The beginner’s guide to narrowing down the exact car insurance policy you need
No matter where you live and drive in the US, you’ll need a minimum level of car insurance coverage to legally hit the road. The options are many, ranging from bare-bones, low-cost policies to expensive full-coverage plans.
But which one’s right for your situation? Read on to learn more about how to buy car insurance while getting the best value you’re eligible for.
Compare car insurance providers
Applying for car insurance involves first getting a quote, and then the application process itself.
Compare car insurance quotes
The quote process will differ depending on the insurance brand though most will follow similar steps to those listed below:
- Specify what policy you want and when you want it to start: comprehensive; third party property damage, fire and theft or third party property damage.
- Input your vehicle type, including non-standard 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.
- Enter your personal details and the details of any drivers.
- Choose any policy extras and decide if you want to increase your excess to reduce your premiums.
Apply for the best car insurance provider for you
Once you’re happy with how much you’ll be spending each year or month, you’ll have to go through an application which go through the same steps above but in further detail. When this is completed, you’ll make your payment, and the policy will start on the date specified.
Information you must include when applying
While it may be tempting to avoid disclosing some details about your vehicle or driving history from your insurance brand, in doing so you only risk your claim being rejected in the event you actually have an accident. Insurance companies go to great lengths to verify the information you have provided in the event of a claim.
- Driving convictions – You’ll need to inform your insurer of anything on your driving record.
- Other criminal convictions – Be straightforward about other criminal convictions. If you don’t let insurers know up front, you can find yourself with a policy that is not valid down the road.
- Vehicle incidents – You’ll need to share everything in your driving record, including any incidents, accidents, damages or claims you have filed and those filed against you and anyone else on your policy.
- Modifications – Include any modifications you’ve made to your car, like installing specialty exhausts or tinting windows. Car mods could make your car more valuable or increase the chances of it getting stolen. While this might seem strange, studies have shown drivers with modified cars are more likely to make claims.
- Miles you drive per year – Insurance companies will consider how much you drive your car when determining the cost of insurance.
- General info about your car – This includes year, make and model, and whether you own, lease or financed your car.
- Other drivers – Your insurance provider will want to know if there are other drivers in your house who might be driving the car.
How does a new driver buy car insurance?
If you’re new to the driver’s seat, here are the top ways to shop for protection that covers your needs.
- An insurance brand’s agent. A main way that people acquired insurance in the past is through a captive agent working exclusively for one provider. Serving as your advocate and point of contact, these agents are known for providing solid support and guidance around the company’s offerings and what’s right for you.
- An independent agent. Unlike captive agents, independent agents work for you, assessing 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 want to start here.
- Direct from a provider. This can mean buying over the phone or through a provider’s website — either method more convenient than meeting directly with an agent. You can often see a breakdown of your policy and work through options at your own pace at a time that’s good for you. A basic understanding of car insurance is helpful.
- Comparison tool or website. If getting the best rate and coverage is your main priority, compare quotes from top insurance providers against one another, narrowing down the lowest premium against the best policy you’re eligible for.
Buying online vs. buying from an agent
Buying from an agent
- An agent can guide you through the process and lay out all of your options.
- An agent will also explain all of the details of your policy.
- An independent agent might be able to get better pricing because he or she is not limited to one insurance provider.
- Agents work on commission and might be tempted to sell you coverage you don’t need.
- Captive agents only represent one company and can’t offer the flexibility of independent agents.
- There is no pressure to purchase unwanted coverages from an agent.
- Getting a quote online is fast and convenient.
- Many insurance providers offer a discount for obtaining insurance online.
- You will need to understand insurance requirements and options, as you will not have an agent guiding you through the process.
Steps to choosing coverage
Getting the best value on the coverage that fits your circumstances involves a handful of steps.
- Research your options. Learn which insurance providers offer the best coverage for you and the selection available in your area. An idea of what you’re after — the cheapest monthly payments, the most comprehensive coverage or the highest overall customer satisfaction — can help you narrow down your options.
- Know your needs. What’s required in your state? What about additional bank requirements that come with car loans or leases? You might need to consider the cost of adding drivers to your policy, especially if your family includes teenagers.
- Consider your vehicle and driving habits. Knowing the age and overall value of your vehicle is helpful. For instance, a new BMW M3 typically costs more to insure than a six-year-old Toyota Corolla. But considering extra safety features on newer vehicles, you might save on your policy with safety feature discounts. The driving record of you and any other drivers on your policy also affects the rates you’re ultimately offered.
- Start getting quotes. Get in touch with multiple insurance providers that offer the coverage you need to see where they fall in terms of price and value. You’ll get a feel for what’s out there, getting you closer to knowing the best possible value.
- Learn about any discounts you qualify for. Most drivers qualify for at least some kind of discount. When calling for quotes or shopping online, check to see if you qualify for any discounts based on your vehicle, age, affiliations or other factors.
- Look at more than price. You might save a few dollars by going with one provider over another, but that doesn’t mean it’s your best choice. Know too exactly what’s covered and for what amounts, and see how other customers rate support and claims resolution. No use paying for a policy that doesn’t work as expected when you need it.
- Know your policy inside-out. Understand both what you are and are not paying for plus any exclusions that would prevent your claim from being approved. Carefully read through your insurance policy and its terms, gathering questions or points of concern before signing on the dotted line.
If an insurance policy or provider itself ends up a poor fit for your needs, you can typically cancel it for a fee. By getting in touch with your agent about possible changes, you might learn you’re able to drop unnecessary coverage mid-policy or add missed coverage options to your policy.
What kind of policy is right for me?
After you’ve figured out the method you prefer for buying your car insurance, you’re ready to take the next steps toward coverage.
- Conventional car insurance. With conventional or traditional car insurance from companies like Allstate, State Farm or Liberty Mutual, an insurer calculates multiple factors to determine how much you should pay each month for your policy’s premiums. These factors include your age, your driving record, your location, the kind of vehicle you drive and your credit score (in most states).
- Use-based car insurance. Several large providers like Progressive and Allstate offer plug-in devices that allow them to monitor your driving habits — typically for one to six months. Instead of assessing a rate based on factors from your past, these providers allow you to prove in real time that you’re a safe driver and deserve favorable rates. Other factors might still come into play — your age, your overall driving record and your location among them. But if you’re a safe driver generally, these provider plug-ins could help you get a better rate than you might have gotten otherwise.
- Per-mile insurance. Also requiring a plug-in that tracks your driving habits, this type of insurance focuses only on how much you drive to calculate what you’ll pay. Mileage-based insurance is still a new concept, and only Esurance and Metromile offer true pay-per-mile coverage. If you drive very little, it could be a great way to save money while getting the coverage you need.
What kind of discounts can I qualify for?
- Safe driver discounts
- Safety devices discounts
- Antitheft discounts
- Good student discounts
- Homeowner discounts
- Senior discounts
- Discounts for healthcare workers, educators or government employees
- Low-mileage discounts
- Defensive driver course discounts
Questions you should ask your insurance agent
Getting the best insurance coverage at the best price is all about having the right information. Asking these questions can put you on the right track to a coverage level and cost 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, with insurance covering your largest assets.
- 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 yet 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. If you drive a vehicle with a market value below $5,000, 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 two or three installments, rather than six or 12. If there’s any payment flexibility with your policy, your agent should be able to tell you how to make the best of it.
- Who should be on my policy?
For a nuclear family, it’s often best to keep everyone on the same policy. However, if a younger relative lives in your household or if your elderly parents have moved in, you might want to keep them on their own insurance policies for the best rates and coverage options.
How do I meet the requirements in my state?
Most states enforce minimum car insurance requirements for drivers, and where you live dictates those minimums.
However, it’s likely that you need these three types of coverage:
- Liability insurance. When drivers talk about auto insurance, they’re usually referring to liability coverage. Liability covers damage you cause to the other driver’s car and injury caused to the person. It does NOT cover injury to you or your car. All states except New Hampshire and Virginia require you to have at least liability insurance.
- Personal injury protection (PIP). If you’re involved in a car accident, PIP pays for medical services you may need after, including ambulance rides, nursing care, prosthetics, lost income, child care and funeral services. PIP applies regardless of who’s at fault in an accident.
- Uninsured motorist coverage. If another driver doesn’t have insurance, you won’t have to work with them to receive compensation. Instead, your own insurance will cover your expenses. You can choose bodily injury (UMBI) or property damage (UMPD) coverage.
Other basic coverages you might want to consider include:
- Collision. This covers damage to your car caused by a car accident. (It is usually optional. However, if you finance or lease your car, the lender might require it.)
- Comprehensive. Covers damage to your car caused by things other than a car crash, like vandalism, theft or fire. (Like collision, it is usually optional, but if you finance or lease your car, the lender might require it.)
- Underinsured. This covers bodily injury and property damage if you are hit by a driver who does not have have enough insurance to cover the costs of damages.
How do I find the best value?
Once you’ve nailed down the type of insurance you want, and how you want to go about getting it, you can find a deal that gives you the coverage you want at an affordable rate. To do that, the best tactic is to compare rates. Most insurance providers have quoting tools on their websites.
If a provider in your area doesn’t allow for online quotes, don’t let that deter you from finding out if their rates are competitive. Picking up the phone to get a quote can be just as easy as going online. And if you have the time, visiting an agent’s or provider’s office can be key to knowing your options and negotiating an insurance policy that suits your needs.
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 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 the comprehensive guide to car insurance to get a feel for which providers are out there and to start comparing your options.
Frequently asked questions
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