5 Questions to Ask Your Agent About Cheap Auto Insurance

The law mandates that you buy car insurance. Not surprisingly, plenty of auto insurance companies vie for your business with sometimes impossibly low rates. Are you really getting a good deal? Avoid common pitfalls associated with cheap auto insurance.

1. What does the policy cover?

The Insurance Information Institute (III) highlights that there are six common components to an auto insurance policy (even though they do not all have to be purchased): Bodily injury liability, PIP, property damage liability, collision, comprehensive and uninsured or under-insured motorist coverage. State-mandates govern the bare bones of an auto insurance policy that local law enforcement will accept. Thus, when you compare car insurance products, make sure that they all have the same components you need and also want.

2. How much does it cost to cover my leased car?

Leasing a car is attractive, because frequently the payments are low and the vehicle is a late-model automobile. Do not get sticker shock when calling the insurance agent! Know ahead of time that leasing companies require drivers to carry comprehensive and collision coverage in addition to state-mandated insurance coverage. For late-model cars, this can get rather costly. Do not get a low quote from an insurer, only to later find out that the agent failed to include comp and collision in the estimate.

3. Does my policy cover a rental car?

If you buy car insurance online, there is probably little talk of renting a car. Once again, the III offers sage advice: Failure to carry comprehensive and collision coverage eliminates any theft or accident protection for the rental car. Moreover, if you are renting the car for business, rather than simply for a vacation or while getting your daily driver fixed, your regular auto insurance may not apply.

4. Which policy price reductions do you offer?

Cheap auto insurance quotes are a starting point, not a destination. The calculations involved in assigning cost to a policy include the driver's record, how many miles she puts on the vehicle in any given year, the ages of all licensed drivers in the family, the type of car and also the statistical trend of car crashes in the area where the driver resides. Of course, the types of coverage and deductibles also factor into the price.

On the other side of the equation, there are plenty of reductions that individual companies offer. For example, State Farm offers car insurance discounts when insuring multiple cars, buying other kinds of insurance (such as homeowner coverage), qualifying under the "good student" stipulation and also undergoing driver training. It pays to compare car insurance reductions offered by various companies -- not just their rates.

5. What is your Standard & Poor's rating?

Standard & Poor's is in the news for changing the United States' credit rating; did you know that the agency also rates car insurance companies? Compare car insurance ratings and only do business with a financially solid agency. It is easy for a fly-by-night outfit to offer cheap auto insurance and then simply close down when the claims start coming in.

Do not forget to also solicit personal recommendations from friends and family members, especially those who filed claims in the past. Were their experiences good or did they have to endure a lot of red tape and unanswered phone calls? Cheap auto insurance is not always all it is cracked up to be; paying a bit extra -- in the long run -- can save you quite a bit of money.