Personal Finance Expert
Tyron Jones is a finance expert who has operated within the auto insurance business for more than 10 years. He has written many other finance related articles for a number of prominent publications.
Everyone gets excited when looking to purchase a new car or, at the very least, a “new to you” car (a softer way of saying used). But after buying the car and before driving it home, there is one small step that has a significant impact on whether it is legal for you to drive the car onto city streets. And this small step is called car insurance.
Before the car is driven on the streets of any state in the union, one must purchase car insurance. Car insurance protects the car owner and drivers against hazards faced during the operation of a vehicle. Most specifically, there is a financial shield that mitigates damages caused by the car and bodily injuries during traffic accidents. It also provides liability coverage from many incidents that relate to the insured vehicle.
Before operating a vehicle, securing car insurance is a state requirement. Many car insurance consumers have no idea about car insurance terminology nor how to select a car insurance policy that maximizes their interest.
As a result, we will discuss the requirements for car insurance, coverage options, and steps involved in buying a policy based on acquiring the maximum amount of coverage with the minimal amount of premium based upon your budget.
Minimum requirements to get car insurance
In beginning your search for car insurance, you must secure a policy premium quote. A quote will be specific to your vehicle's make, model and year. For accuracy, the number of drivers of the car, ages, and gender factor into this premium.
Additional factors that impact the minimum requirements for an insurance quote include:
- Vehicle's storage address: The address matters because of the “cost of the accident” that factors into the premium. The cost of repairs fluctuates based upon a geographical location. Therefore, the insurance company places a heavy emphasis on not only the residential address but also what other drivers live with you.
- Driver's license information of all covered drivers: This Information is needed to identify all covered drivers correctly. The driver's license information results in the elimination of fraudulent claims and other negatives associated with misinformation. Identifying the correct person to be insured factors into the vehicle's premium.
- Driving records of all covered drivers: Insurance companies use a point system to determine the amount of premium attributed to a driver and to determine if a policy will be offered.
- Vehicle Identification Numbers (VIN) of all covered: Car insurance companies need to know the specifics of the vehicle. The more detailed the information is about the car, the more precise the quote will be at the time of the proposal.
- Insurance history of all drivers: A driver's history is necessary because insurance companies analyze the risks associated with the potential of filing a claim in the future. This potential manages the risk that an insurance company takes.
These requirements are the minimum information required for a car insurance quote. The more detailed information, the more accurate the quote is. Additionally, car insurance companies use a Motor Vehicle Report (MVR).
The MVR informs insurance companies of what type of “driving reputation” you may have in the future. It's a synopsis of your driving history, so if you provide false information during the fact-finding process, and adjustment to the premium comes afterward. Remember, the insurance company is a risk management organization. Hence, they consistently modify their financial risk as more details arise.
Understanding Coverages and Terms
Most states require a minimum of liability coverage and the protection of your vehicle. However, there are additional requirements that a state may need such as:
Medical payments: Regardless of fault, the medical payment benefit limits apply to occupants of your vehicle.
Personal injury protection: Regardless of fault, this benefit applies to your medical payments only.
Uninsured motorist coverage: This coverage protects you against a driver of another vehicle who has insufficient or no insurance coverage.
Collision coverage: This coverage protects against collisions with other vehicles or physical damage to property.
Gap coverage: It pays the financial gap determined between the remaining loan balance and its depreciable value.
Roadside assistance: It assists in case of breakdowns and may include towing and repairs.
Comprehensive coverage: Having a high deductible: The more that you are willing to contribute to a claim, you reduce the overall risk of payout for the insurance company. Therefore, they reward you with a lower premium.
Having anti-theft devices: An anti-theft device reduces the chances of your vehicle being stolen. The insurance company looks favorably upon those vehicles that contain an anti-theft system and do offer savings.
Having favorable credit scores: Being a responsible creditor allows an insurance company to forecast you as a responsible driver, and they will happily reward you.
Having a bundled policy: Bundling your auto insurance policy with a homeowners or renters policy generates savings opportunities within the same insurance company.
Having a defensive driving certification: Taking the additional step by completing advanced driving courses goes a long way with a car insurance company. Keeping a clean driving record makes you a priority policyholder in their eyes.
Driving fewer miles: Insurance companies use a baseline of mileage that factors into your insurance premiums. The fewer miles you drive positively impact the premium savings.
Making a one-time payment: Insurance companies offer discounts on a single payment made because there is minimal oversight of concern concerning your ability to pay.
Comparing your premium options with other carriers: Some carriers offer savings at various points in time throughout the year or provide promotional quotes, so check around.
Comprehensive coverage: This benefit provides monetary support for your vehicle in non-collision accidental claims.
Customizing your Coverage
Customizing your coverage is dependent upon the circumstances the party seeking car insurance. For example, your coverage will depend upon the vehicle you're driving and the frequency in which you operate it over the policy term. Additionally, maximize limits of liability in alignment with affordability in addition to other required policy coverages.
There are a couple of ways to view policy coverage recommendations before you get car insurance. To begin, you want to start by assessing whether your car is considered new or old. A “newer” car is one considered to be five years or less due to the quality of the cars made today. Cars last much longer than in years past. So if you have a newer car, strongly consider having comprehensive and collision coverage along with gap insurance.
Older cars, meaning older than five years, must have a minimum requirement of liability insurance, but for a financed vehicle, consider comprehensive and collision coverage, gap insurance and roadside assistance.
Minimum state car insurance requirements
In many cases, states mandate a minimum amount of coverage. These minimal amounts of liability, often do not sufficiently protect neither the driver of the vehicle nor the vehicle itself. It is in the policyholder's best interest to add higher limits of liability to mitigate the risk of bodily injuries and property damages. In some states, medical payments and uninsured motorist coverage are a serious priority because of the number of motorists who have no coverage, such as undocumented “citizens.”
How to save on your car insurance premiums
When it comes to saving on your car insurance premiums, you are in luck. Due to the amount of competition, car insurance company premiums are competitive to gain a solid base of clientele. There is good news for a potential policyholder, and here are some suggested ways to begin your savings process that include:
Steps in buying car insurance
Some car buyers prematurely settle on a quote without adequately evaluating all of the options. Assessing and understanding the basis of who's providing the quote cannot only save you time but also save you money. Although we're about to share four ways to begin your search for affordable car insurance, always have confidence in the agent or company in whom you trust with your business.
Buy car insurance from a captive agent
An agent who represents the products from only one insurance company is called a captive agent. The advantage of working with a captive agent is that they are familiar with the products of the insurer that they represent. Therefore, they should offer those products that fit your requests and affordability.
Buy car insurance from an independent agent
With an independent agent, they may represent the products offered by various insurance companies. What's excellent is that they can explain the strengths and weaknesses of each policy and have a better feel of the culture and nuances of how each insurer operates. You also strengthen your business relationship with one agent for all of your car insurance needs. Ask them if they have an insurance now pay later option available.
Buy car insurance from the insurance company directly
When purchasing directly from the insurance company online or through a customer service representative, your ability to understand the terminology is totally on you. Also, it may be time-consuming.
Buy car insurance by comparing benefits
Online comparison-shopping allows you the opportunity to assess several policies at once with the analysis of one input of your information and criteria. Using a car insurance comparison tool makes this process much easier.
General Questions About Shopping for Car Insurance
We’ll answer general questions about car insurance shopping in this section.
How to shop for car insurance?
The best way to shop for car insurance is by using an online price comparison tool. That way you can see multiple quotes at once.
How to shop for home and auto insurance?
It’s easy to shop for car insurance from home using price comparison tools that let you see quotes from many different car insurance companies at the same time.
How to shop around for car insurance?
You should use online price comparison tools when shopping around for car insurance. These tools make it easy to get all the information you need in one place. Related; Where do I shop if I can't afford auto insurance?
What to look for when shopping for car insurance?
When you’re shopping for car insurance you should make sure you’re comparing two of the same policy. For example, any liability only policy will be cheaper than a comprehensive coverage plan. Related: Get liability auto insurance coverage now.
How often should you shop around for car insurance?
It’s best to shop for car insurance twice a year, a month before your insurance renews.
Where to shop for multiple car insurance?
Online price comparison tools are the best place to go to shop for car insurance.
When to shop for new car insurance?
The best time to start shopping for new car insurance is about a month before your current car insurance renews.
How to shop car insurance for future vehicle?
You just need to know the vehicles make, model, and mileage of the car you’re considering to get prices on insurance for it.
How early should I start shopping for car insurance before my renewal?
It’s best to start shopping for car insurance about a month before their renewal.
How to shop for car insurance for first car?
You should use online shopping tools that compare prices to make sure you get the best insurance deal for your first car. Keep in mind that lease insurance requirements may be different if this is how you're purchasing the car.
What do I need to get car insurance?
You'll need your car's make, model, and VIN. You'll also need your driver's license number, social security number, and address to get an accurate quote.
How to get non owner car insurance?
You’ll usually have to directly contact an insurance agent to get non-owner car insurance.
How to get car insurance quotes?
The best way to get car insurance quotes is by using an internet price comparison tool. This will let you see quotes from lots of companies at the same time.
How long does it take to get car insurance?
It doesn’t take very long to get car insurance at all. Most people can get new car insurance in as little as 15 minutes.
How to find the best car insurance?
The best way to find the best car insurance is through internet price comparison tools that let you make apples-to-apples comparisons.
Shopping for Car Insurance and Prices and Coverage
This section answers people questions about shopping for car insurance based on price and coverage.
How to shop for car insurance online?
The best way to shop for car insurance online is to use a price comparison tool to get quotes from multiple companies at the same time.
Shopping for auto insurance, what should be covered?
You should make sure you have at least state-minimum liability coverage, along with any comprehensive coverage required by your financing. Related: Do I need full coverage insurance on a used car?
How to shop around for good car insurance interest rates?
Car insurance companies don’t have interest rates, they have premiums. You should look for the coverage you need at the lowest premium. Related: Why is my car insurance so high?
When is the best time to shop for car insurance?
The best time to start shopping for car insurance is about a month before your current insurance renews.
When shopping for car insurance what all can they see?
Exactly what an insurance company can see depends on how far into the application process you are and the laws in your particular state.
How to shop for car liability insurance?
When you’re looking for car insurance make sure to specify liability only for any internet search tools. Related: Buying a used car without insurance.
Is it worth shopping for auto insurance when you are retired?
Yes, it’s always worth time trying to save money on your car insurance. Related: What is the typical new car insurance grace period?
Where can I find cheap car insurance?
Internet search tools are the best ways to find cheap car insurance. You can get quotes from multiple companies at once and compare them to get the best deal. This is also the best way to get lower car insurance if your premiums are currently too high.
How can I get gap insurance on my car?
Most dealerships and insurance companies offer additional Gap policies. Check with the company you’re buying the car from as well as your current insurance company.
How to get discounts on car insurance?
Every insurance company has discount programs you can take advantage of. Talk to your insurance company and see what programs you might be eligible.
What coverage should I get for car insurance?
It depends on a few factors. You need to maintain any insurance agreements as a result of leasing or financing the car. You should also evaluate your own acceptable risk levels to make a decision.
How to get cheaper car insurance?
One of the best ways to get cheaper car insurance is by looking for discount programs. Things like driver training courses and good grades discounts can save you a ton!
How to get liability insurance for a car?
You can get liability insurance with any car insurance agreement. Make sure your liability limits meet the minimum limit in your state.
Answering Car Insurance Questions While Shopping
We’ll help you answer some of the questions that car insurance companies ask while shopping in this section.
When shopping for car insurance is it best to say you’re working or on disability?
It’s best to be honest with questions about car insurance. If you lie, you risk getting your account canceled for fraud.
Should I disclose my traffic accidents when shopping car insurance?
Yes, you should disclose any traffic accidents. The company will find out anyway, disclosing the accidents just means you get an accurate quote. There are auto insurance high risk options available.
What information do you need when shopping for auto insurance?
You’ll need your name, driver’s license number, social security number, address, phone number, car make, car model, car mileage, and car VIN. To get cheap full coverage car insurance quotes enter your zip code above.
DUI but not yet been to court, do I need to declare this when shopping for car insurance?
It depends on the laws in your state. You should consult an attorney to get the best answer to your question.
Other How to Shop for Car Insurance Questions
This section covers other questions about shopping for car insurance. Check here if you don’t see your question in other sections.
When shopping for car insurance, do they run your credit?
In nearly every case, yes. However, this may or may not be a hard credit check depending on where you live.
Where to shop for multiple car insurance?
Most companies offer discounts for multiple cars. You should contact the company directly if you have any questions. Related: What is the difference between liability vehicle vs full coverage?
Is it a bad idea to give social security number when shopping for auto insurance?
As long as you trust the company and the website you’re on, you should give your SS number, as it’s needed for a credit check to generate a quote.
What percent of people shop for auto insurance?
Almost every driver will shop for car insurance at some point in their lives.
After how long can you shop around for car insurance?
You can shop around for car insurance any time you want. There’s no penalty for changing insurance policies in most states. If you need temporary coverage look for 24 hour car insurance companies.
What month of the year do people shop for car insurance?
Most people shop for car insurance the month before their birthday and six months after that.
Should I disclose my current car insurance rates when I am shopping for insurance?
It’s up to you. It’s not required that you disclose your rates, but it may help companies develop better information on the market.
Questions to ask when shopping for auto insurance?
You should ask what your policy covers, what kinds of discounts are available, when you need to renew, and if there is a guaranteed rate. If you have a less than perfect record ask about bad driving record auto insurance.
Why shop for car insurance locally?
You can shop locally because car insurance rates are based on where you live. Local agents may have better or more accurate knowledge and might give you a better price.
How long do you have to get insurance after buying a used car?
You need insurance anytime you’re driving a car. Most insurance companies give you a 7-day grace period to change your insurance when you get a new car.
How long do you have to get insurance on a new car?
You need to have insurance on any car you’re driving if you’re taking it on public roads. You’ll need insurance immediately.
How to get car insurance without a car?
You can get non-owner car insurance through most major insurance companies if you don’t own a car.
How to get car insurance for the first time?
You can use an internet price comparison tool to find the best offer and then apply for car insurance through the best company for you.
What type of car insurance should I get?
That depends on your situation. You may have to get certain insurance if you lease or finance your car. Otherwise you should base your decision on your acceptable level of risk.
How to get car insurance without a license?
Many companies may be hesitant to give car insurance to someone without a license. Your best bet is non-owner insurance.
What information do I need to get car insurance?
You’ll need your driver’s license information, make, model, year, and VIN of the car, social security number, home address, and other information to get car insurance.
How to get sr22 insurance without a car?
You’ll need to talk to a lawyer about your insurance requirements regarding SR22 if you don’t have a car.
How to get car insurance with a suspended license?
It’s going to be difficult to get car insurance with a suspended license. You should check with high-risk insurance specialist companies.