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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.
Buy car insurance online today
Step 1: Pull together details for your application.
When buying car insurance, expect questions about your car, yourself and any drivers to help your insurance company set the right premium. Provide accurate and honest information for:
- Driving violations from the past three to five years. Inform your insurance company about previous violations since they affect your future risk.
- Previous accidents or claims. The company will check on any records with your current or previous insurance companies.
- The annual miles you drive. Companies consider how much you drive since more time on the road increases your chance for an accident.
- Modifications you’ve made. These can include installing specialty exhausts or tinting your windows. Car mods could make your car more valuable or increase the chance of it getting stolen.
- General car info. Give basic details about your car’s year, make and model. Most companies ask whether you own, lease or finance too.
- Other drivers’ info. You’ll need to list other people in your house who might drive your car like a teen and 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 after an accident. Insurance companies go to great lengths to verify the information you provide in a claim.
Step 2: Figure out what coverage you need.
Several factors go into figuring out how much car insurance you need, like whether you’re financing or the minimum insurance required in your state.
You’ll need at least this state-required coverage like liability, personal injury protection or underinsured motorist coverage. However, buying more car insurance than what’s required could save you hundreds 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 car type
- Where you park
- If you’re financing
- Your health insurance
- Any car mods you have
- If you need a rental
- What your warranty covers
Step 3: Decide where to buy car insurance.
Whether or not you’re new in the driver’s seat, choose one of these ways to shop for your car insurance:
- An insurance company’s agent. Buying through captive agents who work exclusively for one company is one of the oldest ways to buy coverage. One example is using a State Farm agent. Serving as your advocate and point of contact, these agents provide guidance on which coverage is right for you.
- An independent agent. Independent agents look at your priorities to find the best value from multiple car insurance companies. If you like the idea of working with an agent but want quotes from multiple companies, an independent agent might work best for you. Major companies like Travelers let you search for independent agents through their websites.
- Direct from an insurance company. This can mean buying over the phone or through a website like Geico or Progressive — either method offers convenience from the comfort of your home. 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 looks different depending on the insurance company, but you can follow similar steps to these listed below:
- Research different insurance companies. A good place to start is your current insurance company if you have home or renters insurance because of multipolicy discounts. Then, you can compare with other companies’ coverage and ratings for customer service, claims and finances. You can find ratings on the Better Business Bureau, Trustpilot, AM Best, J.D. Power and finder.com.
- Verify online quotes with an agent. Consider taking the time to go through your quote by phone with an agent. Since the agent will walk through your coverage and discount opportunities, you could get a much lower rate than you were quoted online.
- 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.
- Choose 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 in your quote. You can edit preselected coverage amounts based on your needs. Note whether the deductible amounts fit your budget since you’ll pay this amount up front after an accident.
How long do I have to buy insurance for a new car?
Many insurance companies offer grace periods that range from seven to 30 days, but this depends on the insurance company or your state laws.
The grace period may apply if you’re replacing your old car with another one. If you’re adding a car to the family, you need coverage on both cars and should buy insurance before driving it.
Another factor is whether you’re financing your car since your lender will require specific coverage before you can drive your car off the lot.
Do I need 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.
Step 5: Choose the best policy that meets your needs.
As the last step, you’ll want to compare companies side by side. You could gather all the quotes you’ve received and notes for each company.
Then, make your final decision. Try to balance the decision for the cheapest premium with other factors like coverage to make sure it’s the right choice.
Step 6: Review your policy and sign.
Now, you can click through to the payments page or tell your agent that you’re ready to buy your car insurance. Be ready to set your policy start date and make your first payment at sign-up.
Then, you can read all the policy documents and agreement information before signing. You may get the signed documents immediately online or by email from your agent. Ask any questions to clarify policy details if you’re confused.
Step 7: Buy your 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, debit card number or bank account details. Some quote forms let you select automatic payments, so you don’t have to worry about missing a payment.
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 clarifies 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 lays 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 you to buy a policy right now.
- Saves you time by comparing multiple companies at once.
- Compares benefits and coverage side by side.
- Requires a basic understanding of insurance coverage.
- Requires you to provide 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 car insurance discounts. When you renew your policy or shop for coverage elsewhere, ask about any discounts that might’ve slipped through the cracks.
- 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 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 two or three installments, rather than six 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 car insurance 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
Image from: Pexels
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