Vehicle Insurance: Owners' Purchasing Guide

Vehicle owners can purchase insurance in a few different ways. The most common methods are buying it online, contacting a company representative, or working with an independent insurance broker. Before purchasing a policy, it is important to research the minimum coverage requirements in your state and compare the terms of different policies. It is also recommended to shop around for insurance to find the best price and determine the desired coverage levels and deductible amounts. When buying a new car, it is usually best to purchase an insurance plan beforehand to ensure sufficient coverage.

Research your state's minimum coverage requirements

When it comes to car insurance, the minimum coverage requirements vary from state to state in the US. While nearly all states mandate a minimum amount of liability insurance, the specific coverage limits differ. Liability insurance covers any injuries or damages you cause to another driver, their passengers, or their property in a car accident. This typically includes bodily injury coverage per person and per accident, as well as property damage coverage per accident. For example, in some states, the minimum liability coverage limits might be $25,000 bodily injury liability per person and $50,000 per accident, with $25,000 property damage liability per accident. Other states might have higher or lower limits.

In addition to liability insurance, some states also require other types of coverage, such as uninsured/underinsured motorist coverage, personal injury protection, or medical payments coverage. Uninsured/underinsured motorist coverage protects you if you're in an accident with a driver who doesn't have enough insurance or no insurance at all. Personal injury protection covers medical expenses, lost wages, and other costs for you and your passengers, regardless of who is at fault. Medical payments coverage is similar but typically has lower limits and doesn't cover lost wages.

It's important to note that minimum coverage requirements might change over time, so it's always a good idea to check with your state's Department of Insurance or a local insurance agent to get the most up-to-date information. Additionally, while minimum coverage may be cheaper, it might not provide sufficient protection in the event of a major accident. Consider your needs and financial situation when deciding on the level of coverage that's right for you.

Compare quotes online, from insurance agents, or through an independent broker

Vehicle owners can purchase insurance in a few different ways. They can compare quotes online, contact insurance agents, or hire an independent broker to find the best rate for them.

Comparing Quotes Online

When comparing quotes online, vehicle owners can use insurance comparison websites or go directly to insurance company websites. These websites allow users to input their information and receive quotes from multiple insurance companies at once. This can be a quick and convenient way to compare rates and coverage options from different insurers. It also gives vehicle owners more control over the purchasing process. However, some people may find the lack of human contact impersonal, and it can be challenging to find answers to specific questions.

Contacting Insurance Agents

Insurance agents are licensed professionals who represent insurance companies and guide customers through the insurance purchasing process. There are two types of insurance agents: captive agents and independent agents. Captive agents work for a single insurance company and can only offer their products, while independent agents have access to multiple companies and policies. Working with an agent can be beneficial if you have questions or need help understanding different coverage options. Agents can also assist in identifying your needs and ensuring you purchase the appropriate type and amount of insurance. They can further help with policy updates, modifications, and renewals. However, using an agent may result in a lack of autonomy and higher costs due to commissions.

Hiring an Independent Broker

Independent brokers are similar to independent agents in that they have access to multiple insurance companies. However, brokers represent the customer, not the insurance company. They can shop around and find the best deal on car insurance for their clients. Working with a broker can increase the chances of finding the lowest-priced insurance coverage and save time for the customer. Brokers provide a personalized experience by getting to know the customer's needs and circumstances. However, using a broker typically comes with a fee, and the purchasing process may be delayed as customers wait for information and cost comparisons.

Understand the different types of insurance coverage

When it comes to purchasing car insurance, it's important to understand the different types of coverage available to make an informed decision that suits your needs and budget. Let's delve into the various types of insurance coverage for vehicle owners:

Liability Coverage

Liability coverage is a legal requirement in most US states for all drivers. It includes two main types: bodily injury liability and property damage liability. Bodily injury liability covers the medical expenses of the other driver and your passengers if you are at fault in an accident. This coverage ensures that you don't have to pay out of pocket for another person's medical bills resulting from your negligence. Property damage liability, on the other hand, covers the cost of repairing or replacing someone else's property damaged in an accident that was your fault. This could include repairing their vehicle, fence, mailbox, or any other property damaged in the incident.

Collision Coverage

Collision coverage pays for the damage to your vehicle when it collides with another object or vehicle. This coverage is optional in most states but may be required in certain situations, such as when you have leased or financed your car. It covers the cost of repairing or replacing your car, regardless of who was at fault in the accident. For example, if you hit a tree, guardrail, or another vehicle, collision coverage will help get your car fixed.

Comprehensive Coverage

Comprehensive coverage is another type of optional coverage that protects your car from damages not caused by a collision. This includes incidents like theft, vandalism, fire, storms, floods, falling objects, or hitting an animal. For instance, if your car is damaged in a hailstorm or someone breaks into it and steals your stereo, comprehensive coverage will help cover the costs of repairing or replacing your vehicle.

Uninsured and Underinsured Motorist Coverage

Uninsured motorist coverage is crucial because it protects you if an uninsured driver hits you. Unfortunately, many drivers don't have insurance, and this coverage ensures that you don't have to bear the financial burden if you're in an accident with one of them. Underinsured motorist coverage, on the other hand, kicks in when the at-fault driver doesn't have sufficient insurance to cover all the damages. This type of coverage is often paired with uninsured motorist coverage and can provide additional protection in case of an accident with a driver who has minimal insurance.

Medical Payments Coverage

Medical payments coverage, also known as MedPay, covers the initial medical expenses for you and your passengers, regardless of who is at fault in the accident. This type of coverage ensures that you and your passengers can receive prompt medical attention without worrying about immediate out-of-pocket expenses.

Personal Injury Protection Coverage

Personal injury protection (PIP) is similar to medical payments coverage but offers more comprehensive protection. In addition to medical expenses, PIP may also cover lost wages, funeral costs, and child care expenses resulting from an accident, regardless of fault. This type of coverage is especially important in no-fault states, where it is required by law.

Other Coverages

In addition to the standard coverages mentioned above, there are several other optional types of insurance coverage that you can add to your policy. These include rental reimbursement coverage, which pays for a rental car while your vehicle is being repaired; roadside assistance coverage, which provides help with towing, battery jumps, and minor repairs; and gap insurance, which is particularly useful for new cars as it covers the difference between the car's value and the loan balance if it is totaled. Other specialized coverages include classic car insurance, rideshare insurance, and mechanical breakdown coverage.

Remember, the right insurance coverage for you will depend on factors such as your budget, the age and value of your car, and the requirements of your state. It's always a good idea to shop around, compare quotes, and choose the coverages that best fit your specific needs.

Have relevant personal and vehicular information at hand

When purchasing vehicle insurance, it is important to have all the relevant personal and vehicular information at hand. This will ensure that the process goes smoothly and that you can provide accurate information to your insurance company. Here are some key details that you should prepare in advance:

Personal Information

• Driver's license number for each driver on the policy.
• Social security number(s) for all drivers on the policy.
• Date of birth or age for each driver.
• Gender of each driver.
• Marital status.
• Driving history, including any accidents or violations within the past 3-5 years.
• Proof of residence, such as a utility bill or lease agreement.
• Information on other drivers in the household, especially those who may have access to the vehicle.
• Good student information and driver training certificates for drivers under 25 (for applicable discounts).

Vehicular Information

• Vehicle Identification Number (VIN) for each car on the policy.
• Make, model, and year of each vehicle.
• Odometer reading or mileage estimates for each car.
• Information on safety and security features, such as anti-lock brakes or GPS tracking.
• Vehicle modifications, if any.
• Parking location, such as in a garage or on the street.
• Name of the registered owner(s) of the vehicle(s).
• Current or previous insurance information, including a copy of the declarations page from your previous insurance company.
• Title of each vehicle and financing information, if applicable.

Having this information readily available will streamline the process of purchasing vehicle insurance and ensure that you can provide accurate and comprehensive details to your insurance company. It is also important to note that some information, such as your driving record or claims history, may be verified by the insurance company through other means.

Decide on the best policy and cancel your old one, if necessary

When deciding on the best policy, it's important to compare car insurance quotes to find the best price. You can do this online, by contacting insurance agents, or by hiring an independent broker. Independent brokers are not loyal to a particular company, whereas captive agents usually work with only one provider.

It's also important to compare the terms of your existing policy to the terms of the new policy you're considering. You should also compare coverages, limits, and deductibles to ensure that you're getting the same amount of coverage. Trading valuable protection to save money in the short term may cost you more in the future.

You should also find out how your new insurer handles claims. Affordability is important, but your auto insurance company should also be judged on how well they handle claims.

It's crucial to avoid a gap in coverage. Even a day without car insurance coverage is a risk. Make sure your new insurance policy is already in effect before cancelling your old policy. Continuous coverage could also help you save with your new insurer.

Once you've decided on the best policy, it's usually your responsibility to cancel coverage with your previous insurer. Your new insurance company can provide proof of insurance to your old company, but they are generally not authorized to cancel a policy with another insurer on your behalf. After you purchase a new policy, you should contact your former insurer and cancel your old policy. You'll receive a refund for any unused portion of your policy, subject to any cancellation fee your insurer may charge.

You can cancel your old policy by calling your insurance company, mailing or faxing a letter, or stopping by your agent's office. If you call, you may be required to sign a cancellation notice. If you mail or fax a letter, it should include your full name, address, auto policy number, and the date of the requested cancellation.

Remember to always start the cancellation process after you have a new policy in place. Allow some overlap so that your new policy is in place before cancelling the old one. Also, make sure there is a paper or electronic trail of your cancellation.

Finally, get a confirmation of cancellation from your insurer or agent. This confirms that your policy is formally canceled. Your current insurer should also refund any pre-paid premiums minus cancellation fees.

Frequently asked questions