If you are confused about how to buy car insurance, you're in the right spot. In this article, we'll help you understand the basics of car insurance, how much coverage you need, and how to start a policy. Finally, we'll show you a few tips and tricks for how to get the cheapest car insurance rates.

To make the decision process even easier, we’ve already taken a look at the industry's leaders and narrowed down the top companies in our best car insurance providers review, considering factors such as cost of coverage, customer satisfaction, and the ease of the claims process.

 

In this article:

 

1. Understand The Different Types Of Car Insurance

Every state has different requirements for car insurance. In order to understand these requirements, it's important to understand what each type of car insurance covers.

Let’s take a look at the various types of coverage for which you could sign up.

Required Coverage

Almost all states mandate the following liability coverage:

  • Body injury liability insurance: With this coverage, the costs related to injuries or death that you cause to the other party are covered.
  • Property damage liability insurance: With this coverage, any damage that you cause to another vehicle, building, or property is covered.

Commonly Required Coverage

Some states will mandate the following coverages, as well:

  • Medical payments (MedPay)/personal injury protection (PIP): This coverage reimburses any medical expenses for your injuries or those of your passengers. With a PIP policy, you can also receive payments for lost wages and related costs.
  • Uninsured motorist coverage: If an accident is caused by a motorist without insurance, this policy covers the damages. It’s also the policy that’s used after a hit-and-run incident.
  • Underinsured motorist coverage: This plan covers your costs when the driver that hits you doesn’t have adequate coverage.

Optional Add-On Coverage

When you think about how to get car insurance, there is a lot more than basic car insurance coverage to consider. Many drivers purchase more than the state minimum to ensure adequate coverage. You have the following options available to you:

  • Collision coverage: This coverage reimburses you for any damage done to your car that results from colliding with an object or another vehicle, as long as you are at fault. Many lenders require you to carry collision insurance when you owe money on a car.
  • Comprehensive coverage: This coverage takes care of the damage caused by an incident other than an accident. It covers theft, fire, flood, hail, vandalism, falling trees, and other hazards. Many lenders also require you to carry this coverage when you owe money on a vehicle.
  • Roadside assistance: This optional coverage gives you peace of mind if something should malfunction while you are driving. Common services include towing, lockout services, jump-starts, flat tire changes, and gas delivery.
  • Rental car reimbursement: This optional coverage will help cover the cost of a rental car while your vehicle is in the shop for repairs after an accident.
  • Accident forgiveness insurance: This additional coverage prevents your insurance premium from increasing after an at-fault accident.
  • Glass protection: It’s common to experience windshield damage, so this auto policy includes protection not only for the front window but also sunroofs, rear windows, and side windows.
  • Gap insurance: If you finance or lease a vehicle, you will want to look into guaranteed asset protection coverage. Because collision and comprehensive insurance only cover your vehicle at market value, it may not be enough to pay off the car loan if your car is totaled. Gap insurance pays the difference, so you don’t owe the creditor anything after a complete loss.

 


 

2. Decide How Much Car Insurance Coverage You Need

As mentioned, every state has different financial responsibility laws when it comes to car insurance. Check out this chart of state insurance requirements by the Insurance Information Institute (III) to learn what kind of car insurance is required in your state. A state's minimum insurance coverage is given in a series of three numbers. Each of the numbers stands for a coverage requirement.

For example, the requirements for Texas car insurance are 30/60/25. That breaks down to:

  • $30,000 bodily injury liability per person
  • $60,000 bodily injury liability per accident
  • $25,000 property damage liability per accident

While the required level of insurance is mandated by your state, it isn’t always wise to go with the bare minimum coverage. You must ask yourself what level of personal risk you are willing to take.

Insurance protects your assets. If you exceed your coverage limits and cause severe injuries to someone, you will be personally liable. Even if you don’t have the money, you could be sued and have to pay for the damages out of your future assets. Are you willing to take that risk?

 


 

3. Determine How You Want To Buy And Manage Your Insurance

When you are ready to get car insurance, you have several options available. If you already have a current policy for renters or homeowners insurance, you might choose to stick with the same company. The provider will often offer a discount if you bundle multiple policies, such as home and auto insurance.

Other than that, you must determine what type of company you want to work with.

Type Pros Cons
Direct Provider

-No need to find a broker

-Quotes available online

-Ability to set up coverage on your own

-Low pressure

-No personal relationship with one agent

-Online quotes are sometimes estimates

Insurance Agent

-A long-term relationship with one person

-You can ask your agent any questions

-Limited offerings since agents only work with one company

-Possibility of hard selling tactics because agents work on commission

Independent Broker

-Variety of quote and coverage options

-Top brands available through brokers

-May be charged a brokerage fee

-Agents work on commission

 

 


 

4. Gather All The Required Information

Once you know what type of coverage you want to buy, be prepared to share the following documents to buy car insurance:

Personal Information

  • Names for all drivers
  • Dates of birth for all drivers
  • Social security and driver’s license numbers
  • Driving records, including any previous tickets or accidents

Vehicle Information

  • Vehicle make, model, and year
  • Vehicle identification numbers (VINs) for all covered vehicles
  • Current mileage and usage of the vehicle
  • Name of the registered owner
  • Address where you reside and where the cars are located
  • Your current auto insurance policy information and expiration date

You will likely want to answer any additional questions asked of you to see if you qualify for discounts before buying car insurance.

 


 

5. Understand What Factors Affect The Cost Of Your Car Insurance

While each company calculates the price of its policies differently, here are a few basic factors to take into consideration:

  • Driving record: This is one of the most significant factors in the price of your car insurance. Speeding tickets, DUIs, and reckless driving all raise rates. Depending on the state, your rates can go up for the next three to seven years because of a conviction.
  • Credit score: Generally, a higher score correlates to lower rates, and individuals with lower credit scores often report high car insurance rates. A few states, such as California, have banned the use of an individual's credit history when determining car insurance rates.
  • Driving experience: Newer drivers are charged higher rates, while drivers with lots of experience get a break. This is because inexperienced drivers are at higher risk to get into an accident.
  • Location: If you live in a densely populated area with many expensive claims, your insurance will cost more even if you’re a good driver with a perfect history.
  • Age: Younger drivers pay more, especially teen drivers, as they have less experience. Teens can pay up to two or three times what a person in their 40s would pay.
  • Mileage: Lower annual mileage can mean lower premiums from many car insurance companies.
  • Previous auto insurance coverage: Companies like to see that you’ve had continuous coverage throughout your driving career. Gaps in coverage can increase your rates.
  • Claims history: Claims filed within the last few years can also increase your rates.
  • Gender of young drivers: Younger men are more likely to receive higher rates, but costs even out after drivers age beyond their teens.
  • Vehicle type: Auto insurance companies will charge you more if you have a luxury or sports car since those cost more to fix. Family-oriented SUVs are a safer choice.
  • Geography: Additionally, you will pay more if you live in a particular region. The most expensive states for car insurance include New Jersey, Louisiana, and New York, according to the III. If you live in Idaho, Iowa, or North Dakota, you can expect to pay the least.

 


 

6. Compare Quotes From Reputable Car Insurance Providers

Whether you're buying auto insurance for the first time or looking to switch from your current car insurance company, it's a good idea to get quotes from multiple insurance providers. This can help you compare coverage and rates. It's important to remember that since auto insurance quotes are based on your individual circumstances, what’s best for your neighbor might not be best for you.

According to our cost estimates, the average 35-year-old pays between $990 and $2,700 and above per year for car insurance depending on the company. That's a wide range, which is why it's so important to compare rates. 

If you are not sure where to start, consider getting quotes from some of the best car insurance providers. 

Best Car Insurance of 2021 Superlatives Motor1 Rating Customer Service Grade Affordability Rating Our Annual Cost Estimate
1. USAA Car Insurance Best for Military 5.0 A+ 4.5 $990
2. Geico Car Insurance Best Overall 4.5 A- 4.0 $1,356
3. State Farm Auto Insurance Best for Students 4.5 B+ 4.0 $1,312
4. Progressive Car Insurance Best for High-Risk Drivers 4.5 B+ 3.5 $1,346
5. AAA Car Insurance Best for AAA Members 4.0 A 4.0 $2,736

6. Liberty Mutual Auto Insurance

Best for Teens 4.0 B+ 3.5 N/A

7. Allstate Auto Insurance

Best Local Service 4.0 B+ 3.0 $2,450
8. The Hartford Auto Insurance Best for AARP Members 4.0 B+ 4.0 N/A
9. Nationwide Car Insurance Best for Seniors 4.0 B+ 3.5 $1,570
10. Farmers Auto Insurance   4.0 B+ 3.0 $2,032
11. Travelers Auto Insurance   4.0 B+ 3.5 $1,587
12. Root Auto Insurance Best Usage-Based Insurance 4.0 A- 4.5 N/A
 

 

 
 

 


 

7. Decide On Your Car Insurance Deductible

When it comes to insurance, a deductible is the amount of money you agree to pay toward covered repairs. As an example, if you get into a car accident and the repairs are going to cost $4,000, but you have a $500 deductible, you will be responsible for paying the $500 and your insurance company will pay $3,500.

If you are looking to save money, it makes sense to have high deductibles, as long as you have the money to cover the expense should an accident occur. The higher your deductible is, the lower your premium will be.

As you determine the deductibles that work for you, consider these factors:

  • Income
  • Household budget
  • Personal savings
  • Available credit

Make sure you only agree to what you can actually afford. After all, an accident is stressful enough without having to think about paying for the repairs.

 


 

8. Choose Your Car Insurance Provider

Now that you have several quotes to compare, consider what other factors will impact your car insurance experience. Just because a company claims to have cheap car insurance rates does not mean it offers the best coverage. 

Here are some things to look for as you evaluate potential companies.

Company Information

You can use the consumer information resources provided by the National Association of Insurance Commissioners (NAIC) to find out more about various providers. The information provided includes closed insurance complaints, financial data, and licensing information. You can find further details by visiting your state’s department of insurance to look at rates and consumer complaints.

Financial Ratings

Search for the company’s financial strength ratings from AM Best. An excellent rating ensures that the company has the money to pay out claims.

Reputation

You can read reviews about the company on the Better Business Bureau (BBB) website or on Consumer Reports. Don’t forget to check the provider’s rating on BBB, if it has one.

Opinions Of Family And Friends

Talk to the people closest to you about the companies they use. Find out if claims have been paid and gauge their satisfaction levels. Maybe you will find your next provider by hearing about how happy your trusted sources are.

Coverage Terms

You want to evaluate the various coverages that the provider offers. Are there additional perks to receiving a plan through that company? Some providers will bundle perks such as roadside assistance or rental car coverage with your policy.

Cost

While you want to pay as little as possible for protection, prices that are too low should be a red flag. It’s possible that the company is charging less because it isn’t paying out on claims like it should. On the other hand, there’s no logical reason to pay for the most expensive coverage. You need to know that you have chosen a reputable company and then get the lowest rate you can.

Discounts

An easy way to get the best car insurance rates is to look for available discounts. You may be eligible for car insurance discounts if you:

  • Bundle insurance with other products and services the company offers
  • Receive coverage for multiple cars
  • Have a clean driving record
  • Pay for the premium by the year or biannually rather than monthly
  • Receive online statements
  • Drive a car with anti-theft or safety features
  • Belong to a particular organization that’s affiliated with a company
  • Serve in the U.S. military
  • Are enrolled as a full-time student
  • Complete a defensive driving course
  • Are a safe driver
  • Use anti-theft devices

Claims Process

Read reviews about the claims process to ensure everything runs smoothly when you are in need. You can often find ratings for specific areas like the claims process on J.D. Power.

 


 

9. Purchase Your Car Insurance Policy

Once you’ve chosen the company you want to work with and you like the quote you received, it’s time to look over the terms before agreeing to anything. While many people will buy car insurance without reviewing all of this, it’s not wise.

The car insurance policy is a legally binding contract. It might look confusing, but it’s just broken into three sections.

Declarations page: You will see your name, policy period, and premium amount on this page. There will also be a description of the insurance coverage along with the maximum dollar amount the insurer is responsible for.

Insuring agreement: This part of the policy is considered the central portion of the contract. It describes what the company is giving you in exchange for your premium. It also states who receives coverage. The provider ensures that everything is clearly defined, so there is no misunderstanding. You want to specifically look at anything that’s excluded from your coverage. You don’t want to find this out when you file a claim.

Conditions of the policy: This part illustrates your responsibility when you make a claim. It lets you know how much time you have to report the claim and what documentation you must have ready. The terms for canceling your policy are also set forth in this section. While you can cancel any time you want, the insurer has to follow certain regulations to drop coverage.

Most car insurance policies can take effect on the day you sign and make your first payment. This is especially useful if you’re planning to purchase or lease a new car, as most dealerships require proof of insurance before letting you drive off the lot. You can also choose a later date – just let the insurance agent know, so it’s clearly stated on the policy.

If you are purchasing a new car, keep in mind that you must notify your car insurance provider within 7 to 30 days. You will want to review your existing policy to determine how long you have to inform the company about your new car.

When your new policy has taken effect and you’ve received proof of insurance, don’t forget to cancel any old policies you may have. 

If you haven't yet, now is the time to shop around and start comparing your personalized car insurance quotes from different companies.

 
 

 


 

Methodology

In an effort to provide accurate and unbiased information to consumers, our expert review team collects data from dozens of auto insurance providers to formulate rankings of the best insurers. Companies receive a score in each of the following categories, as well as an overall weighted score out of 5.0 stars.

  • Industry Standing: Insurers with strong financial ratings and customer-first business practices receive the highest scores in this category.
  • Availability: We consider availability by state as well as exclusions for specific groups of drivers.
  • Coverage: This rating is based on types of insurance available, maximum coverage limits, and add-on policies.
  • Cost and Discounts: Our research team reviews auto insurance rate estimates generated by Quadrant Information Services for a variety of drivers in every state. Companies with lower prices and many car insurance discount opportunities receive the best scores.
  • Customer Service: We comb through customer reviews and consumer feedback studies from experts like J.D. Power.
  • Technology: Auto insurers with mobile apps, advanced online services and telematics are more likely to meet consumer needs.

 

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