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If you’re new to car insurance, getting a policy — and understanding the coverage — might seem complicated. The process of getting a car insurance policy doesn’t have to feel overwhelming, though. To help you better navigate the purchase of a car insurance policy, Bankrate’s insurance experts, who have nearly fifty years of combined industry experience, have narrowed down the process to six easy steps. Here’s everything you need to know about buying car insurance.
How to shop for car insurance
While there are steps you can follow when shopping for car insurance, the specifics of your coverage will be unique to you. Every driver has different needs, wants and considerations. One of the most important things you can do before shopping for insurance is analyze your overall financial picture.
What is your budget for coverage? What kind of car do you have, and what is its value? What is your level of risk tolerance? If you have a low tolerance for risk or cannot afford to pay much out of pocket if you have an accident, you may want to consider full coverage car insurance. Most insurance experts recommend buying as much liability insurance as you can afford, since you could be financially responsible if you cause an accident that costs more than your coverage limits provide.
Having a general idea of the answers to these questions could help you move more quickly through the steps outlined below.
1. Assemble paperwork
The first thing you may want to do is to gather and organize all the paperwork and documentation you will need. This information could vary by insurer, but typically includes:
- Your driver’s license number
- Your date of birth
- Your social security number
- The year, make, model of your vehicle
- Current vehicle mileage
- Vehicle identification number (VIN) of your car
- The routing and account numbers of your checking account for direct payments
- Your current policy declarations page
The auto policy declarations page includes the pertinent details of your coverage, including limits, deductions and exclusions. It will also list your policy number, policy date, premium and discounts you currently receive.
2. Determine coverage type and amount
Before you can apply for auto insurance, you must decide how much coverage to purchase and what optional endorsements you might want. These coverage types can include basic liability, collision, comprehensive, uninsured and underinsured motorist coverage, medical payments, personal injury protection and roadside assistance coverage. The state you live in and the company you choose will affect what coverages are available.
To determine coverage amounts, you can look at your state’s legal auto insurance minimum requirements. You may want more coverage than the minimum, but it is illegal to drive with less. However, you may rest assured that you will not be able to purchase a policy with limits that are below your state’s minimum limits. Still, most insurance agents recommend that you purchase higher liability limits to offer more financial protection. If you have a loan or lease, you will likely need a full coverage policy, which includes comprehensive and collision coverages.
3. Shop around and compare quotes
Now that you know what kind of coverage you want, it is time to find the right insurance company. While many components of auto insurance are similar across the industry, premiums, coverages, discounts and policy features can vary between insurance companies. By knowing the coverage types and limits you want, you can get quotes from multiple companies and see which will offer the best fit for your needs.
If you don’t have the time to shop around, you might consider working with an independent agent. They work with multiple carriers and can get quotes for you. Then, you can review the quotes together to decide which one fits your needs and budget.
4. Fill out an application
Now it is time to contact the insurance company you have chosen and fill out an application. With most auto insurance companies, you can apply in person or online on a company website. Some insurance companies may let you apply by phone or email, as well. Your choice can affect how long the application takes, but the process is relatively quick even if you speak with an agent in person.
Much of the information needed to fill out your application can be found in the paperwork you assembled in step one and the policy specifics you decided upon in step three. Beyond these details, you will need to provide payment information. This is where the voided check or routing numbers come in.
Once the application is complete, submit it and wait for a notification of approval. You will usually receive these notifications by email but may be able to request a phone call. If you are working with an in-person agency, you should be able to talk to your agent to determine if your policy was approved.
5. Pay your first premium
If your policy was approved, you should have coverage as of the effective date you chose in the application step. You likely had to submit your payment information with the application, but in some cases you may be able to wait for approval to pay. Most companies offer numerous ways to pay your premium.
You could set up an automatic withdrawal from your bank account or credit card, you could pay online or you might be able to pay in cash if you go into an agency location. Most policies can be set up on a number of payment schedules, including monthly, quarterly, semi-annually and annually. You might save money if you pay in larger installments.
Frequently asked questions
Most drivers are able to purchase car insurance fairly quickly. Depending on the car insurance company you apply with and the type of application process it involves, it could take as little as a few hours to obtain a policy on your car. It’s important to remember, though, that car insurance is written on a case-by-case basis. What that means is that if you have a complicated policy, it could take longer to obtain a quote and purchase coverage for your vehicle. In general, though, you can pay your first premium after your application is approved. Once the company receives payment for your policy, your car insurance will be active as of the start date listed on your policy.
The average cost of car insurance full coverage is $1,771 per year for full coverage auto insurance, according to Bankrate’s analysis of 2022 rate data from Quadrant Information Services. It’s important to understand, however, that rates vary significantly for each driver based on numerous factors, including your location, driving history and claims history, among other factors. The number of cars you insure, the coverages you choose, the limits you purchase and your driving history can all impact your premium. As such, your rate may be higher or lower than the average.
If you’re just starting to explore car insurance, the best way to find cheapest car insurance may be to start by requesting quotes from a number of different car insurance companies. This allows you to compare the cost of car insurance from each company with other factors — such as coverage options, limits and deductibles — to ensure they are the same across the policies you’re considering. And while most car insurance companies offer general discounts, like safe driver and multiple policy discounts, by requesting quotes, you’ll also be able to see if any of the companies offer unique car insurance discounts to further help improve your policy premium.
Switching car insurance companies is relatively easy. Once you have found a company you want to switch to, you just need to get the new policy in place before you cancel your current policy, to avoid a lapse in coverage. Once you have paid your first premium and the new policy is active, you can then cancel your old policy. It may make sense to switch carriers if you move, experience a lifestyle change, need to add a new driver, buy a new car or if your current policy is coming up for renewal.
Yes, you may still have options for car insurance even if your coverage was dropped by another provider. If your car insurance coverage is dropped, you may be considered a high-risk driver by some car insurance companies, which means that in general, you can expect to pay more for car insurance coverage. However, some companies specialize in high-risk car insurance while others may include a surcharge on your policy premium. If you’re not able to find a car insurance policy or are deemed ineligible for coverage through the standard car insurance market, you can contact your state’s Department of Insurance (DOI) to discuss its “assigned risk plan,” which helps provide car insurance coverage when you cannot purchase it elsewhere.