How to Get Auto Insurance Coverage

Quick answer

• Understand your state’s minimum coverage requirements.
• Assess your personal risk and financial situation to determine appropriate coverage levels.
• Shop around with multiple insurance companies to compare quotes.
• Look for discounts and consider bundling policies for savings.
• Review policy details carefully before purchasing, especially exclusions and limits.
• Keep your policy updated as your needs change.

What to check first (before you buy or change coverage)

Coverage Needs

Before you even look at quotes, take stock of what you need. This means considering your state’s legal minimums, which are often quite basic. Think about the value of your car, your financial assets you need to protect, and your tolerance for risk. Do you have a new car that would be expensive to replace? Do you have significant savings that could cover a deductible or minor repairs?

Deductibles and Premiums

Your deductible is the amount you pay out-of-pocket before your insurance kicks in for a claim. A higher deductible usually means a lower premium (your monthly or annual cost), and vice versa. Balance what you can comfortably afford to pay in an emergency with how much you want to spend on premiums each month.

Exclusions and Limits (General)

Every policy has exclusions – things it won’t cover – and limits – the maximum amount it will pay for certain types of claims. Common exclusions might include normal wear and tear, or damage from certain natural disasters (though comprehensive coverage often addresses this). Limits apply to each coverage type (e.g., bodily injury liability per person and per accident). Understanding these upfront prevents surprises during a claim.

Claim Process

Familiarize yourself with how to file a claim with a potential insurer. What is their process? How quickly do they typically respond? Do they have a user-friendly app or online portal? Knowing this can reduce stress if you ever need to use your insurance.

Bundling and Discounts (General)

Many insurers offer discounts for bundling different types of insurance (like auto and home) with the same company. You might also qualify for discounts based on your driving record, safety features in your car, good student status, or loyalty. Always ask about available discounts.

Step-by-step (simple workflow)

1. Determine your state’s minimum liability requirements.

• What to do: Research the legally mandated minimum amounts of bodily injury and property damage liability coverage required by your state’s Department of Motor Vehicles or equivalent agency.
• What “good” looks like: You know the specific dollar amounts for each type of coverage your state requires.
• Common mistake: Assuming state minimums are sufficient.
• How to avoid it: State minimums are often very low and may not adequately protect your assets. Plan to purchase coverage well above these minimums.

2. Assess your personal risk and financial situation.

• What to do: Evaluate the value of your car, your personal assets (savings, home equity), your driving habits, and your tolerance for risk.
• What “good” looks like: You have a clear understanding of how much coverage you need to protect yourself financially in various accident scenarios.
• Common mistake: Underestimating the cost of repairs or medical bills after an accident.
• How to avoid it: Consider worst-case scenarios. A serious accident can involve tens or hundreds of thousands of dollars in medical expenses and property damage.

3. Identify the types of coverage you need.

• What to do: Beyond liability, consider comprehensive (for theft, vandalism, weather damage) and collision (for damage to your car in an accident, regardless of fault), as well as uninsured/underinsured motorist coverage.
• What “good” looks like: You can explain why you’ve chosen each type of coverage based on your needs.
• Common mistake: Skipping comprehensive or collision on an older car to save money.
• How to avoid it: Weigh the cost of premiums against the actual cash value of the vehicle. If the car is worth very little, the cost of these coverages might exceed its value.

4. Decide on your deductible amounts.

• What to do: Choose a deductible for comprehensive and collision coverage that you can afford to pay out-of-pocket if you file a claim.
• What “good” looks like: You’ve selected deductibles that offer a good balance between lower premiums and your emergency fund’s capacity.
• Common mistake: Choosing a deductible that’s too high for your budget.
• How to avoid it: Ensure you have enough cash readily available to cover the chosen deductible without going into debt.

5. Gather necessary information.

• What to do: Collect your driver’s license number, vehicle identification numbers (VINs) for all cars, current insurance policy details (if applicable), and information about all drivers in your household.
• What “good” looks like: You have all required documents and information at your fingertips, making the quoting process smoother.
• Common mistake: Not having all information ready, leading to incomplete quotes or delays.
• How to avoid it: Create a checklist of required items before you start getting quotes.

6. Shop around and get multiple quotes.

• What to do: Contact several different insurance companies (at least 3-5) or use online comparison tools to get quotes for the same coverage levels.
• What “good” looks like: You have a range of quotes from different providers for identical coverage, allowing for direct comparison.
• Common mistake: Only getting quotes from one or two companies.
• How to avoid it: Prices can vary significantly between insurers for the exact same coverage.

7. Compare quotes carefully, not just price.

• What to do: Look at the coverage details, deductibles, limits, exclusions, and the financial strength ratings of the insurance companies.
• What “good” looks like: You understand the differences in policies and are choosing based on value, not just the lowest premium.
• Common mistake: Choosing the cheapest option without understanding what it covers.
• How to avoid it: Prioritize companies with good customer service and claims handling reputations, alongside competitive pricing.

8. Inquire about discounts.

• What to do: Ask each insurer about all available discounts, such as multi-policy, safe driver, good student, anti-theft devices, or low mileage.
• What “good” looks like: You’ve identified all applicable discounts and they’ve been applied to your quotes.
• Common mistake: Forgetting to ask for discounts you might qualify for.
• How to avoid it: Be proactive and ask specifically about every discount category.

9. Review the policy details thoroughly.

• What to do: Read the full policy document, paying close attention to the declarations page (summary), exclusions, limits, and any endorsements.
• What “good” looks like: You understand exactly what is covered, what is not, and what your responsibilities are.
• Common mistake: Not reading the fine print, leading to misunderstandings later.
• How to avoid it: Ask your agent or the insurance company to clarify anything you don’t understand before you sign.

10. Purchase your chosen policy.

• What to do: Complete the application process and make your initial payment to activate coverage.
• What “good” looks like: You have proof of insurance (an insurance card) and understand when your coverage officially begins.
• Common mistake: Delaying the purchase, leaving yourself uninsured.
• How to avoid it: Purchase your policy as soon as you’ve made your decision, especially if you’re switching providers or buying a new car.

11. Keep your policy updated.

• What to do: Notify your insurer of any significant changes, such as a new address, a new driver in the household, or modifications to your vehicle.
• What “good” looks like: Your policy accurately reflects your current situation, ensuring appropriate coverage and pricing.
• Common mistake: Failing to update your policy after life changes.
• How to avoid it: Schedule an annual review of your policy to ensure it still meets your needs.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Driving with only state minimum liability	Inadequate protection for your assets in a serious accident; personal financial ruin.	Purchase higher liability limits (e.g., 100/300/100 or more) to cover potential damages.
Choosing the cheapest policy without comparison	Overpaying for less coverage, or missing out on better deals and discounts from other insurers.	Get quotes from at least 3-5 insurers for identical coverage levels and compare policy details thoroughly.
Ignoring comprehensive and collision coverage	Financial loss if your car is stolen, damaged by weather, or involved in an accident where you’re at fault.	Assess the value of your car; if it’s worth repairing or replacing, these coverages are often essential.
Setting a deductible too high	Inability to pay the deductible when a claim occurs, leading to delayed repairs or unpaid claims.	Ensure your deductible amount is easily affordable from your emergency savings.
Not asking about discounts	Paying more than necessary for your insurance premiums.	Proactively ask every insurer about all available discounts you might qualify for.
Failing to update policy information	Incorrect premiums, denied claims, or coverage gaps if your circumstances change (e.g., new driver, new address, vehicle modifications).	Inform your insurer immediately about any changes to your driving record, household members, address, or vehicle.
Misunderstanding policy exclusions	Discovering that a specific type of damage or incident is not covered when you need it most.	Carefully read the “Exclusions” section of your policy document and ask your agent to clarify anything unclear.
Not checking insurer’s financial strength	The possibility that the insurer may not be able to pay claims if they face financial difficulties.	Research the insurer’s financial strength ratings from independent agencies like A.M. Best.
Relying solely on online quotes	Potentially missing personalized advice, bundled discounts, or specific policy nuances that an agent could explain.	Supplement online research with calls to agents or customer service to ask clarifying questions and explore all options.
Not understanding uninsured/underinsured motorist coverage	Being financially responsible for damages caused by drivers who have no insurance or insufficient coverage to cover your losses.	Ensure you have adequate UM/UIM coverage to protect yourself from drivers who can’t pay for the damage they cause.

Decision rules (simple if/then)

• If you own a new or valuable car, then purchase comprehensive and collision coverage because these cover damages to your vehicle regardless of fault or cause.
• If your state has low minimum liability limits, then increase your liability coverage to at least 100/300/100 because state minimums are often insufficient to cover serious accident costs.
• If you have significant savings or assets, then consider a higher deductible to lower your premium because you can afford to pay more out-of-pocket if you need to file a claim.
• If you have multiple vehicles or own a home, then bundle your auto insurance with other policies because insurers often offer substantial discounts for multi-policy customers.
• If you have a long history of safe driving and no recent accidents, then shop for insurers that offer good driver discounts because you are likely to qualify for lower rates.
• If you drive very few miles annually, then inquire about low-mileage discounts because many insurers offer reduced rates for less frequent drivers.
• If your credit score is good, then check if your state allows credit-based insurance scores for pricing because a good score can lead to lower premiums in many areas.
• If you are financing or leasing your vehicle, then you will likely be required to carry comprehensive and collision coverage because the lender needs to protect their investment.
• If you frequently park in high-crime areas or are concerned about theft, then ensure your comprehensive coverage is adequate because it covers theft and vandalism.
• If you regularly transport passengers, then ensure your bodily injury liability limits are robust because you could be responsible for their medical expenses if they are injured in an accident you cause.
• If you are unsure about a specific policy term or coverage, then ask your insurance agent or company representative for clarification because understanding your policy is crucial.
• If you are considering purchasing a policy from a lesser-known insurer, then research their customer service and claims handling reputation because low premiums shouldn’t come at the expense of poor service.

FAQ

What are the basic types of auto insurance coverage?

The main types are liability (bodily injury and property damage), comprehensive (theft, vandalism, weather), collision (accidents), and uninsured/underinsured motorist coverage. Many states require at least liability coverage.

How much liability coverage do I need?

It’s recommended to have more than your state’s minimum. Consider your assets and potential accident costs. Many experts suggest limits of 100/300/100 (bodily injury per person/per accident, property damage per accident) or higher.

What is a deductible, and how does it affect my premium?

A deductible is the amount you pay out-of-pocket before insurance covers the rest of a claim. Higher deductibles generally lead to lower premiums, while lower deductibles result in higher premiums.

Can I get a discount on my auto insurance?

Yes, insurers offer many discounts for good driving records, bundling policies (auto, home), safety features in your car, being a good student, low mileage, and more. Always ask what you qualify for.

What is comprehensive coverage?

Comprehensive coverage helps pay for damage to your car caused by events other than a collision, such as theft, vandalism, fire, falling objects, or natural disasters like hail or floods.

What is collision coverage?

Collision coverage pays for damage to your car resulting from an accident with another vehicle or object, or if your car overturns, regardless of who is at fault.

What happens if I get into an accident with an uninsured driver?

If you have uninsured motorist coverage, it can help pay for your medical expenses and, in some cases, vehicle damage. Without it, you might have to rely on your own collision coverage or pay out-of-pocket.

How often should I review my auto insurance policy?

You should review your policy at least annually, and any time you experience a significant life change, such as moving to a new state, buying a new car, or adding or removing a driver from your policy.

What this page does NOT cover (and where to go next)

• Specific state-by-state insurance laws and regulations. (Next: Visit your state’s Department of Insurance website.)
• Detailed explanations of specific policy endorsements or riders. (Next: Consult your insurance provider or agent for clarification.)
• Legal advice regarding accident liability. (Next: Consult with a qualified attorney specializing in personal injury law.)
• Investment strategies related to insurance products. (Next: Speak with a certified financial planner.)
• Information on commercial auto insurance. (Next: Research resources for business vehicle insurance.)