Car insurance is one of the most important types of insurance. Unlike its health or life counterparts, which are optional, car insurance is a legal requirement in most states. Any individual who owns or drives a car must have at least the minimum amount of coverage.
There are many factors to consider when buying car insurance. To help with your decision, our team has researched and put together a recommended list of leading auto insurance providers.
The first step, however, is to figure out how to buy car insurance. Above, we outline all the necessary steps, the types of available coverage and how to get the best car insurance rates for your needs.
6 Steps to Buying Car Insurance
Buying car insurance can be a bit confusing at first. With all the providers and plans available, where do you even start? The following steps will guide you through finding the best car insurance plan for you.
1. Decide How to Buy Car Insurance
These days, car insurance is purchased much like everything else – online, on the phone or in person. The choice is up to you. Buying car insurance online is quick and easy, while speaking with someone in person may feel more assuring. You can also choose between going through an insurance broker or straight to an insurance company.
2. Figure Out How Much Car Insurance Coverage You Need
This step will require the most time and effort. For starters, you must know about the different types of coverage, such as:
- Liability: Provides coverage for accidents where you are responsible. The two types of liability insurance include body injury liability (BI), which covers any injury to other drivers and their passengers, and property damage liability (PD), which covers any damage to another driver’s vehicle.
- Collision: Provides coverage for your vehicle, no matter who is responsible.
- Comprehensive: Provides coverage for your vehicle outside of an accident, usually due to environmental causes, such as flood, fire, theft and vandalism.
- Personal injury protection (PIP): Provides coverage for medical expenses and any lost wages for you and your passengers, no matter who is responsible. PIP is mandatory in all no-fault states, where every driver involved in an accident must file a claim with their own insurance company, no matter who is responsible.
- Medical payments (MedPay): Provides coverage for medical expenses for you and your passengers, no matter who is responsible. MedPay is less comprehensive than PIP, but available in more states.
- Uninsured and underinsured motorist (UM/UIM): Provides coverage for you and your vehicle for accidents where you aren’t responsible and the other driver has no or little insurance. In some states, UM/UIM also covers hit-and-runs.
There are also coverage add-ons, such as car rental reimbursement, new car replacement, roadside assistance and the like.
Keep in mind that each state has its own car insurance requirements, which usually includes the minimum liability coverage and some type of medical coverage. However, this is often not enough to safeguard you against accidents. It’s highly recommended to purchase more than the minimum requirement, if possible.
Finally, consider your personal preferences and driving habits. Have you just purchased a new car and want full coverage? Do you drive long distances? Or live in an area with extreme weather conditions? These factors will help to figure out the car insurance coverage you really need.
3. Gather All the Required Information
Car insurance companies generally ask for the same information to provide you with a quote:
Personal Information
- Driver name and date of birth
- Driver’s license number and state of issue
- Driving records, including any previous tickets or accidents
Vehicle Information
- Vehicle make, model and year
- Vehicle Information Number (VIN)
- Current mileage and usage of the vehicle (i.e., personal or business use)
- Name of registered owner
- Address where the vehicle is registered
- Vehicle purchase date
- Any previous insurance carrier and expiration date
Note that standard insurance follows the car, not the driver. To extend coverage to other drivers who might use your car, such as family or household members, make sure to include their personal information when applying for a quote.
4. Get a Few Car Insurance Quotes
With your information handy, it’s time to start shopping for car insurance quotes. Request quotes for the same type of coverage, and aim to contact at least three to five car insurance companies.
If you’re not sure what providers to contact first, get a list using the form above, or read about some of the top-rated auto insurance providers we found.
When speaking to the provider, make sure to ask about any car insurance discounts or promotions. Also, keep in mind that some cases naturally result in higher quotes. This includes first-time drivers, who are less experienced and pose a greater risk, and new or leased cars, which are generally more expensive to repair and replace.
5. Compare Car Insurance Quotes
A quote contains coverage details and associated costs. Before you just go with the cheapest car insurance, there are a few other things to consider:
- Cost breakdown: Insurance includes two types of payments – premiums and deductibles. A premium is the amount paid for the car insurance policy (monthly or annually), while deductibles are the amount paid out of pocket before the insurance plan will start to cover costs. If the quoted premiums are too high, you can try negotiating for lower premiums and higher deductibles instead.
- Coverage details: Even if your quotes include similar coverage, every company operates differently. Does it impose a time limit by when you must submit a claim? Can you use original equipment manufacturer (OEM) parts? If details aren’t included in the quote, make sure to ask the company.
- Company standing: You want car insurance that’s easy to deal with and reliable. Learn more about the inner workings of a company through its customer reviews and rankings on AM Best and National Association of Insurance Commissioners (NAIC). You can also look to our list of leading car insurance providers for more information.
6. Purchase Your Car Insurance Policy
Once you’ve made your decision, it’s time to purchase your car insurance policy. Read through everything one last time, especially the declaration page (typically the first page), which contains all of the important information.
Most car insurance can take effect on the day you sign and make your first payment. This is especially useful if you’re planning to purchase or lease a new car, as most dealerships require proof of insurance before letting you drive off the lot. You can also choose a later date – just let the insurance agent know, so it’s clearly stated on the policy.
When your new policy has taken effect and you’ve received proof of insurance, don’t forget to cancel any old policies you may have.
Should You Purchase Car Insurance Online?
Although it’s a good idea to do some initial research and even request a few quotes online, the decision between actually purchasing car insurance online or in person is ultimately up to you.
If you know what you want and need coverage immediately, purchasing a plan online may be more convenient. Online providers allow you to shop for car insurance quotes much easier and faster. You can filter through all the options to find exactly what you’re looking for, and purchase a policy any time you want – without ever speaking to an agent.
It’s important that you only submit your personal information to reputable companies using a private computer and secure internet connection. A lot of information is available online, and you can ask questions through chat or phone. However, you may find yourself talking to a call center operator and have a hard time getting in touch with an actual insurance agent.
How to Get Car Insurance for the First Time
First-time drivers, especially those below 25 years old, can expect to pay more than any other age group for insurance, an average of $1,150–$1,900 per year (for liability coverage only). With no previous driving history and a relatively short credit history, young drivers are a greater risk for companies to insure.
If this is too expensive, another option is to be included in a family or household member’s plan. After a few years of good driving, you should be able to get lower car insurance quotes on your own.
How to Get Car Insurance When Buying a Car
Getting insurance when you’re in the process of buying a car requires a little timing. You need the car details (year, make, model and VIN) to get insurance, but you also have to be insured to drive the car. Aside from being a legal requirement, proof of insurance is typically required by dealerships before you drive the car off the lot.
To ensure everything runs smoothly, start looking for insurance even without the car information (although a general idea of the make and model will help). Prepare all other requirements in the meantime, and speak with an agent to better explain your situation.
Then, with your car insurance already selected, you can quickly fill in the remaining details and purchase the policy the day you purchase the car.
Technically, you don’t need insurance to buy a car, but it’s illegal in most states to drive it without insurance. If you intend to drive the car off the lot, you must have at least the minimum coverage. Anyone caught driving without insurance is likely to be heavily fined or lose their license. Even worse, in case of an accident, the driver is financially responsible for all damages.
Furthermore, driving without insurance creates a gap in your insurance history. This will come up the next time you apply for car insurance, signifying greater risk and resulting in higher premiums.
In some cases, you may be buying a car and already have car insurance – the new car just isn’t listed on your plan yet. Instead of getting a whole new plan, check if your current car insurance offers a grace period that automatically covers new cars. This coverage is temporary (under a month), but more than enough time to find a permanent policy.
How to Get the Best Car Insurance Rates
Every insurance company has their own formula for calculating car insurance quotes. The factors that tend to carry the most weight are your age, location, driving record, credit score and the type of vehicle.
There’s not much you can do about how old you are, where you live or your driving history. But if you can raise a low credit score (paying bills on time and reducing debt), this will also help improve your car insurance quotes.
Another way to lower premiums is to only include the required coverage. For example, if your car is older, you may be better off shouldering any repairs yourself, rather than paying for regular collision or comprehensive coverage. If you don’t drive that much, look for mileage-based or usage-based insurance plans, such as Allstate’s Milewise® or State Farm’s Drive Safe & SaveTM.
Finally, when gathering car insurance quotes, reach out to a few local providers. Smaller companies don’t have the massive overhead of bigger names, and may be able to quote a lower rate. No matter which provider you end up with, don’t forget to inquire about discounts.
