Learn How to Buy Car Insurance from the Pros and Cons

Buy Car Insurance

Most states require car owners to carry a minimum level of insurance coverage no matter what they drive. Leasing or financing a new vehicle comes with additional auto insurance requirements. Even if you don't own a car, you may want or need coverage. Whatever your reason for purchasing an auto insurance policy, this guide can help you through the process.

What are the steps to buy auto insurance?

  1. Determine which types of car insurance you are required to have and which are optional.
  2. Have your personal and vehicular information at hand.
  3. Get car insurance quotes from at least three companies.
  4. Compare premiums, coverage amounts, and limits.
  5. Make your decision and buy your new car insurance policy.
  6. Cancel your old policy, if you have one.

There are three ways to get car insurance: by buying it online, by contacting a company representative (sometimes called a captive agent), or by working with an independent insurance broker. You can also use an insurance comparison calculator like ours to help you determine the best company, the best coverage, and the best rate. Here are three ways to buy car insurance and some pros and cons of each.

Buying Car Insurance Online

Pros:

  • You can get car insurance quotes, buy a policy, and print your ID cards all in one place.

  • You don’t need to speak with an agent to buy a policy.

Cons:

  • Some people may find the lack of human contact impersonal.

  • If you have a question, you may not be able to find the answer online.

Buying Car Insurance With a Captive Agent

Pros:

  • Agents can walk you through the entire buying process, from quote to purchase.

  • An agent can answer your specific questions and figure out tricky coverage issues.

Cons:

  • Most captive agents only work for one company and may not be able to provide car insurance quotes from multiple providers.

Buying Car Insurance With an Independent Broker

Pros:

  • An independent broker can provide you with rate quotes from multiple auto insurance companies.

  • Unlike captive agents, a broker’s primary allegiance is to the client, not an insurance company.

Cons:

  • It’s a two-step process. Once a broker has presented options to a client, they hand the information over to the insurance company, which completes the transaction.

  • Brokers may charge a fee for their services.

If you plan to buy or lease a vehicle and don't currently have auto insurance, you'll need to have a policy before you get behind the wheel. Likewise, if you're a newly licensed driver and not covered by someone else's policy, you'll need auto insurance. Even if you've had auto insurance for years, it's a good idea to review your coverage annually or when major life events occur, like marriage or moving. You may be able to save money by switching insurers.

Many insurance companies recommend purchasing a policy as soon as practical before you get behind the wheel. But even if you have to make a sudden or unexpected car purchase, many dealers can help you get coverage before you leave the parking lot. Some insurance companies will also allow you to shop for car insurance online in a matter of minutes. It is important to note that some states require drivers to show proof of insurance to register a new vehicle.

In order for your auto insurance shopping process to go as smoothly as possible, it's best to have the following information ready:

  • Driver’s license number
  • Social security number(s) for each driver on the policy
  • The vehicle identification number (VIN)
  • The car’s make, model, year, and current odometer reading
  • Vehicle safety and security features, such as anti-lock brakes or a GPS anti-theft tracking device 
  • Where you park your car, such as in a garage or on the street
  • Your home address and ZIP code
  • Estimate of how many miles you drive every year
  • Desired coverage levels and deductible amounts
  • Whether the car is owned outright, financed, or leased
  • Any other drivers in your family that you plan to insure

Even if you don't own a car, you may want to purchase auto insurance for the protection it provides.

Non-owners insurance, also called non-driver insurance, is designed for people who don't have their own car but borrow a friend's regularly, travel frequently and rent a vehicle, or use car-sharing services frequently. Depending on the state you live in, non-homeowners insurance may also be appropriate for people who need to file an SR-22 form to prove they are insured or to regain their driving privileges.

This type of insurance covers liability for bodily injury and property damage to third parties that occur while driving. Depending on the company and the policy, it may also include personal injury protection (PIP), medical payments coverage, and protection against uninsured or underinsured motorists. Car insurance for non-owners generally does not include collision coverage, comprehensive insurance, or theft protection.

Car rental insurance is designed for people who do not have car insurance or whose car policy does not extend to car rental or has a high deductible. This type of insurance is sold by the rental company and is valid only for the duration of the rental contract. Car rental insurance generally covers the following, although you may be able to purchase each component separately:

  • Liability coverage applies to property damage and injuries to others caused while driving. If you don't have auto insurance, you'll probably be required to purchase this type of coverage.
  • A collision/loss damage waiver protects you from financial responsibility in the event your rental vehicle is stolen, vandalized, or damaged in an accident or other mishap.
  • Personal effects coverage protects your belongings in the event they are stolen from your rental car. If you have a homeowners or renters insurance policy, it may also cover your personal belongings.
  • Personal accident insurance covers medical bills for any injuries you or your passengers may sustain as a result of driving.

All states except New Hampshire and Virginia require drivers to carry a minimum amount of liability insurance, and many states also require additional coverage. But a basic policy may not cover all of your expenses if you are involved in an accident or other event that causes damage, loss, or injury.

Liability insurance covers bodily injury and property damage if you are found at fault in an accident. It is important to note that the protections only cover the other parties involved. Liability insurance will not cover your own losses. Some states also require uninsured/underinsured motorist insurance (UM/UIM). If you have this coverage, you will be protected if you are involved in a crash with a motorist who does not have insurance or does not have enough insurance to cover your losses. Additionally, a handful of states require personal injury protection, or PIP, which provides coverage if you or your passengers are injured or your car is damaged in an accident.

States also specify minimum limits of liability for bodily injury and property damage, usually expressed in three figures (for example, 25,000/50,000/25,000 or 25/50/25). The first number represents the maximum dollar amount of coverage for anyone injured in an accident. The second indicates the total amount of coverage for all injured persons. The third represents the coverage limits for property damage. Minimum liability limits vary by state. Contact your state department of motor vehicles or division of insurance to find out what their insurance requirements are.

Should I buy more than the minimum car insurance required?

Depending on where you live, how often you drive, and the type of vehicle you own, you may want to carry more than just the state-mandated minimums. You may want to add other types of coverage to your auto policy, such as:

  • Collision insurance covers damage to your vehicle in the event of an accident with another car or if it hits a stationary object like a tree or retaining wall.
  • Comprehensive insurance protects your car from damage caused by an event other than a collision, such as a tornado, flood, hail, or wild animal.
  • Gap insurance will cover the difference between what you may owe a lender on a vehicle loan and what the car is actually worth in the event that it is destroyed or severely damaged.
  • Medical Payments (MedPay) coverage applies to health care costs associated with a covered incident, regardless of liability, for the driver and passengers.
  • Car rental reimbursement is not insurance. It is an optional coverage that will pay for a car rental in the event your vehicle becomes undrivable and needs repair.

Our study data shows that USAA offers the cheapest auto insurance rates, closely followed by Geico. A driver with a clean record can expect to pay just under $1,000 on average for USAA coverage. It is important to note that USAA provides insurance only to members of the military and their families. If USAA isn't an option for you, Geico might be. Their average premiums are about $150 more for similar coverage. Your actual rates may vary, based on factors including coverage amounts, what you drive and where you live.

2022 Average Rates:

  • USAA: $999.74
  • Geico: $1,147.62
  • State Farm$1,267.27
  • Nationwide: $1,326.83
  • Travelers: $1,371.29
  • American Family$1,371.38
  • Progressive: $1,532.72
  • Farmers: $1,916.57
  • Allstate: $2,046.78
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