Are you in the market for a new auto insurance policy?
Here’s your guide to purchasing auto insurance in 7 easy steps.
Step 1: Choose a way to purchase your policy
You can choose to buy a policy directly from an insurance company or through an independent insurance broker.
If you already have homeowners or renters insurance, you likely also have the option of purchasing an auto policy through your current insurer. Choosing to bundle policies may give you a discount of as much as 15% off the usual cost of the policy.
If you’re working with insurance companies, contact each one individually to get your quotes. This is likely to be the best approach if you’re only choosing between two insurance companies or between several policies from the same company.
If you’re open to purchasing a policy from any company, and you’d rather not spend the next month getting quotes, you’re best off using an independent broker. You’ll only need to fill out one application and the broker will do the research for you, pulling up several quotes for you to compare and consider.
Step 2: Decide how much coverage you need
When choosing a policy, you can opt for maximum coverage, the minimum required by state law, or any amount in between.
Here are the primary categories of auto insurance coverage:
Liability coverage. This includes coverage for bodily injuries, property damages, or auto damages to another motorist if you’re at fault.
Comprehensive coverage. This will pay for any damage and losses to your car that was not caused by another vehicle, including damage from inclement weather, theft, floods and more.
Personal injury protection. This covers medical bills for you and your passengers in the event of an accident.
Collision insurance. This covers the damages to your car if it’s involved in an accident.
Uninsured/underinsured motorist protection. This pays for damages caused by another motorist who does not have sufficient insurance coverage.
Gap insurance. This coverage is exclusively for financed or leased cars. It pays the difference between what you owe and what the car is valued at if there were a total loss of the vehicle.
There are several coverage add-ons you may be interested in as well, including roadside assistance, rental car insurance, and rideshare insurance for those employed by a rideshare company, like Uber or Lyft.
Step 3: Determine your risk
Ask yourself these questions to assess your risk of being in an accident or of your vehicle incurring damages:
How many hours do you drive each week? If you drive an excessive amount, you may want to opt for more coverage.
Are you financing or leasing your car? If you are, consider gap insurance.
Do you drive in high-traffic areas and/or park in an area that has lots of break-ins? Both factors increase your car’s risk of damage and are reasons for increased coverage.
Do you spend many hours driving for business-related reasons? If so, you may need a commercial policy.
Will any of your children be driving your car? If you have a teenager who will be using your car, it’s a good idea to increase your coverage cap.
Step 4: Fill out an application(s)
No matter how you choose to apply for car insurance, be prepared to supply the following information:
- The year, make and model of your car
- Your driving history
- Your marital status
- Your education
- Your employment status, details, and history
- The names and birthdates of everyone who drives your vehicle
- The ownership history of your car
Step 5: Get your quotes
You’ll get your quotes within a few hours of submitting your application, and sometimes as quickly as within a few minutes.
Your quotes will include several options for the deductible and the premium amounts. In general, a higher deductible, which means paying more out of pocket when you file a claim, will give you a lower premium. While this option might mean there’s more money in your wallet each month, it can spell catastrophe for your finances if your vehicle is involved in a theft or accident requiring expensive repairs. Your best option is to take the middle road and find a plan that offers the maximum deductible you can easily afford along with the lowest premiums.
Step 6: See if you qualify for a discount
Before signing on a quote, check if you qualify for a discount. Any of the following factors may make you eligible for a cheaper plan:
- Your vehicle has safety features or an alarm system.
- You’re a military veteran.
- You’re a full-time student with a decent academic record.
- You have an excellent driving record.
- You’ve completed a defensive driving or safety course.
Step 7: Choose your policy
When you have all the details ironed out and you’ve compared several plans, you’re ready to choose an auto insurance policy that best suits your needs.
Once you’ve made a decision, be sure to pay your premiums in a timely manner and to keep your insurance identification card in your vehicle at all times. If you are involved in an accident or are the victim of theft, contact your insurance provider through the number provided on your insurance identification card as soon as possible. It’s also a good idea to try shopping for a cheaper policy once a year.