How to shop around for car insurance

How to shop for car insurance in 5 easy steps

You can shop for car insurance in five steps: gather your information, choose coverage, select where to shop, compare equal quotes, and review each insurer. This process helps you find a fair price without cutting coverage. It also reduces ensures accurate quotes.

Ready to get started? Here are the five steps to shopping for car insurance.

1. Gather all of the documents and information you need

There are some important documents you should have ready when shopping for a new car insurance policy. Having these handy will make the process smoother. Make sure you have:

Driver’s license: Have everyone’s license handy to read off names, license numbers, and birth dates.
Previous policy: If you have a previous policy, it will show your coverage limits, allowing you to compare quotes for the same coverage.
Information about your lienholder. If your car is financed, you will need to provide the details to your insurance company.

2. Choose your coverage

Choose enough coverage to meet state law, lender rules, and your financial needs. State minimum limits can leave you responsible for large accident costs. A lender or leasing company will require comprehensive and collision coverageCollision coverage helps pay for repairs or replacement of your car if it's damaged in an accident, regardless of who is at fault and is subject to a deductible. until you pay off the loan or return the vehicle.

Common coverage types include:

Liability: There are two types of liability coverage, and both are required by law in nearly every state. Bodily injury liability pays for injuries to others when you are at fault in an accident. Property damage liability covers damage to the other driver’s vehicle when you are at fault.
Comprehensive: Covers physical damages that don't involve a collision, such as weather damage or a collision with an animal.
Collision: Covers damage to your vehicle from a collision with another vehicle or if you hit an object like a building or pole.
Personal injury protection (PIP): Required by law in some states, PIP covers your medical bills and other costs, such as funeral expenses, regardless of who is at fault in the accident.
Medical payments (MedPay): Also a no-fault coverage, MedPay pays medical costs for anyone involved in an accident.
Uninsured/Underinsured motorist (UM/UIM): Covers you if you’re involved in an accident with someone who doesn’t have insurance or whose limits aren’t high enough to cover the damages. It’s required by law in some states.

Full coverage is a term used to describe a policy that includes all legally required coverages as well as comprehensive and collision. It’s the costliest policy to carry, and most states don't require quite so much coverage. However, it’s required if you are financing or leasing a vehicle.

There are a few other optional coverages you may want to consider, such as:

Rental reimbursement. Pays for a rental car while your car is being repaired as part of a covered claim.
Roadside assistance. Provides services such as help with a flat tire, jumping a dead battery, lockouts, and towing your vehicle if it breaks down.

3. Choose where to shop for car insurance

You can buy car insurance directly from an insurer, through an independent agentAn insurance professional who represents different insurance companies, is not an employee of any one of those companies and earns commissions from policies sold., through a captive agent, or on a comparison website. The best choice depends on how much help you want and how many insurers you want to review. Ask about fees before buying through a broker.

You have a few options regarding where to get car insurance. All have pros and cons, but it comes down to individual preference.

Buying insurance from an independent insurance broker

One option is to buy through an independent broker. This approach can be beneficial because brokers represent you and shop the entire market. You might have to pay a broker's fee if you go this route.

Brokers differ from agents in that they work for you, not for any insurance company, and can get quotes from any company.

Buying insurance from an insurance agent

There are two types of agents. Independent agents represent many insurance companies but don’t work directly for any company. They can help you compare rates from any of their contracted companies. Those companies may include large insurance companies as well as small, local companies.

Captive agents work solely for the one company they represent. For example, big insurers like State Farm and Allstate use captive agents. These agents will be very knowledgeable about policies for their insurers but can’t help you buy from any other company.

Buying insurance directly from an insurance website

Most insurance companies today sell policies directly online, including those that also use agents. Some sell exclusively online, cutting out the cost of agent commissions.

There are also insurance websites where you can shop and compare several companies at once and complete your policy purchase when you’ve decided. This makes comparison shopping quicker and easier but doesn’t offer the personal assistance of an agent.

4. Compare auto insurance quotes

Compare quotes with the same drivers, vehicles, limits, deductibles and optional coverage. Check the total policy cost rather than just the monthly payment. A cheaper quote may have lower limits, higher deductibles or fewer benefits. Review each detail before deciding which policy offers the best value.

Compare these items:

Full term premium
Liability limits
Comprehensive deductible
Collision deductible
Uninsured motorist limits
Rental and roadside coverage
Discounts
Payment fees
Policy exclusions
Coverage start date

How to use an insurance comparison site

Insurance comparison sites are a great way to get multiple quotes in one place. You will be asked to supply information such as your name, address, and age, as well as information about your vehicle. Once you have provided all the necessary information, you will see a list of quotes from several insurers, allowing you to compare quotes apples-to apples for the coverage you need.

How many quotes should you get?

Get at least three car insurance quotes before buying a policy. Three to five quotes will ensure you get a broad view of your options.. Add more quotes when rates vary widely or when you need coverage for a teen, violation, or high-value vehicle.

5. Compare companies and buy your policy

Choose an insurer based on coverage, price, claims service, complaint history, and financial strength. Confirm the limits, deductibles, discounts, and payment schedule before you pay. Set the new policy’s start date before canceling your current coverage to avoid an insurance lapseWhen your auto insurance coverage ends because you missed a payment or did not renew it on time. A lapse in auto insurance coverage may result in paying higher premiums for a new policy..

Before buying:

Review the declarations page.
Confirm every driver and vehicle.
Check all limits and deductibles.
Verify each discount.
Review payment fees.
Confirm the start date.
Save proof of insurance.
Cancel the old policy after the new one starts.

How can you get the lowest car insurance rates?

Lower your car insurance rate by comparing insurers, raising your deductibles, checking for discounts, and maintaining a clean driving record. You can also review your mileage, payment plan, and coverage needs. Do not cut important liability limits or drop vehicle coverage if you can’t afford to repair or replace your vehicle.

Compare different deductibles. The deductible is the amount you pay when you file a comprehensive or collision claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing., and a higher deductible means lower rates.

Ask for discounts: Insurers may offer discounts for having a safe driving record, your car's safety features, or customer loyalty. Ask about discounts directly when buying a policy to find out whether you might be eligible for any of them.

Ask about bundles: One of the biggest discounts available is the bundling discount for buying more than one policy from the same company. The most common example is the bundling of car and home insurance together. Auto-home bundles can sometimes result in a 10% or more reduction in your insurance costs.

Why do you need car insurance?

You need car insurance for two main reasons: to protect yourself financially and comply with state law. Liability coverage pays for injuries and property damage you cause. Comprehensive and collision protect your vehicle. Without enough coverage, you can owe repair, medical, and legal costs that exceed your savings.

Car insurance is required by law in nearly every state. Even the states without mandatory insurance laws require you to be financially responsible in the event of an accident.

In a serious accident, costs can mount very quickly. Most people don’t have the financial means to cover the damages, which is why everyone needs insurance.

When should you shop for car insurance?

You should shop for car insurance at renewal or after major life, vehicle, or driving record changes, since rates vary by insurer. The cheapest option today may not stay the same, and comparing equal quotes helps you find savings without losing coverage.

For example, when you:

Want to add a teen driver to your policy
Move to a new state
Buy a new car
Have an accident or get a ticket
Have a rate increase on your renewal

You might be surprised at the difference from one company to another, and by how much you could save.

What you need to know to get car insurance quotes

You need accurate driver, vehicle, and coverage information to get useful car insurance quotes. Insurers use these details to calculate risk and price the policy. Missing or incorrect information can result in a change to the final premium after the company reviews your driving record, claims history, or vehicle details.

Vehicle type

The type of vehicle you drive has a big impact on your car insurance rates. Using the car’s VIN is the best way to provide the insurance company with all the details, but if you don’t know it, you should list the make, model, and trim level.

You may also need to provide the mileage and details about safety and security features, like an alarm system.

Your state's minimum required coverage

Most states require you to have at least liability coverage before you get behind the wheel. But each state sets its own coverage minimums. Some require other coverage, including no-fault coverages like PIP if you live in a no-fault state.

Your policy should have at least the minimum, but it’s wise to carry more. Most minimum car insurance policies don’t provide enough protection in an accident.

Driver details

To get accurate quotes, you will need to provide details of each driver's history, including any tickets or accidents. You'll also need to let the insurance company know how each driver uses the car, such as for commuting or only on weekends.

How to purchase a policy

Buy a policy after you compare quotes for the same coverage and confirm it meets your needs. Complete the application, review the final price, and choose a start date. Pay the required amount, save your insurance card, and cancel your current policy only after your new coverage begins.

If you already know what type of policy you want to buy, such as full coverage or comprehensive/collision, you can do so directly from an insurance website. For example, if you want to buy a policy from State Farm, you can head to the insurer's website, type in your ZIP code, and start your quote.

By this point, you should already have information such as VIN and license numbers, which you may need during the process. Also, some insurers offer many types of insurance. State Farm, for example, allows you to request a quote for auto plus renters insurance; bundling insurance can be cheaper than buying each type of insurance separately.

Generally, the best way to get the lowest car insurance rates is to use the methods discussed in earlier sections. Shopping around and asking for discounts will help you get the best rate. There are a few things to consider to save on car insurance.

TIP"Have a good driving record and a good credit score (depending on the State), don't purchase state minimums as this makes you less desirable when shopping (I call this the 'responsible adult discount'), and having your homeowners/renters with the same carrier," says Ben Guttman, a broker at North Central Insurance Agency, an independent insurance agency.

Guttman calls out a couple of interesting tricks that could help lower your rate here. Having a good credit score makes you eligible for a lower rate in most states, although a few states have outlawed the practice of using credit scores for car insurance. A safe driving record and bundling your insurance also mean lower rates.

Ultimately, a combination of different factors contributes to your rates. Not all are in your control, but paying attention to the ones that are when shopping for car insurance can make a big difference.

Here is a tighter FAQ section based on the uploaded page.

FAQ: Car insurance

How often should you shop for car insurance?

Shop for car insurance once a year and after major changes. Compare rates when you move, buy a car, add a driver, receive a large rate increase, or improve your driving record.

Does shopping for car insurance affect your credit score?

No. Getting car insurance quotes does not impact your credit score. Insurers can review a credit-based insurance score where allowed, but the check does not count as a hard credit inquiry.

Can you switch car insurance companies before renewal?

Yes. You can switch insurers at any time. Start the new policy before canceling your current coverage. Ask your former insurer about any refund or remaining balance and request written confirmation of cancellation.

Should you choose the cheapest car insurance quote?

No. Check the coverage limits, deductibles, exclusions and discounts before choosing. Also review the insurer’s claims service, complaint history and financial strength. Select the best combination of price and coverage from a reputable company.