Shopping for Insurance

Shopping for the Best Insurance Rate

Whether you are shopping for auto insurance, health insurance, home insurance, life insurance or any other kind, you can look at the process for insurance shopping the same way.

First, work out the amount of insurance you need. Meaning, if an insurable event were to occur (such as a car accident for auto insurance or a fire that damages your home) then how much money will you reasonably need. If you insure yourself for too little you won't be made whole for the loss you suffered; for too much and you'll be wasting money on premiums every year.

Second, consider what deductible is reasonable. A high deductible will mean you have to cover small damages (the next time you back into a pillar?) yourself but will dramatically lower your premiums. A low deductible will mean you can claim for even relatively small issues, but will mean you pay a lot for coverage, i.e., your premiums.

Once you've developed a general idea of what you're looking for, you can start to search for the right provider. Bills.com provides a great way for you to start your insurance search. Even in the Internet era, though, looking for insurance is not totally straightforward — you will typically have to fill out a separate application for each insurer you want to get a quote from.

Once you've gathered a few quotes, it is worth verifying THREE things.

First, check on the financial health of your insurer — as we saw dramatically in the first decade of this century, insurance companies can fail. And if you are going to pay a company year after year, you need to make sure that the company will be around when the time comes to make a claim. Companies that can help give you insight into an insurance company's health include A.M. Best Company, Duff & Phelps, and Moody's Investors Service.

Second, check the details of the quote. Does it cover what you need it to cover? Are there things it does not cover, that you believe you need to be covered for? Take a home policy: will it replace your home contents with new things or only compensate you for what the old contents were worth if you sold them just before they were lost? Will it pay to bring a new home up to code when an insurable event leads to the loss of your old home? Make sure you know the ins and outs and that you know what you're getting in your policy.

Third, check on the company's reputation for handling claims — in the event the worst happens, the last thing you want is an insurer who will nickel and dime you, or treat you as an adversary.

If you are uncomfortable making your own choice, you are of course free to work with an insurance agent. Though many of them will only offer insurance from a single company, so make sure you check on the company's financial health and reputation for claims handling before choosing an agent.

Once you've made a choice and signed up, study your insurance documents carefully on receipt, to make sure that the policy is exactly what you demanded. This is important because if you aren't happy and choose not to go ahead you can return the policy and get a full refund within 20 days.

To make a start, head to Bills.com's insurance center.