How To Get Car Insurance and What To Look For (in 6 Steps)
If you drive or own a vehicle, you need insurance. But that doesn’t mean you should accept the first quote provided to you. Much like the process of buying a car, it often pays to shop around before purchasing a policy.
Car insurance is a necessity for drivers, but no single company has a monopoly on the car insurance market. Premiums can vary wildly. And while several factors determine how expensive or inexpensive your car insurance premiums are, at least one of them is within your control. Shopping around can ensure you find the best coverage for your needs without overpaying.
Even so, with so many coverage options to decide between and companies to research, buying car insurance can get complicated. Fortunately, there are a few quick and easy steps you can take to help make the searching process painless.
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Gathering Your Personal Information Is the First Step
Whether you are working with an agent or applying online, providing three crucial pieces of information can give you the most realistic quote.
Your car details
Have information about your car — such as the vehicle information number (VIN), registration, current mileage, make and model — all in one spot. It also isn’t uncommon for insurers to ask about the everyday use of the vehicle and how long you’ve owned it.
Your driving and insurance history
Insurers will likely ask about any accidents, DUIs, suspensions or accumulated points on your driving record. When applying, let your agent know your current coverage and by what company.
This may seem like filler information, but it is the most important. What you do, where you work and where you live will influence your insurance rate.
If you have all this information ready you can get car insurance the same day you start shopping.
Suppose you’re uncomfortable entering these details online. In that case, you can also use MoneyGeek’s car insurance calculator for an anonymous car insurance quote, which will allow you to get an estimate without using personal information.
If you live in a household with a car but don't have a license yourself, you may need to name yourself as an excluded driver. Learn more about why you need a license to get car insurance.
Decide How You’ll Get Car Insurance — Online or With an Agent
There are multiple ways to get a car insurance policy. Online through the company's website, a captive agent or an insurance broker, are the most common.
While online is probably the most convenient, it's understandable if you're wary about entering personal information online. With this in mind, you have the option to consult and purchase your car insurance from a captive agent or an insurance broker.
To know which process suits you best, make sure to find time to review each option.
Working with a captive agent is like having your own personal salesman for a particular insurance company, and you’ve likely heard of them through companies like Allstate, StateFarm and GEICO.
Pros of using a captive agent:
Since captive agents only work for one company, they are often experts in their company’s products.
If you are looking for quick finds, this could be your preference since a captive agent is likely patiently waiting for your call.
Cons of using a captive agent:
- These agents work on commission for one company. So, they may not always provide you with the most economical options.
An independent representative does not work for one particular company. Compared to a captive agent, an insurance broker will give you different company options.
Pros of using an insurance broker:
- Considering brokers don’t work for one company, they can help you find targeted coverage and savings from across the market.
Cons of using an insurance broker:
- You may have to pay out of pocket for their service. Since their pay is commission-based, they may also try to upsell you on a policy.
This is a convenient process that allows you the option to purchase a car insurance policy after getting an online quote from your chosen insurer. Getting instant online quotations from different companies will help you narrow down your choices.
Pros of using online:
- You can do it yourself.
- Process is quick and easy.
- You do not have to deal with agents or brokers.
Cons of using online:
- Can be risky since you're about to share personal information online.
- You have to rely on your own research when choosing what company and which coverage you're getting.
If you want to take a hands-on approach, MoneyGeek's car insurance calculator can provide a fast and secure range of personalized estimates to help you make an informed decision.
Decide How Much — and What Type — of Car Insurance You Need
You need to answer two essential questions before finalizing a policy: How much and what types of car insurance do you need?
However, MoneyGeek recommends getting more than the minimum amount of liability insurance required to ensure you're fully covered. Nevertheless, note that while doing so can save you thousands in the case of an accident, it may also vastly increase your annual premium depending on the insurer.
Another factor that may influence what you need is how you bought your car. Often, a leased vehicle will require full coverage, which includes comprehensive and collision insurance.
Most states only require liability insurance for a car that is paid in full or financed, but you may want full coverage for additional protection if you have a new or highly-priced vehicle.
The table below shows the difference in price for liability-only versus full coverage policies, with:
- $100,000 in bodily injury liability per person - covers the driver and occupants of the other car if you are at fault
- $300,000 in bodily injury liability per accident - covers the total cost paid out for injuries per accident
- $100,000 in property damage liability per accident - covers damages to the other person's property or a building
Average Annual Rate: Full Coverage vs. Liability-Only
- PolicyAverage Annual Rate
- Full Coverage$1,311
While liability-only insurance is the most affordable option, it will only protect you from the costs of damages accumulated to another driver if you’re at fault. You should shop around for cheap liability insurance if you want to meet state requirements and save on your monthly premium.
To ensure that damage to your car will also be covered, you will need a balance of liability and a full coverage policy with comprehensive and collision insurance. Be sure not to jump at the first offer that looks right when shopping for cheap full coverage. Even though smaller numbers are alluring, the more expensive a full coverage policy is, the more protection you receive.
Protecting your wallet from at-fault claims is important. But without full coverage, you won’t get help to recover or replace your vehicle.
Know What To Look For in a Car Insurance Company
In your search, you’ll find that car insurance companies offer many of the same coverages. However, the rates and level of customer service will significantly differ.
To discover the most economical option, you can search for the cheapest car insurance company and find reliable yet affordable policies with national insurers such as GEICO and USAA.
But you don’t have to sacrifice the quality of your coverage when seeking affordability. By browsing customer service ratings for the best car insurance companies, you can find one that strikes a good balance between user satisfaction and financial sustainability.
It is important to note that in addition to the cost, level of customer service and coverage, checking the insurer’s financial strength rating is something you may want to consider. Companies with an A+ or A++ from A.M. Best are the most secure options you have.
MoneyGeek has state-by-state recommendations for the most affordable policies that will best fit your needs depending on where you live. Shop for car insurance in your state here.
Shop Around for Car Insurance Quotes
What you learn online, with an agent or with data provided by MoneyGeek will give you a good starting point for knowing precisely what you need and what you don’t.
But the best way to find out which insurer has the best deal for you is to compare quotes from various car insurance providers. Insurers calculate rates based on dozens of factors, but three elements, in particular, can affect your insurance rates:
- driving history
- credit score
These elements have profound effects on insurance premiums because:
- Young drivers have a much higher likelihood of filing claims due to inexperience, making the cheapest car insurance options for teens different from those for adults.
- As you get older, rates typically decrease. But finding car insurance after a ticket or accident may be difficult since you’re seen as a greater risk.
- The same goes for those who have poor credit or no credit history. Getting car insurance with bad credit is possible, but you may find yourself paying higher rates.
One of the best ways to save money on insurance regardless of any application blemishes is by asking for a home and auto bundle. If you’re already happy with your home insurance provider, it’s typically cheaper to bundle your policies under the same provider.
After Taking All the Previous Steps, Purchase a Car Insurance Policy
Once you have done your research, the last step is to purchase a policy. After exploring your local options, possible discounts and speaking to a representative, you should know what you want and how you want to do it. And you can buy fully online or through an agent if you’ve built a good rapport.
One thing to note: the majority of insurers give quotes with expiration dates, so policy quotes are typically designed to be bought quickly.
Even so, there’s no need to worry about making a wrong decision because you can treat your policy as a trial period and keep your options open if you’re unhappy. Policy lengths usually are set in increments of six months to a year, and you can get discounts for paying more upfront.
Buying a six-month policy as a trial is beneficial because insurance companies do not typically offer temporary car insurance. Doing your research will help you feel secure in making at least a six-month decision, but you’ll only be able to get an honest view of your provider with time.
However, if you find yourself in a situation wherein you only need a temporary car insurance, there are insurance companies that offer short term policies. Depending on your situation, you can opt to cancel your policy anytime without charges. Some providers even offer refunds.
Related Topics About Purchasing Car Insurance
Frequently Asked Questions
In order to find the best car insurance that suits your needs you have to be equipped with the right information. Find time to read and review the most common questions you'll most likely encounter when looking for the right insurance for your car.
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