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.
How To Get Car Insurance and What To Look For (in Six Steps)
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.
Gathering Your Personal Information Is the First Step
Whether you are working with an agent or applying online, three crucial pieces of information are needed to give you the most realistic quote possible.
- Your car details – Have information about your car — such as the 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 – You will likely be asked about any accidents, DUIs, suspensions or accumulated points on your driving record. When applying, let your agent know if you’re currently covered and by what company.
- Your bio – 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.
Personal Information Needed to Buy Car Insurance
Gather together all of your vehicle’s details — including the make and model, VIN, registration and current mileage — before asking for a quote.
Have information about your driving record at the ready. Make a note of any previous accidents as well as safety courses you’ve taken.
When doing preliminary research, there’s no need to enter your personal data. Use MoneyGeek’s car insurance cost calculator to get anonymous quotes.
Decide How You’ll Get Car Insurance — Online or With an Agent
It's understandable if you're wary about entering personal information online. Fortunately, there are multiple ways to find the top car insurance policies. Though most companies have online quote systems available, you can also work through a captive agent or broker.
A captive agent is like your personal salesman for a particular insurance company, and you’ve likely heard of them through companies like Allstate, StateFarm and GEICO. If you are looking for quick finds, this could be your preference since a captive agent is likely patiently waiting for your call.
Pros & Cons
Pro — Since captive agents only work for one company, they are often experts in their company’s products.
Con — These agents work on commission for one company. So, they may not always provide you with the most economical options.
An insurance broker is an independent representative. They are like insurance translators that help you communicate your needs to a wide range of companies to find you the best deal.
Pros & Cons
Pro — Considering brokers don’t work for one company, they can help you find targeted coverage and savings from across the market.
Con — 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.
Having the help of an insurance agent is beneficial. However, if you care to take a hands-on approach, continuing to use MoneyGeek for research will provide you with a good foundation and 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?
How much you need is largely determined by the mandatory minimum requirements in your state. 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, $300,000 in bodily injury liability per accident and $100,000 in property damage liability per accident.
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, but 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.
MoneyGeek has state-by-state recommendations for the most affordable policies that will best fit your needs depending on where you live.
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: age, driving history and 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.
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