How To Buy Car Insurance

When you buy a new vehicle, you most likely spend a fair amount of time comparing options to find the best ride at a fair price. Buying car insurance should work the same way, but many car owners skip this crucial step.

Car insurance prices can vary widely by company for the exact same coverage. If you want to find the best car insurance for a reasonable price, here’s how to do it.

How to Get Car Insurance in 5 Steps

1. Gather your driver and vehicle information
2. Determine how much car insurance you need
3. Choose how to shop for car insurance
4. Buy an auto insurance policy
5. Cancel your old car insurance policy

1. Gather Your Driver and Vehicle Information

Here’s the information you’ll usually need to start the process of finding the best car insurance:

• Basic information like the name and date of birth for every driver on the policy.
• Driving history for all drivers on the policy, including at-fault accidents, traffic violations and any completed safe-driving courses.
• Driver’s license information for every driver on the policy.
• Vehicle information, including year, make, model, vehicle identification number and current odometer reading.
• Your current insurance company (if you have one), including your current coverage limits.

2. Determine How Much Car Insurance You Need

Figure out how much car insurance you need. If you buy too little coverage, you could be woefully underinsured if you’re in an accident.

Car Insurance Types to Consider Buying

Type of coverage	What it pays for
Liability car insurance	Property damage and injuries to others, such as their car repair bills and medical expenses. It also covers your legal expenses if someone sues you because of an accident.
Collision and comprehensive insurance	Collision car insurance covers your car repair bills for accidents, such as crashing into another car or backing into a pole. Comprehensive car insurance pays to repair or replace your car if it is stolen or damaged due to problems such as vandalism, severe weather, floods, falling objects and collisions with animals.
Uninsured motorist insurance (UM) and underinsured motorist insurance (UIM)	Pays for you and your passengers’ medical bills and other expenses for accidents caused by uninsured or underinsured drivers.
Personal injury protection (PIP)	Pays for you and your passengers medical bills and other expenses no matter who caused the accident. Required in 15 states as part of “no-fault” insurance laws. It’s optional in four states and Washington, D.C.
Medical payments (MedPay) coverage	Pays for smaller medical bills for you and your passengers, regardless of who is at fault for the car accident.

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Additional Coverage Types

• Rental reimbursement insurance. If your vehicle is out of commission because of a problem covered by your policy, rental reimbursement insurance helps pays for your extra transportation costs, such as a rental car or subway fare.
• Gap insurance. If you have a loan or lease, gap insurance will pay the “gap” between what you owe on the car loan and the depreciated value of the vehicle if it is totaled by a problem covered by your policy (such as a car crash or fire).
• Roadside assistance insurance. If your car breaks down or gets a flat on the side of the road, roadside assistance insurance pays for services such as a tow truck, jump-start or locksmith.

3. Choose How to Shop for Car Insurance

The next step is to compare car insurance quotes from multiple insurance companies. Car insurance rates can vary a lot from insurer to insurer for the exact same coverage.

You can get free car insurance quotes in any of these ways:

• Auto insurance direct from the insurer: You can contact a car insurance company directly over the phone. You can often also get quotes by going to an insurer’s website.
• Car insurance comparison sites: You can get quotes from third-party websites that let you compare the rates from multiple companies.
• Car insurance from a captive insurance agent: Captive agents are professionals who work for one car insurance company. They can’t get you car insurance quotes from other insurers.
• Car insurance from an independent insurance agent: Independent brokers or agents can get you car insurance quotes from multiple insurers.

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4. Buy an Auto Insurance Policy

Once you identify the company and coverage levels you want, you can make an auto insurance application.

Most insurers will offer up to a discount if you pay the full term upfront. If you don’t want to pay in full, you can typically choose monthly installments. You might be able to get a small discount for using automatic withdrawals.

When you buy a policy, the insurance company will send you proof of insurance. Some insurers have a mobile app where you can access your proof of insurance. Most states, excluding New Mexico, accept digital proof of auto insurance.

If you’re purchasing a new or used vehicle, most states require proof of insurance before you can drive it off the dealership lot.

5. Cancel Your Old Car Insurance Policy

If you already had insurance for your current car, you can transfer coverage to your new vehicle by calling your insurer.

If you’re switching car insurance companies, make sure your new coverage is active before canceling the previous policy. You will generally get a refund for the unused months on the old policy.

If you cancel auto insurance before the new coverage is effective, your vehicle will be uninsured. This can have serious legal and financial consequences if you get into a car accident—you will have to pay for all damages and expenses out-of-pocket, and you could be ticketed for driving uninsured. You may also have to pay more for your new policy, as a lapse in coverage can hike rates.

What to Look For When Buying Car Insurance

Whether you’re a car insurance newbie or an expert, here are some helpful tips worth considering when you’re buying car insurance.

Look for Ways to Cut Car Insurance Costs

Here are some ways to find cheap car insurance for your situation:

• Bundle your insurance. Also called a “multi-policy discount,” this is when you buy more than one type of policy from an insurance company. It’s typically one of the best discounts you can get. For example, you can bundle home and auto insurance.
• Ask for discounts. Insurers offer a wide variety of car insurance discounts, such as discounts for insuring multiple cars, vehicle safety features, anti-theft devices, good driving and being a good student.
• Increase the deductible. The higher your insurance deductible for comprehensive and collision insurance, the less you’ll pay in premiums. That’s because your insurer will pay less if you file a claim. For example, you can save between 7% and 28% on average by raising your deductible, according to Forbes Advisor’s analysis of how much you can save by raising car insurance deductible. Keep in mind that the deductible amount will be deducted from your collision or comprehensive claim payment.
• Minimize optional coverage on older vehicles. In some instances, it doesn’t make financial sense to pay for certain optional coverage for an older car. Here’s a guide to when to drop collision and comprehensive insurance.

Keep Your Coverage Options Open

It’s good to regularly review your auto insurance coverage to make sure it still meets your needs. The policy you bought 10 years ago may no longer be adequate or competitively priced.

“Auto insurance needs to vary from person to person. From young drivers, commuting to work, carpooling to soccer practice, or approaching your golden years of driving, it is important to consult with your agent throughout every phase of life to make sure that you have the exact coverage you need and nothing that you don’t,” says Jon Bloom, senior vice president of product management at Erie Insurance.

Look Beyond the Price

Sure, you want to find car insurance at the best possible price. But the cost isn’t everything. If you have to file a car insurance claim, you want an insurance company that has a solid reputation for customer service. The best car insurance companies combine good service at a competitive price.

How Much Should You Expect to Pay When Buying Car Insurance?

The national average cost of car insurance is $1,601 per year, according to a Forbes Advisor analysis. That includes liability insurance, uninsured motorist coverage, collision insurance and comprehensive insurance for a good driver.

Your car insurance costs will vary depending on several factors, such as:

• Your age and gender
• The coverage amounts you choose
• Your credit (except in California, Hawaii, Massachusetts and Michigan)
• Your driving history
• Make and model of your vehicle
• The insurance company
• Where you live
• Your past car insurance claims

Related: Estimate Auto Insurance Coverage

Mistakes to Avoid When Buying Car Insurance for the First Time

With all of the different types of coverage and insurance jargon, getting an auto policy can be confusing. Here are some mistakes to avoid if you’re buying car insurance for the first time.

First-Time Car Insurance Cost

You might experience some sticker shock if you’re buying car insurance for the first time. Inexperienced first-time drivers looking to buy their own car insurance policies will pay more than experienced drivers with a good driving record. Insurance companies see first-time drivers as a higher risk and more likely to file a car insurance claim.

Teen drivers who buy their own policies can expect to pay very high rates. We found the average car insurance cost for a male driver age 16 is $9,422 a year. The average cost is $8,108 a year for a female driver age 16.

But that doesn’t mean you can’t find cheap car insurance for teens. If you’re a parent of a teen driver, your best bet is to keep the teen on your policy. Our analysis found that the average cost of adding a teen driver to a parent’s policy is $1,951 a year.

When is the Best Time to Buy Car Insurance?

If you buy a car, you’re going to need car insurance. Most states (except New Hampshire, South Carolina and Virginia) require car owners to buy insurance in order to meet state financial responsibility laws.

There may be other times that you’ll need to buy car insurance or switch car insurance companies. Here are some examples.

You have a traffic violation

A traffic violation will most likely cause your car insurance rates to go up at renewal time. For example, car insurance rates after a speeding ticket result in an average increase of 24%, or $380, per year. But not all insurers raise rates the same amount after traffic violations, which means you can shop around for better rates.

You caused a car accident

If you cause a car accident, you could see your rates go up. We found an average increase of 45% if you cause property damage and 47% if the accident results in injuries to someone else. Like traffic violations, not all companies raise car insurance rates after an accident, so make sure you shop around if you cause an accident.

Your policy is about to renew

A good rule of thumb is to compare car insurance quotes regularly, and definitely after any life change such as getting married, moving, getting a ticket or causing a car accident. The policy you bought a few years ago may not be the best fit for you today, especially if your driving record has changed.

You’re adding a teen driver to your policy

Adding an inexperienced driver to your auto coverage can raise your annual cost by an average of $2,000 or even more. If you’re about to put a teen behind the wheel, it’s a good idea to do some comparison shopping.

You’re retiring

Retiring usually means less time on the road if you no longer have to commute. If you’re going to see a drastic decrease in your monthly mileage, you may want to look at an alternative such as pay-per-mile car insurance.

You’re getting married

You’ll get a discount if you insure multiple vehicles with one insurance company. If you and your new spouse have insurance policies with separate companies, this is a good time to consider combining them under one insurer.

Your credit score has improved

Depending on the state you live in, insurance companies can take into account your credit when pricing your policy. They use your credit to create their own credit-based auto insurance score that’s used to assess your risk. Folks with good credit can qualify for the most competitive rates. If your credit has improved, ask your insurer to rerun your rates to reflect your better credit.

You had a bad claim experience

If you recently filed a claim and the experience was dissatisfactory, it might be time to explore other options.

Should You Buy Car Insurance Before or After Buying a Car?

Have car insurance coverage in place before you buy a new car.

Almost every state requires drivers to show proof of insurance before driving a new or used vehicle off the lot.

• If this is your first car or you’re not currently insured, you’ll need to purchase coverage before buying a vehicle.
• If you currently have auto insurance, insurers usually give a grace period of between seven to 30 days to update your policy with the details of the new vehicle. If you get into an accident during this grace period, your new car will have the same coverage as your previous vehicle. This applies to car buyers who are buying a new car and getting rid of their current vehicle. If you are adding another vehicle to your household, call your insurer first to add the additional car to your policy.

Even if you already have car insurance, it’s a good idea to get car insurance quotes before purchasing a new vehicle. You’ll want to be prepared for any increase or decrease in insurance rates for the new car.

Can I Buy Car Insurance Without a Car?

If you have a driver’s license but no vehicle, non-owner car insurance can provide auto coverage. Non-owner car insurance consists of liability insurance that protects you if you’re at fault for damage or injuries to someone else in an accident. It may also include other state-mandated coverage, such as uninsured motorist insurance and medical payments coverage.

There are some situations when you may need non-owner car insurance:

• You regularly borrow cars. If you regularly borrow cars, non-owner car insurance can be a good way to get liability insurance to protect your assets if you cause an accident. While the car owner’s insurance will generally need to pay out first for liability claims, non-owners insurance can pay the remaining accident bills.
• You rent cars frequently. You may want to consider non-owner car insurance so you can avoid buying liability car insurance from the rental car company.
• You use a car-sharing service. Drivers using a car-sharing or short-term rental service can extend their liability coverage above the company’s liability limits with a non-owner policy.
• The state requires you to file an SR-22 form. If you have problems such as multiple DUI convictions, you were caught driving without insurance, or your license was suspended, the state may require you to file an SR-22 form, often called SR-22 insurance, to prove you have auto insurance. If you no longer own a vehicle, non-owner car insurance is a way to show proof of insurance.

Can I Buy Car Insurance Without a Driver’s License?

Yes, you can buy car insurance without a driver’s license. If you own a car and you’re letting someone else drive it, you will need car insurance. Most states require car owners to have insurance on their vehicles.

Here are some reasons you may need to buy car insurance without a driver’s license:

• You may need to buy car insurance for a child with a learner’s permit.
• You have a teen driver under age 18 who cannot legally buy their own policy in your state.
• Your license has been suspended but you want to maintain continuous coverage.
• Someone else drives your car regularly.
• You have a classic car or a car you keep in storage and want coverage for problems like theft and vandalism.

Related: Best Classic Car Insurance

How to Buy Car Insurance FAQ