Always shop around for auto insurance before you buy a car. This should be done because consumers are required to have proof of insurance before the vehicle can be taken off the lot. Try not to buy auto insurance at new or used car dealerships. Some consumers who do not have financial foresight will ask the car salesman if they can refer them to someone. Many car salesmen have contacts with one or two auto insurance agents. This relationship is sometimes necessary to help customers and to help make the sale.
The need for auto insurance at the time of purchase of a vehicle can create a position in which an insurance agent and car salesman can generate some income for each other. It also can create, in some circumstances, consumer problems if the consumer is not educated to the proper procedure for shopping for very cheap car insurance no deposit.
First, an individual should always shop around for auto insurance prior to the purchase of a vehicle to insure the best possible premium. Unfortunately, too many consumers upon seeing the shiny, new car or truck forget about taking their time in shopping for auto insurance.
Here are a few of the pitfalls:
Temporary Policies- These policies were designed to help individuals who cannot find affordable auto insurance, or are just in too much of a rush to buy a vehicle that they don’t shop around first. These policies will cover a consumer for thirty to sixty days with full vehicle coverage (liability and physical damage, usually).
The problem is not with the policies, but with a lazy consumer. Because of the ease of obtaining these policies (sometimes there is no credit or MVR check) and the affordability of short-term policy, some consumers fail to shop for auto insurance until the temporary policy is about to expire or cancel.
Then, as the consumer shops for insurance in the general market, they sometimes discover the car they purchased has expensive insurance rates. In some cities where rates are high, the auto insurance is just as much as the car note and doesn’t fit into their budget. Unfortunately, at this point, it’s too late to return the vehicle.
The other problem is that the temporary insurance is inexpensive compared to the regular market priced auto insurance. Consumers have to remember that car salesmen sell cars, not auto insurance. If they can move inventory by selling you a temporary policy, some will do just that. The best thing for you to do is shop around for no money down car insurance. Another consideration is whether the dealership gets a commission for selling temporary auto coverage.
Off-premises auto insurance agent – some car dealerships have developed relationships with auto insurance agencies, the car dealer or salesman will refer a potential client to the agency for insurance before the purchase of the car. This sometimes works very well for the consumer. The consumer can purchase competitively priced auto coverage, and the dealership sells a car.
But even this situation can turn against the consumer. Sometimes the dealership or salesman’s referral leads to expensive auto insurance coverage. In addition, some auto insurance agents will tack on inflated fees to the down payment. Part of the fee will compensate the dealership or salesman for the referral. Depending on in which state you reside, charging a fee is totally legal. In Pennsylvania, there are certain guidelines that an agent must follow if charging fees.
One guideline for fees is that the fee being charged must be for a service unrelated to the auto insurance policy or coverage. For example: A road service plan. Another guideline is that an agent of a company cannot charge a fee without written approval from the company. Very few companies allow agents to charge fees if they are being paid a commission. Please contact your State Insurance Department for additional information.
On-premises Auto Insurance Agency – these auto insurance agencies tend to give better service and possibly rates because of the relationship with the dealership. Some dealerships own the on-premise Insurance Agency. But even with on-site auto insurance agencies, a consumer should still shop around.
Six Month Policy vs. Twelve Month
There are advantages and disadvantages to having either six or twelve-month auto insurance policies. Let’s first look at twelve-month policies. A twelve-month policy gives you a stable premium for one year. If you are with a great company and have a low premium, that’s excellent. Under the twelve-month policy, if you get a chargeable accident, the company will not change your policy until January 2019.
If you had a six-month policy, you would be surcharged six months earlier, in June of 2019. Additionally, with a twelve-month policy, if you pay the policy off, in let’s say three months; you will have nine months without a payment. Some clients who would pay their entire annual premium with their tax refund every year.
One of the benefits of the six-month policy is the ability to switch to another company sooner, maybe for a cheaper rate. With the twelve-month policy, you would have to cancel mid-term and possibly lose a couple of dollars. Another benefit of the six-month policy is that you don’t have to wait as long to receive certain discounts.
For example, a birthday discount or a marriage discount would decrease your policy premium, with a six-month policy your wait could be from one to five months. Companies only apply discounts and surcharges at renewal, never mid-term. Possibly the best strategy is to ask for buy now pay later car insurance or $20 down payment car insurance.