First Time Buying Insurance? Here Are Some Tips

When first shopping for insurance, everyone has to start somewhere. While your first time buying insurance may not seem very exciting, this is actually a cause for celebration. After all, you’re established enough to pay for your own insurance, and you have property like your car, home or apartment and more to cover. While it may seem tempting to just buy a quick internet policy for the least amount of money possible, you’re much better off doing your research before buying that first policy. We’ve put together several tips for first timers who are just getting started in the insurance world.

What To Look For In An Insurance Agent

First thing is first, you need to find a reliable insurance company and a trustworthy agent or insurance broker to work with. While yes, you can easily buy a policy without ever talking to an agent, this is probably a mistake if it’s your first time buying insurance. This is because speaking with an agent or insurance broker allows you to ask questions, and it provides an opportunity for the broker to get to know your needs. If you simply click on something that looks good online, you could end up with coverage that actually isn’t right for you. Even though you may be embarrassed to admit this is your first time buying insurance, don’t worry, most agents and brokers are eager to help. But wait, what is the difference between an insurance agent and an insurance broker? Let’s break it down real quick:

Insurance Agents

Most people are familiar with the term insurance agent, so much so that they use it to describe both agents and brokers. However there is a key difference. Insurance agents, also known as captive agents, work for only one insurance company. This means their interests are in selling you only their company’s services. There are no price comparisons with other insurers and only a select few policies to choose from. First time customers should know that an insurance agent may not be their best option if they haven’t determined what their insurance needs are yet.

Insurance Brokers

Insurance brokers on the other hand work with several different insurance companies. This means they are free to evaluate several trusted companies and select the products are best for their customers. If it’s your first time buying insurance, this can be a huge advantage. They can shop different companies to place you with the best fit for your needs. They can consider factors like budget, coverage limits, bundling, and other items as they search. If you’re new to insurance, this is the best way to get started. Better yet, your broker can tell you why they recommend one company over another for you, all you have to do is ask!

Reputation Matters

One other tip on insurance agents and brokers is to check their reputation before you ask for a quote or do business with them. This is for obvious reasons. An agent or broker with a five star rating on Yelp is likely to provide quality service, but one with a low rating probably has it for a reason. Read deep into the reviews to get a general consensus. One bad review doesn’t spoil the bunch of good reviews.

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The Cheapest Coverage Isn’t Always The Best

Since it’s your first time buying insurance, it’s natural to be concerned about costs. After all, every insurance customer is concerned about price, and this is the biggest factor when anyone shops for insurance. If anyone tells you price isn’t important in insurance, they’ve got it wrong.

Policy Limits

However price isn’t the -only- thing to consider, and this is a mistake many first time insurance customers make. Fact is insurance plans all have coverage limits, and the lower the limit, the less it costs per month. However this also means that if you file a big claim, you’re only covered up to that limit. This is why it’s important to work with your broker to determine a limit that’s right for you. Often first time insurance customers may not need a high limit policy, but going too low could be risky as well.

Deductibles

Another factor that can impact the cost of your insurance premiums is your deductible. The deductible is what you have to pay out of pocket before the rest of an insurance claim is covered. An average auto insurance deductible may be $500 while an average homeowners insurance deductible may be $1500. A higher deductible will result in lower monthly premiums, but you’ll have to pay more out of pocket during a claim. A lower deductible will cost more per month, but it will cost less for you to file a claim. It’s best to work with your broker to determine a deductible that you can meet even in an emergency, but one that’s isn’t too low so it costs more each month.

Your Credit History Matters Too

When insurers provide you quotes, they want to know a little more about you before they provide an accurate quote. This is because your history factors into the final cost of your insurance premiums. As you can guess, those with a solid credit history are often offered lower premiums because they present less of a risk to an insurer. If your credit score is low, then chances are you may have to pay a little more for insurance coverage. From your first time buying insurance to years down the line, anything you can do to increase your credit score will have a positive impact on the cost of insurance. Here are some tips to improve your credit score:

  1. Always pay your bills on time.
  2. Pay off debt as efficiently as possible.
  3. Keep the balance on your credit card low.
  4. Pay off your credit card in small increments throughout each month instead of one large payment at the end of the month.
  5. Check your credit report for errors.

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Final Thoughts

We hope these tips for those new to insurance are helpful, but we’re always happy to answer any other questions you may have. We know your first time buying insurance can be overwhelming, but you don’t have to figure it out all on your own. Contact Square State Insurance today to learn more.

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