance policy you are investing in.
Since we are in Texas we’re going to specifically look at the TX process, so depending on where you live, some parts may vary.
1. Pick an insurance provider:
You wouldn’t buy a car without doing your research first, right?
Well, you should treat shopping for car insurance the same way. Of course, if you’re reading this, that means you have already started your research, so good for you.
When beginning your research, the first thing you should consider is …
Which type of insurance provider to work with:
First, you’ll want to research the various types of insurance providers (direct writer, captive insurance agent, or independent insurance agent) and weigh the pros and cons of each to decide which option works best for you.
We’ll provide a short description of each to help you get started …
A direct writing insurance company is a company that can give you a quote online or over the phone but does not work through an intermediary, like an agent. Examples of direct writers for auto insurance are GEICO or Progressive.
If you are looking for an auto policy in a hurry, and don’t want to shop around, then buying directly might be your best bet. You’ll likely remove any potential for back and forth conversations, can do all your shopping either online or over the phone.
Captive Insurance Agent
A captive insurance agent represents only one insurance company and can only offer a quote with that one company. Examples of captive agents are State Farm, Allstate, and Farmers Insurance.
If you are looking to work with someone more local, but who represents a nationally known insurance company, then buying through a captive might be the way to go.
Independent Insurance Agent
Independent insurance agents (sometimes referred to also as brokers) represent multiple insurance companies and can provide you with multiple quotes. An example of an independent insurance agent would be us here at RiskWell Insurance, and many other local insurance agents you see as you drive through your town.
If you want to have multiple quotes or options for your auto insurance, shopping with an independent agent is the way to go. Agents are more likely to spend more time discussing your needs, and providing quote options that provide the coverage you need at a price you can afford.
Once you have an idea of which type of provider you want to use, the next step is to …
Choose a specific provider:
You can begin by searching the internet for specific agents or carriers in your area.
Read reviews for the companies on websites like Google Business or Facebook and ask for their credentials to be sure you are working with a reputable company.
Decide what is most important to you in a provider: Convenience? Hours? Online capabilities? Customer service? Consider what your priorities are and choose an agency or carrier that aligns with those.
2. Provide information to the insurance provider:
Once you have decided who you are going to work with, it’s time to reach out to them to get a quote.
The agent or representative you are working with will ask you for all sorts of information including:
- Date of birth
- Driver’s License number
- Information about other drivers in the household
- Information about any accidents or violations
- Vehicle information/who drives each vehicle
- Loan information about each vehicle
- Information to determine eligibility for discounts
- Questions about coverage/limit/deductible options (which we’ll get into more below)
Often, it will make the most sense to bundle your auto policy with your home or renters policy because it saves money. If this is the case, you would also need to provide information about your home or apartment and possessions.
3. Discuss and choose coverage/limit/deductible options:
Auto insurance policies have various coverages, some required and some optional, all with coverage limits.
Your agent or carrier should go over all the coverages with you and help you determine which you need, and what their limits and deductibles should be.
Liability coverage– pays to repair the other driver’s car if you caused the accident. It also pays the other driver’s and his or her passenger’s medical bills and some other expenses. Texas law requires you to have at least $30,000 of coverage for injuries per person, up to a total of $60,000 per accident, and $25,000 of coverage for property damage. This is called 30/60/25 coverage.
Part-1 Collision-Provides coverage for damages to your vehicle as a result of a collision accident, regardless of fault. This coverage is subject to a deductible, which at a minimum is $250. You can increase your deductible for additional savings. Dropping this coverage is not recommended unless you have an older vehicle with a low value.
Part-2 Comprehensive (AKA Comp)-Provides coverage for damages to your vehicle caused by something other than a collision (ex. Flood, fallen objects, hail, pests, or collision with animals). This also includes glass coverage. This coverage is subject to a deductible, which at a minimum is $250. You can increase your deductible for additional savings. Dropping this coverage is not recommended unless you have an older vehicle with a low value.
Part-3 Medical payments coverage pays your and your passengers’ medical bills. It also pays if you’re hurt while riding in someone else’s car or while walking or biking. If you do not want this coverage, you have to tell the company in writing.
Part-4 Personal Injury Protection (aka PIP)-This is similar to medical payments coverage. If you are involved in an accident, regardless of fault, PIP coverage will pay for any medical bills and lost wages for you and your passengers. Typically, insureds purchase 5-10K in coverage, but you can get $25,000 for a low cost. If you do not want this coverage, you have to tell the company in writing.
Part-5 Rental Coverage-Provides coverage for rental charges you incur while your vehicle is being repaired as a result of a collision. The minimum coverage available is $30 per day up to $100 per day with most carriers. Some carriers offer up to 15K in total with no per-day limit. You can increase this coverage. (Note: This coverage does not reimburse for rental fees for other situations, such as vacation rentals.)
Part-6 Towing & Labor-Provides coverage for towing and labor (at the scene) costs associated with your car disablement. Coverage available varies by the insurance company. The coverage per disablement typically ranges from $50 to $120.
Part 7 – Bodily Injury Caused by an Uninsured/Underinsured motorist Auto (aka UM/UIM) If you are involved in an accident with someone that does not have liability insurance coverage or does not have enough, or you are involved in a hit-and-run incident, UM/UIM coverage would pay the claim. The coverage has two limits: per person and per accident. This is a low-cost way to protect your family and is highly recommended since an estimated one out of eight drivers in Texas does not carry liability coverage.
4. Select a payment plan:
Once you have selected all your coverages and limits, your agent or carrier will give you a quote for the cost of the policy.
At this point, you will have several options of how to pay available to you including monthly installments, pay in full, or through electronic funds transfer (EFT) or automated clearing house (ACH).
Paying in full or through EFT or ACH could save you money on billing fees.
Most insurance companies require a 20% deposit for a new policy.
And that’s it! You have your new policy. At this point, the only thing you will need to do is be ready to …
5. Renew when the term expires:
Most policies have a one-year term, but some are only six months.
When you get your new policy, make sure you know what the term is so you are ready to renew.
Most agents or carriers will call you to review your policy and renew for you, but it is best to also be keeping track yourself.
Ready? Get shopping for car insurance:
After learning about how the car insurance buying process works, we hope you feel a little more equipped to research your options and navigate the process.
We know there is a lot to consider, specifically when it comes to the optional coverage and limits. I mean, how do you know what coverages are actually worth your money and how much of each you should get?