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How to buy car insurance
Learn what to look for when buying the right car insurance policy for you.
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Buying a car insurance policy can be a straightforward process, whether you’re buying through a company rep, an independent agent or from the insurance company online. But there are several factors you can think through to help you find a company that checks all the boxes on your shopping list.
How to buy a car insurance policy
Since you’re trusting your chosen car insurance company to back up your finances after an accident, you want to choose the best policy for you. You can take several actions to make sure you’re getting the right car insurance protection:
- Gather the information you need to apply.
- Determine how much coverage you need.
- Decide how you want to buy car insurance.
- Learn how to compare quotes.
- Choose the best policy that meets your needs.
- Review your contract and sign.
- Buy your new car insurance policy.
Step 1: Gather the information you need to apply.
When buying car insurance, you can expect multiple questions about your car, yourself and any drivers to help your insurance company set the right premium. Make sure to provide accurate and honest details, including this information:
- Driving violations. You should inform your insurer about previous violations since they affect your accident risk. Most companies ask you for details on claims or violations from the past three to five years.
- Criminal penalties. In some cases, non-driving incidents lead to a suspended license. When this happens, not all companies accept drivers with this serious penalty on record.
- Vehicle incidents. You need to share any accidents, damage or claims you’ve experienced, so your insurance company can set an accurate premium.
- Miles you drive per year. Companies may consider how much you drive your car since more time on the road can increase your chances for an accident.
- Modifications. Include any changes you’ve made to your car like installing specialty exhausts or tinting your windows. Car mods could make your car more valuable or increase the chances of it getting stolen.
- General info about your car. Give basic details about your car’s year, make and model. Most companies also ask whether you own, lease or finance since lenders require extra coverage.
- Other drivers. Your insurance company will want to know about other people in your house who might drive your car, including their driving history.
Why you shouldn't lie on insurance
While it may be tempting to avoid details about your car or driving history, doing so puts you at risk of a rejected car insurance claim if you get in an accident. Insurance companies go to great lengths to verify the information you provide in the event of a claim.
Step 2: Determine how much coverage you need.
At the least, you should buy state-required coverage like liability, personal injury protection or underinsured motorist coverage. But keep in mind that getting more than the required minimum could save you hundreds or thousands in damage costs in the long run.
Consider the following when figuring out your car insurance coverage needs:
- Your budget
- How often you drive
- What your driving history is like
- Your vehicle type
- Where you park
- If you’re financing
- Your health insurance
- Any car mods you have
- If you might need a rental
- What your warranty covers
Step 3: Decide how you want to buy car insurance.
If you’re new to the driver’s seat, choose one of these top ways to shop for car insurance protection:
- An insurance company’s agent. Buying through captive agents who work exclusively for one provider is one of the oldest ways to get coverage. One example is using a State Farm agent. Serving as your advocate and point of contact, these agents can provide guidance on which offerings are right for you.
- An independent agent. Independent agents assess your priorities to find the best value from among multiple insurance providers. If you like the idea of working with one agent but want pricing options and flexibility from multiple providers, you might start with local insurance agents. Some major insurers like Travelers and Safeco let you search for independent agents through their websites.
- Direct from a provider. This can mean buying over the phone or through a provider’s website like Geico or Progressive — either method can offer more convenience than meeting with an agent in person. Also, you can see a breakdown of your policy and work through options at your own pace.
- Comparison tool or website. If getting the best rate and coverage are your main priorities, some comparison tools let you compare quotes from top companies against one another. Finder.com is an example of a comparison site.
Step 4: Learn how to compare car insurance quotes.
The quote process will look different depending on the insurance company, but you can follow similar steps to these listed below:
- Research different insurance companies. You can shop around with a variety of companies to make sure you’re getting the best price, coverage and benefits. A good place to start is your current insurance company that provides your home or renters insurance. Many companies offer steep discounts for buying several insurance policies from them, but you’ll want to compare that quote with other companies too.
- Tell how you use your car. Input important vehicle info. Details to include are nonstandard modifications and accessories, if the vehicle is for business or personal use and if you want to insure it for an agreed or market value.
- Provide driver info. Enter your personal contact information and address, plus the names and any violations for other drivers.
- Select coverage and add-ons. When prompted, choose your coverage and policy extras. Consider adding coverage you know you’ll use if an accident or breakdown happens. For example, you might want rental reimbursement coverage if you don’t have another car to use after an accident.
- Get the quote. Review all information received in your quote. You may see coverage amounts preselected for you, but make sure to edit those based on your needs. Also, note whether the deductible amounts fit your budget since you’ll pay this amount up front after an accident.
Step 5: Choose the best policy that meets your needs.
As the last step, you’ll want to compare companies side by side. You may want to gather together all the quotes you’ve received and notes on each of the companies.
Before making your final decision, you might check what customer reviews say about your top picks using ratings from websites like the Better Business Bureau and Trustpilot. The more customer reviews you see, the more accurate the final conclusion will be about the customer service.
Then, make your final decision based on which company balances the benefits, coverage and cost that work best for you. You might lean toward the company with the cheapest premiums, but balance that decision with other factors to make sure it’s the right choice.
Step 6: Review your contract and sign.
You should have everything you need to make the purchase, so you can follow through with an agent or buy online. Click through to the payments page or tell your agent that you’re ready to buy a policy. Be ready to set your policy start date and make your first premium payment at sign-up.
Then, you should read all policy documents and agreement information before signing them. You may receive the documents immediately online or by email from your agent. You can ask any questions to clarify information if you’re confused. After you’ve cleared up all questions, agree to the terms and sign the documents.
How long do I have to buy insurance for a new car?
It depends on whether your insurance company has a grace period for new cars. Many companies offer grace periods that range from seven to 30 days.
However, the grace period may only apply if you’re replacing your old car with another one. If you’re adding another car to the family, you need coverage on both cars and should add insurance on the new car before driving it. Another factor is whether you’re financing your car. If so, your lender will require specific coverage on your car before you can drive it off the lot.
Step 7: Buy your new car insurance policy.
Now, you’ll need to make your first payment. If you’re insuring your vehicle online, you may see the option to complete the process online or through an agent.
If you can complete the application online, you should see options to input your credit card or debit card number. Some quote forms let you select automatic payments, so you don’t have to worry about missing a future payment. Otherwise, you might need your bank account information to deduct payments directly.
How do I buy car insurance before buying a car?
To get coverage on a new or new-to-you car, you can call your insurance company from the dealership to add the car’s details to your current insurance. For new policies, research your preferred insurance companies ahead of time and then get coverage once you buy your new car. You can buy insurance while you’re at the dealership or at home later without bringing your new ride home.
Buy car insurance online
Should I buy car insurance directly or call an agent?
Your best method for purchasing auto insurance comes down to your situation and personal preference. For example, if you’re considered a high-risk driver and have trouble finding a policy, an independent agent could steer you toward companies with lower rates that are more likely to accept your application.
Choosing a captive agent may work best if you know which company you want to use but need guidance on coverage or managing your policy. A captive agent:
- Helps you make decisions about coverage.
- Answers questions and clarify details about your policy.
- Steers you toward special programs or discounts you don’t know about.
- May hard-sell a policy from their company even if another one fits your needs better.
- Could upsell you on coverage you don’t need.
- Doesn’t offer comparison shopping.
- May not be convenient if you have to coordinate your schedules for a meeting.
Choosing an independent agent may work well if you want personal guidance but also want to consider options from multiple insurance companies. An independent agent:
- Guides you through the process and lay out all of your options.
- Explains the details of your policy.
- Might get you better pricing because they’re not limited to one company.
- Works on commission and might sell coverage you don’t need.
- Can’t provide quotes from insurers that use captive agents.
- May favor policies with certain companies over others based on their potential commission.
Direct through a car insurance company online
You can compare companies online for extra control of the comparison process. Buying from the insurance company directly without an agent makes sense if you have a few companies in mind but don’t want the pressure of an agent. If you buy directly, expect that you:
- Experience no pressure to purchase unwanted coverage from an agent.
- Get a quote online quickly and conveniently.
- Usually get up to 5% off for buying insurance online.
- Need to understand your requirements since no one’s guiding you through the process.
- Have to give out your personal information, sometimes including sensitive details like your Social Security number or VIN.
- Could miss fine details like buying coverage you don’t need or not signing up for a rewards or discount program.
Buying online works best if you want to avoid the pressure that some agents provide. Comparison tools also help with the insurance shopping process. An online broker:
- Doesn’t pressure to buy a policy right now.
- Saves you time by comparing multiple companies at once.
- Compare benefits and coverage side by side.
- Requires a basic understanding of insurance coverage.
- Have to give out sensitive personal information online.
- May prioritize companies based on compensation.
- might not compare all possible options.
Did you know? You can ask how your broker makes money
Since independent agents and comparison websites can be considered brokers, they’re required to tell you how they’re compensated. You can either look for their compensation on their Statement of Advice or Financial Services Product Disclosure Statement, or you can ask the agent.
Questions you should ask your insurance agent
Getting the best car insurance coverage at the best price is all about having the right information. Asking these questions can put you on the right track to coverage levels and a price that works for you.
- Do I have the right kinds of coverage? Good insurance agents are experts at figuring out how much coverage a driver needs. As a rule, you shouldn’t pay to insure anything you can easily afford to fix or replace on your own.
- Am I getting all the discounts I’m eligible for? Your agent is likely aware of ways you could be saving money. But if your circumstances change, you might be eligible for more discounts. When you renew your policy or shop for coverage elsewhere, ask about any discounts that might’ve slipped through the cracks.
- Can or should I drop any coverage? As your car ages, its value is likely to depreciate. Eventually, an older car reaches a point where it’s not worthwhile to keep comprehensive and collision coverage. To save, ask your agent if you should lower your levels of coverage or drop specific parts of your policy altogether.
- Do I have any other payment options? By paying your full policy up front, rather than over six months or a year, you might save around 10% on your annual insurance costs. You might also be able to save money by paying the entire premium in 2 or 3 installments, rather than 6 or 12.
- Who should be on my policy? For a nuclear family, it’s often best to keep everyone on the same policy. However, you may want to adjust as children move out or if you end up in a roommate situation.
How to cancel your previous policy
If you’ve owned a car for a while, you should have an existing car insurance policy that you need to cancel. Make sure you have your new policy active and in place before canceling your old policy to avoid a coverage lapse. Then, cancel your policy in a few steps:
- Check your company’s cancellation policy, including whether it charges a fee and refunds your prorated premium. If you can’t get a refund, you might wait to cancel when your policy is set to renew.
- Call your insurance company to let them know you’d like to cancel and your preferred cancellation date.
- Stop automatic payments through your online account or by calling customer service.
It can be a bit daunting for a first-timer who’s looking for car insurance, what with the coverage levels, competition and options available. But by learning how to narrow down your needs against your circumstances and budget, you’re likely to find a solid policy at a strong value.
Visit our comprehensive guide to car insurance to get a feel for which insurers are out there and to start comparing your options.
Common questions about how to buy car insurance
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