How to shop for car insurance

By Allstate

Last updated: January 1

Shopping for car insurance might be the last thing you think about when purchasing a new car. But typically, you’ll need car insurance to drive your new vehicle off the lot. And while shopping for car insurance may seem grueling, it’s not as tough as you might think it is. From understanding your personal needs to gauging coverage options, we’ll breakdown how to shop for car insurance, so that you feel confident finding the policy that’s right for you, your vehicle and your wallet.

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Step 1: Understand your car insurance needs

Understanding your protection needs is key to finding the car insurance policy fit for you. By gaining clarity on what you truly need from your coverage, you'll be well-equipped to navigate the marketplace and secure a policy that offers both peace of mind and value.

Types of coverage options

When it comes to car insurance, understanding the various coverage options is paramount. There are certain types of coverage you’ll likely encounter.

Liability coverage is the main one – it’s designed to cover you if you’re found at fault in an accident and helps pay for the other person’s personal property or injuries.

Comprehensive and collision coverages, on the other hand, are meant to cover your vehicle regardless of fault. These are optional coverages in the sense that they are beyond the minimum coverage required to drive, but some lenders may require this coverage as part of a car lease or loan. Comprehensive covers non-collision related mishaps, including vandalism, theft or weather-related damage. Collision helps cover repairs if you collide with another vehicle or object.

Uninsured and underinsured motorist coverage financially protects you if you’re hit by a motorist who is uninsured or doesn’t have enough insurance to cover the costs.

Personal injury protection (PIP), also called no-fault insurance, helps cover medical expenses, lost income and more if you’re injured in an accident – regardless of fault. Some states require that all drivers maintain PIP insurance.

Rental reimbursement coverage helps cover the cost of a rental vehicle if yours is undergoing repairs due to a covered incident.

Towing and labor cost coverage can help pay for certain services, including but not limited to towing, tire changes, jump starts, gas delivery, or lockout assistance.

Gap insurance is specifically designed for financed or leased vehicles. If you get in an accident, it can help cover the difference between what you still owe on the vehicle and the market value at the time of the accident. Many lenders require gap insurance.

Which coverages are right for you depend on a multitude of factors, including the type of car you drive, how often you drive it, laws in your state and where you live. Additionally, it’s important to select the same coverages for each quote to get the most accurate comparison.

Assessing your coverage requirements

It’s important to understand coverage laws in your state. Luckily, many online quoting systems arrange required coverages for you. The vast majority of states, for instance, require you to carry liability insurance, which is meant to protect others if you cause an accident. Some states also require uninsured and underinsured coverage and/or PIP.

Other coverages are considered optional and may be suggested (but not required) based on the answers you provide when getting a quote. But of the coverages that insurance providers may deem optional, some may be required by lenders if you’re financing or leasing your vehicle – including gap, comprehensive and collision coverages.

Again, which coverages are right for you depend on a multitude of factors, including individual state laws. And while some coverages may be optional, they may still be worthwhile. For example, if you commute every day, liability alone won’t protect your vehicle if you cause an accident – but collision or comprehensive just might, depending on the nature of the accident.

Factors affecting car insurance rates

Car insurance companies use many factors to determine your premium. This number is essentially a risk assessment. In simple terms, the less risky – and the safer you are – the likelier you are to pay less for insurance. Here are some factors that many insurance carriers employ when determining your premium.

  • Your age: Teen drivers are likely to pay more for car insurance compared to, say, 50-year-old drivers, who are more experienced behind the wheel and statistically less likely to engage in risky behavior on the road.
  • Your car: The Manufacturer Suggested Retail Price (MSRP) of your car, which is the price manufacturers advise dealerships should use when selling the car, as well as the typical costs of repairs and replacement parts for the make/model of the vehicle, both play a large role in determining rates. Safety plays a role as well, as vehicles with higher crash ratings are seen as safer and therefore may help lower premiums. Also, if your car is equipped with security features you may qualify for car insurance discounts.
  • Your driving habits: Simply put, the cleaner your driving record, the lower your premium will likely be. Additionally, how often you drive is a good indicator to how much risk you’re exposed to. If you commute to work, for instance, you may pay more for coverage than someone who only drives on the weekends.
  • Where you live: Where you park your vehicle can impact your insurance rate. For example, an area with higher rates of vandalism and car accidents may have higher car insurance premiums.
  • Your chosen coverages: Coverages you carry can impact the cost of your auto insurance. Typically, the more coverages you purchase, the more you’ll pay for car insurance. Plus, each coverage comes with a maximum limit, which is what your policy will pay for in a covered incident. Higher limits could also increase your rate. Be mindful, policyholders with minimum protection are more exposed to financial risk in the event of a loss – only carrying liability coverages could mean paying for your own repairs or vehicle replacement.

This is by no means an exhaustive list, but it does give you an idea of how individual premiums are determined. And when it comes down to it, over time, the safer you drive, the more you’ll likely save.

Step 2: Gather the required information

Find at least a few, if not several, reputable insurance companies to begin quoting from. Be sure to do your due diligence when assembling your list of insurers to find the best insurance company for you.

Choosing the best insurance company for you

Finding a reputable company is critical. One marker of a reputable insurer is its financial strength, which you can find through independent agencies like A.M. Best, Kroll Bond Rating Agency and others, according to the Insurance Information Institute (III).

Another indicator of a trusted insurer is customer satisfaction. Look into customer reviews and national claims databases.

Additionally, make sure the company is licensed. You can do this by contacting your state insurance department.

Determining coverage limits and deductibles

Knowing how frequently you’ll be driving your vehicle could help determine which coverages are worth looking into, not to mention coverage limits. As previously mentioned, driving every day versus driving only on the weekends may warrant more protection given the increased exposure to risk. That might mean adding comprehensive and coverage with high enough limits to repair or replace the value of your vehicle’s make and model.

Also important to consider are your deductibles. That's what you pay before coverage kicks in.

For example, say you have a deductible of $1,000. Your vehicle is damaged, and it’ll cost $6,500 to repair it. You’d first pay the $1,000 deductible and your collision coverage would cover the remaining $5,500.

You can choose your deductible. Note that a higher deductible ($1,000, for instance) typically lowers your premium but means you pay more out of pocket before coverage steps in to pay the rest. A lower deductible (say, $500) raises your premium but means you pay less out of pocket. Determine what you can comfortably pay out of pocket before choosing your deductible.

Understanding policy terms and conditions

Your car insurance policy is broken out into sections, containing your coverages, your rights as a policyholder and more. The first page is your declarations page, which outlines basic information about your policy, including:

  • The policy number
  • Your coverages
  • Basic info about you
  • Your covered vehicles

A typical auto policy also lists the different risks you’re covered for, plus certain exclusions – meaning, risks you are not covered for.

Understanding the terms and conditions of your policy helps to set expectations and avoid unwanted surprises down the line. It can be a great point of reference if you want to make any changes, including adding coverages that you don’t currently have but think you might need.

Utilizing online comparison tools

There are many apps and online tools that help simplify the process of comparing auto quotes. You can also go directly to the insurance company’s website to get a quote. To assure accurate comparisons, it bears mentioning again that you want to choose the same coverages for each quote.

Step 3: Compare and obtain car insurance quotes

Comparing car insurance quotes is the best way to get quality coverage at a price you can afford. Here are some things to consider when embarking on that journey.

Start quotes online

Keep in mind that there’s a difference between car insurance quotes and premiums. A quote is simply an estimate of the premium should you continue on into the purchasing process.

Provide accurate information

And to get the most accurate quote possible, you’ll want to provide accurate information – everything from your insurance history to your garaging address to how often you drive.

Request quotes customized to you

Many online quoting systems do a great job of helping you arrange coverages based on your answers and will include coverages you’re legally supposed to carry in your state.

Compare coverage and rates

But, as noted earlier, choose the same coverages and limits for each quote for the best comparisons. This’ll help give you a picture of which insurer may provide the most value for your money.

Consider discounts and special offers

Auto insurance companies typically offer all kinds of discounts but they may vary in the types they offer. Make sure to research their offerings. Discounts typically run the gamut of rewarding safe driving and built-in safety features. But if, say, you plan to include your teen driver on your policy, you may earn a discount if your kid gets good grades in school.

Additionally, many insurers offer discounts if you purchase multiple policies with them – for instance, you might check to see if your homeowners or renters insurance provider also offers car insurance.

Step 4: Deciding on an insurer

Choosing the right insurance company requires putting all of these variables together:

  • Coverages offered
  • Reputation and legitimacy
  • Discounts offered
  • Overall value (that is, quality protection at a price you can afford)

Again, if you already have homeowners orrenters insurance, and you like your insurer, your company may be a great place to start. See if they offer auto insurance and if they offer discounts for bundling.

Weighing the cost against coverage

Finding an insurance policy that you can comfortably afford is important. But purchasing minimum protection could leave you exposed to major financial costs down the road.

Remember, liability insurance isn’t designed to cover you or your vehicle – it covers the other person’s property and their medical bills. If all you carry is liability insurance, you’d be on the hook for repairs to your own vehicle – or even worse, the replacement of your vehicle if it’s totaled.

It’s not to say you need to load up on protection, either. Someone who drives every day to work may need more coverage than someone who drives to the local grocery store once a week.

Seeking recommendations and referrals

Ask family members and friends about their insurance company – if they’re satisfied with their service or, if applicable, the claims process. Again, research customer reviews and assure the insurer you’re interested in is licensed in your state.

Checking state insurance requirements

It bears mentioning again – make sure to understand minimum requirements in your state. A legit auto insurance company will ensure you meet those requirements. Nearly all states require liability insurance, but some states require you to purchase more insurance coverages, such as uninsured/underinsured coverage.

Step 5: Purchase your car insurance policy

You found the vehicle you want, determined your coverage needs, compared quotes and did a little bit of research. Now it’s time to purchase your policy. To help ensure you’re getting what you want, keep these things in mind as you begin to move forward with your purchase.

Review the policy before finalizing

Before you hit that purchase button, review your policy. This legal document is an agreement between you and your insurance company, and outlines what they will and will not cover. Make sure the specifics of your coverage reflect your expectations, and also make sure that basic information is correct, including your name, address, vehicles listed on your policy, the Vehicle Identification Number (VIN) of each vehicle, and drivers listed on your policy.

Providing necessary documentation

You don’t necessarily need to provide documentation during your quote (though they’re good to have to get the most accurate quote possible), you’ll need to have them handy when actually purchasing car insurance. The following items are typically required when buying your policy:

  • Full name
  • Date of birth
  • Garaging address
  • Driver’s license number
  • Social Security Number
  • Any information about recent accidents
  • Claims history

Your insurance company will also need information about your vehicle, including but not limited to its:

  • Make and model
  • Vehicle Identification Number (VIN)
  • Mileage
  • Built-in security features
  • Registered owners
  • Previous insurance information

You can typically find much of this information on your vehicle’s title.

Understand payment options / set up automatic payments

The way you pay for car insurance could actually save you money. For example, some car insurance companies offer discounts for setting up automatic payments or for paying for six or 12 months of car insurance in one lump sum. You may also earn a discount simply for making payments on time, which is a good reason to explore setting up automatic payments if that is an option.

Step 6: Review and update your policy

Your auto insurance policy is legally binding, but it’s also moldable – that is, you can change it to adapt to new life events or living situations.

Regularly reviewing your coverage

It’s good measure to review your coverages every so often to ensure you’re not paying for anything you don’t need or aren’t skimping yourself on protection. If, for instance, you’ve paid off a financed vehicle, then you can probably drop your gap insurance coverage and lower your premium. Or, if you plan on commuting daily with a vehicle previously used only for the weekends, then you may want to increase your coverage limits.

Updating your policy as needed

Certain life changes may require you to update your auto policy to reflect them. A common example is if you move to a new address or need to add your new spouse to your policy. You can typically make updates like these in the middle of your policy term. Remember, your policy is a reflection of you, and as your situation evolves or changes, so should your policy.

Seeking professional advice when necessary

There may be times when you’re not sure if you need to update your coverage, modify your policy or file a claim. If you ever have a question, reach out to your insurance rep – they can guide you through the process and offer you sound advice. That’s what your insurance company is there for, after all.

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