There are over 100 million privately registered vehicles on the road as of 2019, a majority of which are also likely insured due the legal requirement in most states. However, understanding insurance quotes and coverage needs may be confusing as a first-time car insurance buyer. Knowing some standard tips for how to shop around and choose coverages that best protect both you and your vehicle is a good way to start the process.
What you need to get car insurance
Before getting a quote, you will want to have the required information asked by car insurance companies ready to go. This information can generally be broken down into the following categories:
- Driver (or drivers’) information
- Vehicle information
- Insurance information
First, you will likely be asked to provide personal information for yourself and other drivers, if someone else plans to drive the car regularly. This information includes driver name, date of birth and driver’s license number (including where it was issued). You should be prepared for requests regarding your driving history and any information regarding prior accidents or license suspensions. An insurer may also be interested in if you have completed a safe driving course recently.
When it comes to your vehicle, the information required is pretty straightforward. Auto insurers typically want to know the year, make and model of your car as well as the VIN. Other questions may revolve around when the vehicle was purchased, the registered owner, where it is garaged or stored and its mileage.
Even as a first-time car insurance buyer, insurance companies will generally include questions regarding prior coverage, including the carrier and expiration date of the policy. However, if this is your first time ever having car insurance, you will likely provide information about when you were under a parent’s policy because most providers do not allow people to get their own policy before they are 18.
How to get a car insurance quote
With your information prepared, getting car insurance quotes should be relatively simple even as a first-time buyer. Although you have the option of visiting an agent in-person, many insurers — both large and small — allow customers to get quotes online based on a short-application process involving the information covered above. By submitting personal information such as your name and ZIP code and car information such as the make and model, insurers can come up with an annual amount you could expect to pay by purchasing insurance through them.
To help ensure the most accurate quote possible, it may benefit you to take additional time to consider all the different coverage options, including add-ons, you may want on your policy. Because each insurer offers different types of coverage, it helps to do research on the individual providers to aid in this process.
Additionally, as you submit for multiple quotes, making sure to input the same information across each company’s websites could help significantly in the comparison stage. For example, if you include collision and comprehensive coverage in your quote from one provider, but not in others, your quoted rates could be off anywhere from a few hundred to a thousand dollars.
After you submit for a quote, an agent will likely get in touch with you to discuss your coverage more and finalize your premium. Many insurers also provide an option to speak with an agent directly over the phone.
Know your state’s minimum car insurance requirements.
Most states mandate that drivers carry bodily injury and property damage liability insurance at a bare minimum. Almost every state has different required liability limits, usually specifying different amounts for bodily injury and property damage. As these limits generally vary from state to state and may even change over time, reading up on your own state’s requirements could be beneficial.
The minimum coverage required by your state, however, may not be enough to provide you adequate financial protection. For instance, you could still be on the hook for large sums of money if you cause an accident and you don’t have collision insurance to cover the repairs to your own car. A bare-bones policy might also not provide enough coverage to replace a new car that’s been totaled or pay for severe injuries suffered by other drivers and passengers injured in a crash.
Decide how much coverage you need
The amount of coverage you’ll need will vary based on your age, where you live, vehicle type, miles driven, credit score and more.
In addition to liability coverage, auto insurance policies also offer a variety of different coverage options as add-ons to the base coverage:
- Personal injury protection (PIP) covers you (and you passengers) if you sustain injuries in an auto accident. This can potentially cover funeral expenses and lost wages. It’s different from your bodily injury coverage, which pays for costs of those in the other car following an accident.
- Uninsured underinsured motorist coverage covers you for damages caused by an uninsured or underinsured motorists. This also covers you in the case of hit-and-run accidents. Some states require uninsured motorist coverage.
- Collision insurance covers you if you are at fault for damages to your car, truck or SUV sustained in a collision with another vehicle or object.
- Comprehensive insurance covers your car for many damages that are not related to a collision with another vehicle, such as hitting an animal, fire, theft, vandalism and falling objects.
Some insurers offer other optional coverages, such as rental car insurance or gap coverage, which can help you pay off your car loan if your car is totaled. Each insurance company has different offerings, so you’ll have to check and see what’s available with the insurer you choose.
If you have a sizeable auto loan, you’ll likely be required to purchase collision and comprehensive insurance to cover the amount of the loan should you get into an accident.
Shop around for the best fit
First time auto insurance buyers might think that all insurers will offer roughly the same coverage and premiums, but that’s not the case. It’s important to shop around for the best and most affordable car insurance policy for your unique circumstances.
It’s possible to find the best cheap auto insurance, but it can take some time. Quotes can differ quite a bit from company to company.
Also make sure to look into factors such as the financial stability of the insurance company and the quality of their customer service.
Learn how to get discounts on your premiums
The underwriter of your policy considers multiple elements when determining your premium rate.
“Many first time car insurance buyers don’t realize how many factors affect the base rate you get quoted,” says insurance expert Laura Adams. “Your age, gender, marital status, address and credit are some of the data points that play a role, in addition to your driving record, annual mileage and the make and model of your vehicle.”
But if there are many factors involved, there are also many ways to save money on your premiums. According to Adams, “First-time car insurance buyers may not understand how much money they could save on premiums by qualifying for various discounts. What’s available depends on the insurance carrier, so it’s critical to ask for discounts and work to qualify for more of them.”
In the end, Adams says, “The best auto insurance tips are to shop several carriers, and be proactive about asking about potential ways to save money on your insurance.”
Raise your deductible
If you’re willing to take on a bit more risk and pay more out-of-pocket in the event of an accident or damage to your car, you can save big on your premiums. According to the Insurance Information Institute, raising your collision and comprehensive coverage deductible from $200 to $1,000 could reduce your costs by 40 percent or more.
Drop some coverage
If you have an older vehicle or a used car that’s not worth much money, it might not make sense to carry an expensive insurance policy. As a rule of thumb, it’s not worth having collision or comprehensive coverage on a car that’s worth less than 10 times the insurance premiums.
Consider less coverage
Some people who have an older vehicle or a used car that’s not worth much money decide they do not want to spend as much on insurance coverage. In those cases, they choose to drop certain add-ons or coverages like comprehensive and collision.
Equip your car with extra safety features
Everyone loses if your car gets stolen, including your insurance company. So, if you install anti-theft devices, such as steering-wheel locks, tire locks and electronic tracking systems, your insurer is likely to offer you a discount. These devices cost money upfront but can quickly pay for themselves.
Auto insurers reward you with lower premiums when you prove that you can drive safely. Some companies offer discounts if you enroll in a driver training course class. The longer you go without getting into an accident and filing a claim, the larger the discount you can get.
If you are retired or work from home, you may be eligible for a low-mileage discount. Usually the mileage you have to stay below is 7,000 miles per year, but can vary by insurer. If you can start car pooling, biking, walking, taking public transportation or working from home, you might be able to lower your premiums.
Pay in yearly installments
Some insurers offer a discount if you pay for an entire year of coverage all at once, rather than paying monthly.
Also, there might be late fees if you get behind on your monthly payments. You can avoid that risk if you pay in a lump sum.
Use paperless billing and auto pay
Paper billing requires the purchase of physical products and postage, and chasing down payments ties up insurance company resources. So, it’s no surprise that some insurers offer discounts if you reduce the amount of paperwork they have to deal with and streamline your payments.
Improve your credit
Car insurance companies use credit as a factor in determining your premiums, so you can lower your costs if you boost your credit score. You can improve your credit if you stay on top of your debt payments, understand how your credit utilization affects your score, be smart with credit cards you apply for, and monitor your credit report for fraud.
Get good grades
“Student drivers who make good grades qualify for discounts,” Adams says. “But many families and drivers in high school, college and graduate school may not be aware of the potential savings.” Usually if you maintain a GPA of 3.0 or above you will get a significant discount.
Bundle your policy
“Bundling policies, such as your auto and home or renters insurance, is another excellent discount that first-time insurance buyers should consider,” according to Adams. Many companies offer a discount if you have multiple insurance policies under the same carrier. If you already have home insurance, it could make sense to get a car insurance policy with the same company.
Frequently Asked Questions
What insurance company has the cheapest rates?
There is no one company that always has the best insurance for first time car buyers, since your rates will vary from company to company, and you’ll want to get several quotes. The cheapest car insurance provider for you may be the one that offers several discounts that you qualify for. Additionally, it could be worth it to consider smaller local providers.
What types of car insurance do I need?
Most U.S. states will require you to carry at least the minimum amount of liability coverage. Limits vary from state to state, but state motor vehicle websites are often a good resource to stay up to date. Insurance experts generally recommend buying higher liability limits, though, to provide more financial protection in the event of an expensive accident. If your car is newer, you may also want to consider collision and comprehensive coverage as well, and if you owe money on it, your lender will likely require it.
What other factors should I consider when I’m shopping for car insurance?
Customer service is one. There are several organizations that rate customer service, including J.D. Power, Consumer Reports and the Better Business Bureau. You’ll also want to consider the financial stability of your insurer, which is monitored by companies such as AM Best, Moody’s and Standard &Poor’s. Many insurers include these ratings on their websites.