How to buy car insurance online: A step-by-step guide

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Just about every adult needs to purchase some type of insurance. For most of us, buying auto insurance is an essential part of protecting our financial lives.

The process of shopping for and selecting car insurance can be intimidating, but it doesn’t have to be. Car insurance is available from car insurance companies and insurance agents. It’s also become increasingly available online. 

Whether you buy from a person or online, however, simply following these steps can help you get the policy you need at the best possible price.

Key steps for buying car insurance online

Wondering how to shop for car insurance? A step-by-step approach is often the best way to find and purchase the car insurance coverage you need. Here are some key steps that can help you secure the right coverage:

1. Collect information

When you gather quotes from insurers, you will likely need to provide key information. So before you shop, gather some important details, such as:

• The make, model and year of your car
• Your personal information
• Your driver’s license number
• Information about the company that is financing your car loan
• Details about your driving history

In addition, it can be helpful for you to have your current policy at hand. That way, you can see what types of coverages you carry and the coverage limits.

2. Figure out what type of coverage you need

In nearly every state, you will need to carry a minimum amount of liability coverage. This is the insurance that protects you when you are responsible for damage to another person or their property.

Other coverages might be optional, or you might need to carry them for various reasons.

For example, state laws do not require you to carry collision and comprehensive coverage, which provides insurance coverage for your own vehicle. But if you have a car loan, your lender might insist that you purchase these types of insurance.

Some states require you to carry uninsured/underinsured motorist insurance, which protects you in the event that you are in an accident with someone who has inadequate levels of car insurance, or no insurance at all.

There are also optional coverages, such as gap insurance, which covers the “gap” between what your vehicle is currently worth and the amount you owe. Another example is roadside assistance, which provides you with emergency roadside help for things like a vehicle breakdown or flat tire.

Finally, there are standard coverages that most policies offer, such as rental car coverage. But it is still wise to check with potential insurers to make sure this coverage is available.

Even though liability coverage is the only type of insurance virtually all drivers are required to carry, it is often wise to purchase other forms of coverage even if the law does not state that you must do so. In many cases, full-coverage auto insurance is your best bet.

Full coverage auto insurance, as the term implies, is a comprehensive insurance policy that typically includes a combination of several types of coverage, such as collision and comprehensive, to provide a broader level of protection for your vehicle. Find out more about different coverage types here.

“Liability coverage only provides financial and legal protection for other drivers and passengers when you’re at fault,” says Carole Walker, executive director of the Rocky Mountain Insurance Information Association. 

That means that if you purchase liability coverage and nothing more, your vehicle will be left uncovered. Adding comprehensive and collision coverages to your policy will ensure that damages to your vehicle also are covered. 

“Don’t cut corners on insurance to pay to fix and replace your car,” she says. 

In addition to collision and comprehensive coverage, Walker says it’s often wise to carry adequate levels of uninsured motorist coverage and medical payments coverage.

3. Figure out how much coverage you need

When deciding how much liability insurance to purchase, it is crucial that you buy at least enough coverage to meet your state’s minimum requirements. This amount differs in each state, so it’s important to know what the law says where you live.

The minimum amount of required liability coverage is often woefully inadequate to protect the drivers’ finances, particularly those who have a lot of assets to protect. Many drivers will want to purchase coverage that goes well beyond the minimum.

Liability coverage is often expressed as three numbers. For example, “100/300/100” coverage would mean:

• $100,000 in bodily injury coverage per person
• $300,000 in bodily injury coverage per accident
• $100,000 in property damage per accident

You will also need to determine whether you are going to carry collision and comprehensive coverage and other coverages.

4. Compare quotes

Comparing quotes from many of the best car insurance companies might be the single best way to cut your car insurance costs. Experts generally recommend getting quotes from at least three insurance companies.

One way to compare car insurance quotes is to shop company by company and ask for a quote from each insurer. 

A faster and more convenient way to get multiple quotes is to use a website that will get you several quotes instantly once you provide a little information.

You might want to take the time to compare car insurance prices at least once annually, or even every six months.

5. Look for discounts

Looking for discounts is a great way to save money on car insurance premiums. Most insurance companies offer various types of discounts to policyholders that can cut the cost of their premiums.

Common discounts include:

• Bundling your car insurance coverage with other types of insurance, such as homeowners or renters
• Having a history of good driving, with no accidents or moving violations
• Insuring a car with safety and anti-theft devices
• Agreeing to participate in a telematics program, which collects information about your driving habits
• Having a student on your policy who earns good grades

6. Consider your deductible

The deductible on a policy is the amount you pay before your insurance coverage kicks in. One way to lower your premium costs is to raise your deductible.

Raising your deductible can be a good way to save money on car insurance. However, think carefully before doing so. Remember, you are responsible for paying the full deductible before your insurance coverage begins to pay your bills.

Should you always get the cheapest car insurance?

We all want to know how to buy car insurance at the cheapest price. In some fortunate cases, a cheap car insurance policy will indeed be your best bet.

However, there are many other situations where it makes more sense to look beyond price. For example, you might place more value on an insurer who provides exactly the type of insurance you need. Or, you might prefer a company with a reputation for excellent customer service.

In addition, while you can save money by skimping on coverage, this is rarely a good idea. If you have bare-bones coverage, it might not be adequate to cover the damages after a crash.

And you could really find yourself in an expensive hole if you are sued after a wreck and do not have insurance to cover legal costs and judgments. So, don’t automatically settle for discount auto insurance if it leaves you inadequately covered.

How much should you pay?

There is no standard amount that you should pay for car insurance. Instead, you want to balance your budget with the right auto insurance coverage.

However, knowing how much the average policyholder pays for full coverage might give you more insight into how much you can expect to pay. See the table below for a rundown of full-coverage costs in all 50 states and the District of Columbia.

Where to shop and how to buy insurance online

There are many different ways to purchase car insurance. You can purchase a policy from an independent agent, who sells policies from multiple insurance companies, or a captive agent,  who works for one insurer.

It also is possible to get a quote and buy a policy from an insurance company online by visiting their website.

Finally, you can purchase a policy by gathering auto insurance quotes online via an online marketplace that will help you quickly compare quotes from a number of insurers.

What are the best car insurance companies?

Insure.com has a ranking of the best insurance companies (below), but it’s important to remember that the best insurance company is the one that makes sense for you. Each insurer offers its own policies and perks. Insurance companies also have their own methods of setting rates.

That means your profile and insurance needs might be a great match for a particular insurance company, while your neighbor would do better with a different company.

With all that in mind, here is Insure.com’s list of the top auto insurance companies:

Do you need to cancel an old or existing policy when you get new insurance?

Unless you enjoy the thought of paying for two insurance policies, it is important to contact your old insurance company and cancel your policy once you have secured new coverage.

You should not expect your new insurer to do this on your behalf.

If there is any time remaining on your coverage period, you will get a refund from the insurer for the unused portion of the policy once you cancel.

When is the best time to buy insurance?

Any time can be the right time to buy a car insurance policy. Even if you are in the middle of your coverage period with one insurer, it can make sense to look for a better deal elsewhere.

However, there are some circumstances when buying car insurance makes particular sense. This includes when you:

• Buy a car
• Come to the end of your current car insurance coverage period
• Improve your credit score, which might lower your costs
• Experience a change in your car insurance needs
• Learn that your rates with your current insurer are increasing
• Decide to move to a new area of town or to a new state

How do car insurance companies determine rates?

Each car insurance company has its own method of setting rates. That is one reason why it is so important to shop around for coverage. Your driver profile might be a better – and less expensive – fit with some insurers than with others.

As a general rule, some of the factors that can impact your rates include:

•  Age
• Gender
• Make, model and year of your vehicle
• Driving history
• Where you live
• History of accidents and moving violations
• Whether you have had a continuous coverage history with no gaps
• Credit history (in most places)
• How many cars and drivers you insure
• Whether you have teen drivers on your policy

What mistakes do first-time car insurance buyers make, and how can you avoid them?

Buying car insurance for the first time can leave you with sticker shock. Inexperienced drivers tend to pay the highest car insurance rates.

In such a situation, it can be tempting to opt for cheaper, bare-bones coverage that saves you money. But this can become extremely expensive if you do not have adequate coverage when you are responsible for damages after an accident.

It always makes sense to purchase enough coverage to cover you adequately in a worst-case scenario – such as if you badly injure or even kill someone in an accident and are sued for hundreds of thousands of dollars.

Another major mistake first-time buyers tend to make is not shopping around for coverage. Gathering multiple quotes is the best way to get the coverage you need at the best rates.

Our recommendations: Shopping for and buying car insurance

• Gathering multiple quotes through a site such as Insure.com is a great way to quickly compare policies from a number of insurance companies.
• Looking over Insure.com’s list of the best auto insurers can give you important insights about the top insurance companies.

What our expert says

Q: Who is protected with liability insurance?

Carole WalkerExecutive director of the Rocky Mountain Insurance Information Association.

“Liability coverage only provides financial and legal protection for other drivers and passengers when you’re at fault.”

Chris Kissell

Contributing Researcher

 

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Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.