With so many companies to choose from, you may find it difficult to select an auto insurance policy that fits your coverage needs.
It can even be more complicated due to friends, family or simply well made insurance ads. However, with the right strategies, you can empower yourself and still make good decision
Why buying auto insurance is so important
All 50 states require drivers to take financial responsibility to cover the costs of a negligent accident, whether it’s liability insurance or proof of assets.
There is a good reason why states require drivers to maintain proof of financial responsibility. The National Safety Council found that the calculable cost of motor vehicle accidents in 2019 ranges from $4,600 for property damage to more than $1.7 million for an accident resulting in death.
You can save yourself and others the financial burden of a negligent accident by purchasing auto insurance.
How to choose the best car insurance according to your needs
Whether your state requires you to buy car insurance or you believe it’s the wisest option financially, it’s good to keep the following tips in mind when shopping for car insurance:
Identify your insurance needs. Before you buy car insurance, consider factors that may affect how much car insurance you need, such as the make, model and year of your car, how often and far you drive, and your state’s minimum coverage requirements.
Check prices, deductibles and discounts. Auto insurance deductibles can play a vital role in the coverage you choose, as they can have a direct impact on your premium. It’s a good idea to look for a company that offers the features you want with a deductible and premium that fits your wallet. Discounts that can lower your costs are also great to find.
Shop with multiple insurers. Comparative shopping with multiple auto insurance companies is a great way to get a well-rounded overview of the many offerings out there. You can easily compare car insurance quotes online to narrow down your options quickly.
4 car insurance buying tips that can help you avoid decision blocks
You might think that the car insurance buying experience is simple. But some experts have found that when you make any kind of purchase, you actually participate in a consumer decision-making process that includes recognizing your needs, researching information, comparison shopping, and ultimately making a purchase. During this process, you may encounter psychological roadblocks that are common when shopping. Understanding how to avoid or overcome these roadblocks can significantly improve your car insurance search.
1. Identify what psychological biases draw you in.
A psychological bias, also known as cognitive bias, is the tendency to unconsciously simplify information and, as a result, make an illogical decision. Consumers may sometimes unintentionally rely on psychological biases when making purchasing decisions.
For example, a consumer may use a psychological bias known as the bandwagon effect during the buying process, which is the tendency to follow the crowd when making decisions. In this case, you may choose the same insurer as your family members without doing any research first – and later regret your decision.
2. Pay attention to insurance company suggestions
Over the years, companies have learned that consumers are not always perfect decision makers. In fact, consumers have developed a reputation in marketing circles for being consistently irrational, i.e., predictably irrational behavior.
This is why “nudge marketing” has become a popular tactic to influence consumer choices. By exploiting consumers, companies hope to convince them to make purchasing decisions without giving much thought to their choices.
Comparative advertising is an example of a subtle guide that companies can use, in which “a manufacturer highlights certain attributes of its product where it is superior to its competitors,” Brown says.
He notes that this form of advertising is “very effective at inducing faulty decision-making,” because most consumers would not assume that a company would advertise a product that is worse than its competitors.
So how do you avoid being persuaded by companies through these forms of marketing? Brown recommends making “slower, more deliberate choices rather than relying solely on intuition.”
He also suggests gathering as much information as possible about a service, building a rubric to evaluate your choices, and then buying the best product – although he notes that this kind of effort can be difficult for some consumers. He also suggests using third-party organizations to do this work for you.
3. Avoid making uninformed buying decisions
It’s easier than you think to buy car insurance without the proper information, especially if you’re convinced that it’s time to buy car insurance. For example, you may see an advertisement touting a deep discount and feel compelled to purchase a policy immediately.
Elliott Jaffa, a behavioral and marketing psychologist at Dr. Elliott B. Jaffa Associates, recommends avoiding making quick, uninformed decisions.
Fortunately, you don’t have to be a victim of an impulse buy. For example, if you’re looking for a blanket online, Jaffa recommends skipping the ads and scrolling further down to find neutral sources designed to help you compare purchases. But it’s also essential to go into the process with a little bit of information about your needs
Part of building your knowledge is learning more about how auto insurance works and getting relevant data, such as insurer ratings from AM Best companies and insurance company customer satisfaction studies from companies like J.D. Power.
4. Avoid the challenges of choice overload.
Research has shown that consumers sometimes experience choice overload, which can occur when they are presented with so many options that they make a decision they regret or have trouble deciding.
The glut of auto insurance companies offering a wide range of coverage options and benefits can quickly make you feel overwhelmed, so it’s a good idea to clarify what you want and need in an insurance policy.
To help you narrow down your options, Jaffa recommends choosing five companies that have piqued your interest over time, then checking with a neutral, reputable source to see which companies they recommend. In addition to the five companies you like, he suggests choosing two more from the unbiased source. That way, you’ll have a substantial, but not overwhelming, range of options.
Next, you can get auto insurance quotes and review each company’s offerings and prices to see if they match your needs. After you’ve done your research, you may also want to consider waiting a few days before reviewing them. This will allow you to digest the information and help you make your final decision with confidence.
Both novice and experienced auto insurance shoppers can struggle to make informed decisions when shopping for coverage. But after equipping yourself with the right strategies and making the extra effort to conduct an informed search, you can feel confident in your ability to get the best auto insurance.