Steps to Get Car Insurance

Getting car insurance can seem complicated, but it’s a crucial step to protect yourself financially on the road. This guide breaks down the process, from understanding your needs to making an informed decision.

Quick answer

• Assess your needs: Determine the type and amount of coverage you require based on your vehicle, driving habits, and financial situation.
• Gather necessary information: Have your driver’s license, vehicle details, and driving history ready.
• Shop around: Compare quotes from multiple insurance companies to find the best rates and coverage.
• Understand your policy: Read the fine print, paying attention to deductibles, limits, and exclusions.
• Consider discounts: Look for ways to lower your premium through bundling, safe driving, or other eligible programs.
• Make your purchase: Once you’ve chosen a policy, complete the application and payment process.

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

Before diving into quotes and policy details, it’s essential to lay the groundwork by understanding your personal circumstances and insurance needs.

Coverage needs

Consider your specific situation. How old is your car? Is it financed, or do you own it outright? Do you have significant savings to cover potential damages or injuries to others? Your answers will help determine the minimum liability coverage required by your state and whether you need additional protection like collision or comprehensive coverage.

Deductibles and premiums

Your deductible is the amount you pay out-of-pocket before your insurance coverage kicks in for a claim. A higher deductible typically means a lower premium (the amount you pay regularly for your insurance), and vice-versa. Weigh the trade-off between saving money on premiums and having a manageable out-of-pocket cost if you need to file a claim.

Exclusions and limits (general)

Every policy has exclusions – situations or events that are not covered. Common exclusions might include intentional damage or racing. Limits refer to the maximum amount your insurance company will pay for a covered loss. It’s vital to understand these to avoid surprises during a claim. Check your state’s minimum liability requirements and consider if those are sufficient for your peace of mind.

Claim process

Familiarize yourself with how to file a claim with a potential insurer. What is their typical response time? Do they have an easy-to-use online portal or app? Understanding the claim process can save you stress and time if you ever need to use your insurance.

Bundling and discounts (general)

Many insurance companies offer discounts for bundling multiple policies (like home and auto) or for good driving records, student discounts, or safety features in your car. Ask about all available discounts when you’re getting quotes, as these can significantly reduce your overall insurance cost.

Step-by-step (simple workflow)

Here’s a straightforward workflow to guide you through the process of obtaining vehicle insurance.

1. Determine your state’s minimum requirements.

• What to do: Research the mandatory liability insurance limits (bodily injury and property damage) required by your state.
• What “good” looks like: You know the minimum dollar amounts for liability coverage mandated by your state’s Department of Motor Vehicles (DMV) or equivalent agency.
• Common mistake and how to avoid it: Assuming your state has no minimum requirements. Avoid this by checking your state’s official DMV website.

2. Assess your personal coverage needs.

• What to do: Evaluate your vehicle’s age and value, your financial assets, and your risk tolerance. Consider if you need more than state minimums for liability.
• What “good” looks like: You’ve decided on appropriate liability limits (often higher than the state minimum) and whether you need optional coverages like collision, comprehensive, or uninsured/underinsured motorist.
• Common mistake and how to avoid it: Only getting the state minimum coverage. Avoid this by understanding that state minimums may not be enough to cover serious accidents, leaving you personally liable for damages.

3. Gather necessary personal and vehicle information.

• What to do: Collect details such as your driver’s license number, Social Security number, date of birth, current address, vehicle identification number (VIN), make, model, year, and any existing insurance information.
• What “good” looks like: You have all the required documents and data readily available to provide to insurance agents or online forms.
• Common mistake and how to avoid it: Not having your VIN handy. Avoid this by locating your VIN on your car’s dashboard or insurance card before starting the quote process.

4. Research and compare insurance providers.

• What to do: Identify reputable insurance companies and independent agents. Look for companies with good financial ratings and customer service reviews.
• What “good” looks like: You have a list of at least 3-5 insurance companies or agents to get quotes from.
• Common mistake and how to avoid it: Only getting quotes from one or two well-known companies. Avoid this by realizing that prices and coverage options can vary significantly between insurers.

5. Request personalized quotes.

• What to do: Contact each insurer or agent and provide them with your gathered information to get a detailed quote for the coverage you need.
• What “good” looks like: You receive comparable quotes that clearly outline the premium, deductible, coverage limits, and any included discounts for each company.
• Common mistake and how to avoid it: Not asking for quotes on the exact same coverage. Avoid this by ensuring you request the same liability limits, deductibles, and optional coverages from each insurer for an accurate comparison.

6. Review and understand policy details.

• What to do: Carefully read each quote and policy document. Pay close attention to deductibles, coverage limits, exclusions, and any endorsements.
• What “good” looks like: You understand what is and isn’t covered, your out-of-pocket responsibility, and the total cost of the policy.
• Common mistake and how to avoid it: Skimming over the “fine print” or policy declarations page. Avoid this by taking the time to read thoroughly or asking the agent to explain any confusing terms.

7. Inquire about discounts and savings.

• What to do: Ask each insurer about all available discounts, such as multi-policy, safe driver, good student, anti-theft device, or low mileage.
• What “good” looks like: You’ve identified all applicable discounts and factored them into your cost comparison.
• Common mistake and how to avoid it: Assuming you won’t qualify for any discounts. Avoid this by actively asking about every potential discount; you might be surprised.

8. Select your policy and insurer.

• What to do: Based on price, coverage, customer service, and available discounts, choose the policy that best fits your needs and budget.
• What “good” looks like: You’ve made a confident decision based on your research and comparison.
• Common mistake and how to avoid it: Choosing solely based on the lowest price. Avoid this by considering the insurer’s reputation for claims handling and customer service, as a cheap policy can be costly if claims are difficult to resolve.

9. Complete the application and payment.

• What to do: Fill out the final application accurately and submit the required payment to activate your coverage.
• What “good” looks like: Your coverage is officially in effect, and you have received your policy documents and insurance card.
• Common mistake and how to avoid it: Providing inaccurate information on the application. Avoid this by double-checking all entries before submitting to prevent potential policy cancellation or claim denial.

10. Obtain your insurance ID card.

• What to do: Keep your insurance ID card in your vehicle, as you’ll need it for legal purposes and in case of an accident. Many insurers offer digital versions.
• What “good” looks like: You have a readily accessible copy of your insurance card (physical or digital) in your vehicle.
• Common mistake and how to avoid it: Not carrying proof of insurance. Avoid this by making sure your ID card is always with you when driving, as required by law.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Driving without insurance	Fines, license suspension, vehicle impoundment, personal liability for damages	Obtain at least the minimum required insurance for your state before driving.
Only buying state minimum liability	Significant out-of-pocket costs if you cause an accident with severe damages	Purchase liability limits that are comfortably higher than the state minimum, based on your assets and risk tolerance.
Not comparing quotes	Overpaying for coverage or getting inadequate protection	Get quotes from at least 3-5 different insurance companies to find the best combination of price and coverage.
Misrepresenting information on application	Policy cancellation, denial of claims, potential legal penalties	Be honest and accurate when providing details about yourself, your driving history, and your vehicle.
Choosing the highest deductible to save money	Inability to pay the deductible when a claim occurs	Select a deductible you can comfortably afford to pay out-of-pocket at any time.
Ignoring policy exclusions and limits	Unexpected uncovered expenses during a claim	Thoroughly read your policy documents and ask your insurer to clarify any confusing terms or potential gaps in coverage.
Forgetting to ask about discounts	Paying a higher premium than necessary	Inquire about all available discounts, such as multi-policy, safe driver, or good student discounts.
Not updating your policy after life changes	Paying too much or having insufficient coverage	Inform your insurer about significant changes like moving, buying a new car, or adding/removing drivers.
Relying solely on online-only insurers	Limited personal support during claims or policy changes	While online insurers can be convenient, consider those with accessible customer service and claims representatives.
Not understanding the claims process	Delays and frustration when filing a claim	Ask your insurer about their claims process, typical timelines, and how to initiate a claim before you need to.

Decision rules (simple if/then)

Here are some decision rules to help you navigate choosing car insurance.

• If your car is financed or leased, then you will likely be required to carry collision and comprehensive coverage because the lender or leasing company has a financial interest in the vehicle.
• If you have significant savings or assets, then consider purchasing higher liability limits than the state minimum because this protects your personal wealth from being depleted by a lawsuit.
• If you drive a new or expensive car, then collision and comprehensive coverage are generally recommended because the cost to repair or replace it would be substantial.
• If you drive a very old car with low market value, then you might consider dropping collision and comprehensive coverage because the cost of premiums may outweigh the car’s worth.
• If you have a history of traffic violations or accidents, then expect higher premiums and shop around extensively, as some insurers may be more willing to cover high-risk drivers than others.
• If you are a safe, experienced driver with a clean record, then you are likely to qualify for good driver discounts, which can significantly lower your premium.
• If you own a home and a car, then bundling your auto and homeowner’s insurance with the same company can often lead to substantial discounts.
• If you rarely drive your car, then inquire about low-mileage discounts, as some insurers offer reduced rates for drivers who put fewer miles on their vehicles annually.
• If you have a specific concern about a particular insurance company’s financial stability, then check their rating with agencies like A.M. Best to ensure they can pay claims.
• If you are unsure about the coverage options or terms, then consult with an independent insurance agent who can offer unbiased advice across multiple insurers.

FAQ

Q1: How much car insurance do I need?

You need at least the minimum liability coverage required by your state. However, it’s often recommended to carry higher limits to protect your assets. Consider collision and comprehensive if your car is financed or valuable.

Q2: What is a deductible, and how does it affect my premium?

A deductible is your out-of-pocket cost for a claim. A higher deductible generally leads to a lower premium, but you’ll pay more if you file a claim.

Q3: Can I get car insurance if I have a bad driving record?

Yes, but it will likely be more expensive. You may need to look at non-standard insurance providers or consider an assigned risk pool if standard insurers won’t cover you.

Q4: What’s the difference between collision and comprehensive coverage?

Collision covers damage to your car from an accident with another vehicle or object. Comprehensive covers damage from non-collision events like theft, vandalism, fire, or natural disasters.

Q5: How long does it take to get car insurance?

You can often get a quote and purchase a policy within minutes online or over the phone. Coverage can typically begin the same day.

Q6: What information do I need to get a quote?

You’ll need your driver’s license number, vehicle identification number (VIN), make, model, year, your address, and details about your driving history.

Q7: Is it cheaper to buy insurance online or through an agent?

It can vary. Online insurers may have lower overhead, but an independent agent can shop multiple companies and potentially find better deals or packages tailored to your needs.

Q8: What if I don’t agree with an insurance company’s decision on a claim?

You have the right to appeal the decision. You can also file a complaint with your state’s Department of Insurance if you believe the insurer is not acting in good faith.

Q9: How often should I review my car insurance policy?

It’s a good idea to review your policy annually or whenever you experience a significant life change, such as moving, buying a new car, or adding a driver.

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

• Specific details on state-mandated insurance laws, which vary widely.
• In-depth explanations of specialized coverages like rental reimbursement or roadside assistance.
• Guidance on disputing specific claim denials or insurance company practices.

Where to go next:

• Your state’s Department of Insurance website for specific regulations and consumer assistance.
• Information on filing a complaint against an insurance company.
• Resources for understanding different types of optional auto insurance coverage.
• Tips for managing and reducing your car insurance costs over time.