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Oct 02, 2018

Are You Covered? Tips to Evaluating Auto Insurance.

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You did it! You got pre-approved, researched different vehicles, weighed the pros and cons, test drove and eventually found the right car for your life. You thought you had everything covered, but then someone asks you, “What kind of auto insurance will you have on your vehicle?” Oh no…the thought hasn’t even crossed your mind.

Why is auto insurance important, anyway? Maybe all you see are the charges taken out month after month for something that hasn’t even impacted you yet. Do you really even need it? Let’s explore this more.
Pay a little now to save a lot later.
It can be frustrating to pay for something that you don’t see benefits from right away. According to, the minimum average annual rate of car insurance in Minnesota is $579, adding an additional $48 to your monthly vehicle expenses. Car insurance is designed to help protect you from a potential financial crisis down the road (pun intended).

Say, for example, you happen to get into a car accident and the other driver has experienced injuries for which they are looking to be compensated. Those monthly car insurance payments are now coming into play and, depending on your policy, would be used to cover much of those costs. If you opted to forego coverage, in this situation you could be forced to pay for all of the damages out of pocket – sometimes equaling thousands of dollars. The small monthly expense doesn’t seem so bad when you look at it that way.

Other instances may include damages to your vehicle, whether it is an accident, vandalism, storm damage, or a deer runs out in front of you on a back road in Minnesota. Certain coverage options would protect you from paying top dollar to fix the broken windshield, dented doors and more.
So how do you know what insurance coverage you need?
The answer to that question isn’t always an easy one, and it can take time and consideration to make a decision. It is important to evaluate auto insurance coverage to find the right fit for you. There are several factors that will help you find your best coverage, including the type of vehicle, your personal priorities, and your budget.

TIP: Did you know even your car influences the price of your insurance? Before you buy your next vehicle, get a few insurance quotes to see how choosing one over another could impact your total monthly vehicle expenses.

According to the Insurance Information Institute, you should ask yourself these questions before buying auto insurance. Going in to purchasing insurance blindly could cost you (either in coverage above your needs or not enough that could cost you in the long run) so prepare yourself to make the best decision for keeping yourself covered without breaking the bank.

How much do you drive? Do you use your car every day, putting quite a few miles on it every month? A policy should reflect your usage appropriately; opting for a mileage-based insurance may be best for you. Although, in most cases, the cost between high mileage and low mileage drivers has no significant difference - the likelihood of wear and tear on your vehicle as well as the chance of getting into an accident is greater.

Will your car be used for work? Maybe you’re a food or goods delivery driver (hello, Shipt!), ride-share service driver, or a courier for small businesses.  If you use your car as part of your job or a second office, commercial auto insurance is important coverage to consider. Ask your insurance agent to talk through this option if you think this may be applicable.

What type of car do you drive? From fancy sports cars to your family’s mid-sized sedan, the type of car that you drive can impact your coverage. For example, if you have what is considered to be a “safe” car, you could receive potential discounts on auto coverage. To determine the safety rating of a certain vehicle, organizations like the Insurance Institute for Highway Safety tests side impact and rollover crash performance and rates vehicles as poor, marginal, acceptable, or good based on their performance. See where your vehicle falls within the safety ratings.

Where do you usually park your car? This may seem like an interesting question, but it is an important one when it comes to your coverage. Where you live and park your car can impact your insurance depending on the risk of vandalism or theft, which is typically seen more in bigger cities. Even if you don’t drive your vehicle often (say you have a collector’s vehicle), insurance is still important since cars that are always parked in your garage aren’t covered under your homeowners policy.

Will someone else be driving your car? Do you have a teenager, spouse, or even roommate that will also be driving your car at times? Consider adding them to your insurance policy well. Adding additional drivers to your policy can cover you if they happen to get into an accident while driving your vehicle, but keep in mind that depending on who is added to your coverage, you may experience a shift in cost. For example, you add your teenage son or daughter who is just received their license, you will likely see an increase in your premium because drivers under 25 are considered risky drivers. On the other hand, if you are a younger driver and you add someone with more driving experience, you may experience a cheaper premium.

What does your state require? Typically every state requires a minimum liability coverage for your car, meaning you must get a certain car insurance that meets the legal requirements for minimum car insurance based on your state law. Minnesota’s coverage requirements notes that MN is a no-fault state, so even if you aren’t the driver that causes the accident, your insurance is necessary. When choosing your policy coverage, be sure you are in compliant with your state requirements to avoid any legal reprimands if an accident were to occur. If you took out a loan for your vehicle, you’ll want to verify if your lender also requires a certain level of coverage. Many institutions require comprehensive coverage – an insurance option that covers damages to your vehicle caused by events that are out of your control.

Other factors that will be considered when determining your insurance options and costs include your age, gender, driving record and credit score – another reason to boost your credit score.

TIP: Have you been working on improving your credit score lately? Ask your insurance agent to re-evaluate your current policy if you’ve made significant strides to better credit – you could potentially get a better rate on your policy!

Now, where to start.
There is a long list of coverage options to choose from and it can be a bit overwhelming to look at, especially if you are new to vehicle ownership. Get a better understanding of some common coverage options to help you decide what will be best for you, your lifestyle, and your budget.

To help make the process easier for our members, Firefly has a partnership with TruStage Auto & Home Insurance Program to provide helpful information to members of all levels of car buying experience. 

You’ve got this.
Next time you’re looking to purchase a vehicle, remember the importance of auto insurance coverage, too. As you evaluate the different coverage options and questions we’ve outlined, we hope you’ve gained the confidence you need to make the right coverage decision for you.

Contents of this blog article are intended to provide you with a general understanding of the subject matter. However, it is not intended to provide legal, accounting, or other professional advice and should not be relied on as such. Information may have changed since the publication date.

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