Insuring Your Vehicle: The Basics

Insuring a vehicle is a relatively straightforward process, but it's important to do your research to ensure you get the best coverage for your needs. The first step is to gather essential information, such as driver and vehicle details, including names, addresses, dates of birth, driving history, and vehicle make and model. You'll also need to decide on the level of coverage you require and whether you need any additional coverage, such as comprehensive or collision insurance. Next, you can choose how to shop for car insurance, either directly from an insurer, through a captive or independent agent or broker, or via a specialty agency. It's a good idea to compare quotes from multiple companies to find the best price and coverage for your needs. Once you've selected a company and policy, you can purchase your insurance, usually with the option to pay upfront or in instalments. Don't forget to cancel your old policy, if you have one, to avoid a lapse in coverage.

Know your state's insurance laws

Each state in the US has its own laws to regulate the insurance industry operating within its borders, and federal insurance laws also apply. These laws are meant to protect consumers and include requirements for insurance companies to investigate and process claims in a timely manner, prohibitions on deceptive marketing practices, and discrimination in selling and pricing insurance policies.

State insurance laws also specify the minimum amounts of coverage required for car insurance. For example, a state might require liability policies to carry at least $25,000 of coverage for bodily injury or death to any one person in an accident, $50,000 for bodily injury or death per accident, and $25,000 for property damage. These numbers are often listed in a "25/50/25" format.

In addition to these minimum requirements, states may also mandate uninsured and underinsured motorist coverage, as well as personal injury protection (PIP). PIP is required in 15 states as part of "no-fault" insurance laws and is optional in four states and Washington, D.C. PIP covers medical payments, lost wages, and other costs resulting from an accident, regardless of who caused it.

When purchasing car insurance, it is important to be aware of the specific laws and requirements of your state to ensure you have the right level of coverage. For example, if you live in a no-fault state, you will likely need to purchase PIP coverage. On the other hand, if your state requires uninsured motorist coverage, you may want to consider adding underinsured motorist coverage as well for additional protection.

It is also worth noting that car insurance requirements can change over time, so it is always a good idea to consult with an insurance professional or attorney to ensure you are meeting the legal requirements of your state.

Compare quotes from different companies

Comparing quotes from different companies is an effective way to save money on your vehicle insurance. Quotes can vary by hundreds of dollars, so it's worth shopping around.

There are several insurance comparison sites that allow you to compare quotes from multiple companies at once. These include The Zebra, Nerdwallet, Compare.com, Insurify, and Gabi. However, some sites sell your data to insurance companies, which can result in an increase in spam, so it's important to find out how your data will be handled before submitting your information.

When comparing quotes, make sure you are getting like-for-like by selecting the same coverage limits and deductibles. You'll need to provide some personal information, such as your age, location, vehicle, driving record, and credit score, as these factors all influence your quote.

It's also worth bearing in mind that the cheapest option isn't always the best. It's worth checking reviews to see how an insurance company performs when it comes to customer service and handling claims.

Gather driver and vehicle information

To get a quote from a car insurance company, you will need to provide some personal and vehicle information. This information will allow the insurance company to check your driving record for speeding tickets and vehicular accidents, which will factor into your insurance costs.

Driver Information

• Name and date of birth for every driver on the policy
• Driving history for all drivers on the policy, including at-fault accidents, traffic violations, and any completed safe-driving courses
• Driver's license information for every driver on the policy
• Number of years of No-Claims Discount (NCD)
• Claims and convictions details for the last 5 years for all drivers to be included on the policy

Vehicle Information

• Year, make, model, body style, or Vehicle Information Number (VIN)
• Current odometer reading or mileage
• Year it was first registered
• Fuel type (diesel or petrol)
• Modifications (cosmetic, structural, or performance-related changes since the car left the factory)
• Address where the vehicle is registered
• Name of the registered owner
• Prior insurance carrier and expiration date
• Vehicle's date of purchase
• What you use the vehicle for (work or leisure)

Decide how to buy insurance

There are a few different ways to buy a car insurance policy. You can buy a policy directly from an insurance company, by getting a quote online, or you can work with an agent or broker. You can also use an online marketplace to compare multiple quotes at once. Here are some things to consider when deciding how to buy insurance:

• Buy directly from an insurance company: Many companies make it simple to get quotes and buy coverage online. However, you will only see quotes from one company at a time, so you will have to compare costs yourself to find the cheapest rate.
• Buy through an agent: Agents have physical offices in your area, so you can buy insurance in person. Some agents may charge additional fees or only show you quotes from certain companies.
• Shop through an online marketplace: You will be able to compare quotes from multiple companies at once without having to enter your information repeatedly. However, you won't be able to visit an office in person, so this option is best for those who like shopping online or over the phone.

When deciding where to buy car insurance, it is important to consider your own needs and preferences. For example, if you prefer in-person interactions, an agent or broker might be the best option. On the other hand, if convenience and speed are important to you, buying directly from an insurance company or using an online marketplace might be more suitable.

Additionally, it is worth noting that you can get car insurance before buying a car. This is something to consider if you already know the make and model of your future vehicle.

Review your coverages

When reviewing your coverages, it's important to understand the minimum coverage and limits required by your state. These requirements vary depending on the state in which you reside, so be sure to check with your local laws or an insurance agent to determine the specific obligations in your area.

In general, state minimum requirements typically include some variation of the following auto insurance coverage options:

• Bodily injury liability insurance: This covers lost wages and medical bills for individuals other than the policyholder who are involved in an accident caused by the policyholder.
• Property damage liability coverage: This covers the cost of damages to other vehicles and property involved in an accident caused by the policyholder.
• Personal injury protection (PIP): This covers medical expenses and lost wages for the policyholder and other members of their party, regardless of who is at fault for the accident.
• Medical payments (MedPay): This covers medical bills, but not lost wages, for the policyholder and their party, regardless of who is responsible for the collision.
• Uninsured and underinsured motorist coverage: This covers the policyholder's property and injury claims if they are in an accident caused by a driver without sufficient insurance coverage.

In addition to the state minimum requirements, there are several other types of coverage that you may want to consider, depending on your specific circumstances:

• Collision coverage: This covers damages to your vehicle, regardless of who is at fault in an accident. This type of coverage is typically required if you have taken out a loan or lease for your vehicle.
• Comprehensive coverage: This covers damages to your vehicle from sources other than accidents, such as fires, theft, or vandalism. Like collision coverage, this is often required for leased or financed vehicles.
• Gap insurance: This type of insurance covers the difference between what you owe on a leased or financed vehicle and its current market value in the event of a total loss.
• Loan or lease payoff coverage: This covers the remaining balance on an auto loan or lease in the event that the vehicle is declared a total loss.
• New car replacement coverage: This ensures that you will be able to replace your vehicle with a new car of the same make, model, and value if it is stolen or declared a total loss after an accident.
• Roadside assistance: This covers the cost of emergency roadside services such as towing, fuel delivery, and flat-tire repair or replacement.
• Rental reimbursement: This covers the cost of a rental car while your vehicle is being repaired or replaced.
• Mechanical breakdown insurance (MBI): This covers repairs to certain car components following a breakdown, similar to an extended car warranty.
• Rideshare insurance: This provides coverage for individuals who drive for rideshare companies like Lyft or Uber.

When reviewing your coverages, it's important to consider your specific needs and circumstances. For example, if you have a leased or financed vehicle, you will likely be required to carry additional coverage options such as collision and comprehensive insurance. Additionally, if you live in an area with a high cost of living or plan to drive in such areas, you may want to increase your liability coverage limits to protect yourself financially in the event of an accident.

Furthermore, don't forget to review your coverages periodically, especially if your circumstances change. For instance, if you move to a different state, you will need to ensure that your insurance policy complies with the new state's minimum requirements. Similarly, if you make alterations to your vehicle, such as adding custom parts or accessories, you may need to adjust your coverage accordingly.

Frequently asked questions