Auto Insurance Shopping: Key Considerations For Savvy Buyers

Shopping for auto insurance can be a time-consuming process, but it's important to ensure you're getting the best coverage for your needs. Here are some key things to note when shopping for auto insurance:

- Gather essential information: This includes basic details such as the names, addresses, and birthdates of all drivers on the policy, as well as driver's license information, vehicle details, driving history, and current insurance information.

- Determine your coverage needs: Understand the different types of coverage available, such as liability, uninsured/underinsured motorist, collision, and comprehensive coverage. Decide which types of coverage you need and the amount of coverage that's appropriate for your situation.

- Choose how to shop for insurance: You can get quotes directly from insurers, use a captive agent who works for a single insurance company, use an independent agent or broker who works with multiple companies, or use a specialty agency if you have a high-risk profile.

- Compare companies: Get quotes from at least three companies and make sure you're comparing policies with similar coverage limits and deductibles. Consider not only price but also customer reviews and ratings when evaluating insurers.

- Buy your policy and cancel your old one: Once you've chosen a company and policy, purchase your new policy and remember to cancel your old policy to avoid a lapse in coverage.

Gather personal and vehicle information

Gathering personal and vehicle information is the first step in shopping for car insurance. Here's what you need to know:

Personal Information

You'll need to provide basic personal details, such as your full name, date of birth, and address. Additionally, have your driver's license information ready, including your license number. If there are other drivers in your household, you'll need to gather their personal information as well.

Vehicle Details

Get the specifics of your car, including the Vehicle Identification Number (VIN), make, model, and year. The VIN can usually be found at the bottom of your windshield on the driver's side. Knowing your car's details will help you get accurate quotes from insurers.

Driving History

Your driving record from the past three to five years is essential. This includes any tickets, accidents, or violations. A clean driving record can help you secure better rates, so it's worth maintaining a good driving history.

Current Insurance Information

If you already have car insurance, provide the name of your current insurance company and the coverage levels you have. This information will help you compare your current coverage with potential new options.

Additional Information

Have your driver's license numbers and the names of any other household members who will be excluded from your policy. This step ensures that everyone in your household is accounted for and covered appropriately.

Taking the time to gather this information ahead of shopping for car insurance will make the process smoother and help you get accurate quotes from insurers. Remember to be truthful when providing information to ensure you get the right coverage for your needs.

Decide on the type and amount of coverage

When deciding on the type and amount of auto insurance coverage, it's important to consider your specific needs and circumstances. Here are some factors to keep in mind:

Understanding Different Types of Coverage

Liability insurance is a standard requirement in most states and covers bodily injury and property damage caused to another party in a crash. It's a good idea to have more than the legal minimum coverage if possible, as this will provide better protection in the event of an accident. You can choose liability coverage amounts with different limits, usually presented as three numbers. For example, a policy with limits of 100/300/50 means it offers up to $100,000 of bodily injury coverage per person, a total payout of $300,000 for all bodily injuries per accident, and a $50,000 total payout for property damage per accident.

Collision insurance covers damage to your car in an accident, regardless of who was at fault. Comprehensive insurance, on the other hand, covers environmental damage, vandalism, and theft. These two types of insurance are optional in every state but may be required by lenders if you have an auto loan. They often come with a deductible, which is the amount you'll need to pay out of pocket before your insurer pays the remaining costs.

Personal injury protection (PIP) and medical payments coverage (MedPay) cover medical expenses for you and your passengers after an accident, regardless of who was at fault. PIP may also cover additional expenses like funeral costs, child care, or lost wages. These types of coverage are often required in no-fault states.

Uninsured and underinsured motorist coverage protects you in the event of an accident caused by a driver who doesn't have insurance or doesn't have sufficient insurance to cover the costs of injuries and property damage.

Determining the Amount of Coverage

When deciding on the amount of coverage, consider the value of your car and your ability to cover potential costs out of pocket. For older cars with low cash value, it might not make sense to have comprehensive and collision coverage, especially if you also have a high deductible. In general, if your annual premiums exceed 10% of your car's book value, you may want to consider dropping or reducing these types of coverage.

Additionally, review your policy regularly and make adjustments as needed. If your circumstances change, such as getting married, adding a teen driver, or changing your commute distance, contact your insurer to see how these changes might impact your coverage and costs.

Compare quotes from multiple insurers

Comparing quotes from multiple insurers is a crucial step in shopping for auto insurance. It ensures that you find the best coverage at the most affordable price. Here's a detailed guide to help you through the process:

Gather Information:

Before requesting quotes, ensure you have the necessary information readily available. This includes personal details such as your name, date of birth, address, and driver's license number. Additionally, you'll need vehicle information, such as the Vehicle Identification Number (VIN), make, model, year, and mileage. It is also helpful to have your previous insurance policy details, including coverage levels and any claims made.

Decide on Coverage Needs:

Determine the type and amount of coverage you require. Most states mandate a basic level of liability insurance, which covers bodily injury and property damage to others in an accident you cause. Consider adding collision and comprehensive coverage to protect your vehicle. Collision insurance covers damage to your car in an accident, regardless of fault. Comprehensive insurance covers non-collision events like vandalism, theft, and environmental damage.

Choose How to Get Quotes:

You can obtain quotes directly from insurance company websites or agents (captive agents represent a single company, while independent agents work with multiple insurers). Using an online comparison tool is a convenient option, allowing you to fill out one form and receive multiple quotes.

Get Multiple Quotes:

It is recommended to get at least three or four quotes to start. Consider insurers' financial strength and customer satisfaction ratings when evaluating options. Look for insurers that offer discounts relevant to your situation, such as good student discounts, bundling discounts, or safe driving discounts.

Compare Quotes:

When comparing quotes, ensure you are looking at the same coverage types and amounts for an accurate comparison. Pay attention to coverage limits, deductibles, and the premium amount. Choose a policy that offers the most coverage within your budget.

Switch Insurance:

If you decide to switch insurers, ensure there is no gap in coverage. Overlap your old and new policies by at least one day to avoid a lapse in coverage, which can lead to higher insurance premiums in the future.

Additional Tips:

• Be accurate and honest when providing information for quotes. Hiding past accidents or violations may result in a higher final rate.
• Compare rates every six months or whenever your policy is up for renewal.
• Consider using an independent insurance agency or comparison website to save time and easily compare multiple options.
• Evaluate the reputation, quality, and financial strength of insurers, not just the price. Opt for a company with good customer service and claims handling.
• Remember that price isn't everything. A cheap policy may not provide the coverage you need or offer satisfactory service.

By following these steps and comparing quotes from multiple insurers, you can make an informed decision about your auto insurance, ensuring you get the best value for your money.

Choose the best quote

When shopping for auto insurance, it's important to compare quotes from different companies to ensure you're getting the best deal. Here are some tips to help you choose the best quote:

• Get quotes from multiple companies: Contact insurance companies directly, use an insurance broker or independent agent, or use online quote comparison tools to get quotes from multiple companies. This will allow you to compare prices and coverage options.
• Compare apples to apples: When comparing quotes, make sure you are considering identical coverage levels and limits. This will ensure that you are getting an accurate picture of the cost of each policy.
• Consider your coverage needs: Decide what type of coverage you need before getting quotes. Consider factors such as the minimum required coverage in your state, the value of your car, and your driving history. You may also want to consider additional coverage options, such as comprehensive or collision insurance.
• Evaluate the insurance company: Look into the financial rating and complaint index of the insurance company to assess their financial strength and customer service. Choose a company with a strong financial rating and a low complaint index.
• Ask about discounts: Many insurance companies offer discounts for various reasons, such as bundling multiple policies, having safety features in your car, or being a good student. Ask about any applicable discounts when getting a quote.
• Choose a competitive rate: The main goal of shopping for auto insurance is to find a competitive rate that offers the coverage you need at a price you can afford. Don't sacrifice coverage just to get a lower premium.
• Review the policy carefully: Before making a decision, carefully review the policy details, including coverage limits, exclusions, and any additional benefits. Make sure you understand exactly what is and isn't covered under the policy.
• Consider your budget: Determine how much you can comfortably spend on auto insurance each month. Compare this to the quotes you receive to find a policy that fits within your budget.
• Read reviews: Look for reviews and ratings from current and former customers of the insurance company. This can give you insight into the quality of their customer service, claims handling, and overall satisfaction.

Buy the policy

Once you have done your research, compared quotes, and decided on a company, it's time to buy your auto insurance policy. Here are the steps to follow:

• Decide where to buy car insurance: You can buy a policy directly from an insurance company, by getting a quote online, working with an agent or broker, or using an online marketplace to compare multiple quotes at once. Buying directly from a company is simple, but you will only see quotes from one company at a time. Agents and brokers can offer personalized advice but may charge additional fees. Online marketplaces allow for easy comparison but lack the physical presence of an office.
• Figure out how much coverage you need: This is one of the most important parts of buying auto insurance. Consider your budget, the value of your car, and the minimum coverage requirements in your state. Generally, it is recommended to get as much liability coverage as you can afford and add comprehensive and collision coverage.
• Fill out an application: When applying for insurance, you will need to provide information such as the names, birthdays, and driver's license numbers of all drivers in the household, Social Security numbers, vehicle information, and your address. You will also set your coverage amounts and choose deductible amounts for comprehensive and collision coverage.
• Compare auto insurance quotes: Get quotes from multiple insurance companies and compare the cost, protection offered, and customer service. Consider your needs carefully, as different types of drivers may require different insurance. Look for companies that offer competitive rates, good reviews, and applicable discounts.
• Choose a policy and get insured: After comparing quotes and selecting a company, set a start date for your policy and pay your first premium. You will typically receive proof of coverage and a welcome package with information on how to access your account and insurance cards.
• Cancel your old car insurance policy: If you are replacing an existing policy, wait until your new coverage is in place before cancelling your old policy to avoid any gaps in coverage. Set the cancellation date of the old policy and the effective date of the new policy on the same day.

Frequently asked questions