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How to Buy Car Insurance: 7 Steps

How to Get Car Insurance

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updated: March 10, 2024

Car insurance is required by law in nearly every U.S. state, and it may also be required by your lender if you have a car loan or lease. But while car insurance is very common, it can seem daunting to buy. Thankfully, it doesn’t have to be that way. By following a step-by-step approach, you can ensure a smooth experience and feel confident that you’re getting the right policy.

7 Steps to follow when buying car insurance

Here’s a summary of key steps to follow when buying car insurance. We’ll explore the process in greater depth later in the article.

  1. Figure out which coverages, limits, and deductibles you need.
  2. Choose how you’re going to buy your policy.
  3. Gather the information you need for a quote.
  4. Obtain quotes from multiple insurance companies.
  5. Choose a company and complete a policy application.
  6. Cancel your old policy, if applicable.
  7. Confirm your coverage details on the policy declarations page.

Buying car insurance: What you need to know

1. Figure out which coverages, limits, and deductibles you need

A car insurance policy includes multiple coverages. Some are required by state law, some may be required by a lender if you have a loan or lease, and some are optional. Each type of coverage details specific situations in which the insurance company will pay a claim.

State-required coverages vary but typically include:

Property damage (PD) liability coverage: If you’re in an accident that is your fault, the insurance company will pay any car repair costs for other involved drivers and their passengers.

Bodily injury (BI) liability coverage: If you’re in an accident that is your fault, the insurance company will pay any medical costs for other involved drivers and their passengers.

PD and BI liability have limits that you choose when you buy your policy. A limit is the maximum amount the insurance company will pay when you file a claim. Choosing higher limits means you’ll pay more for the policy but have more protection if you’re held liable for others’ injuries or damage.

Note that if you’re in an accident that’s the fault of another driver, their BI and PD liability coverages should cover your medical and repair costs.

Coverages typically required by a lender include:

Collision coverage: If you collide with another vehicle or a stationary object, your insurance company will help pay to repair or replace your car.

Comprehensive coverage: If your car is damaged by fire, severe weather, or striking an animal, your insurance company will help pay to repair or replace it.

Collision and comprehensive coverage both have a deductible, which you choose when you buy the policy. The deductible represents your “share” of the costs to repair your car if you have a claim. So, if you choose a $1,000 deductible and it costs $5,000 to repair your car, the insurance company will pay no more than $4,000 to the repair shop. You’ll pay the remaining $1,000.

If you choose a lower deductible, your insurance policy will cost more, but you’ll pay less to repair your car if you have a claim.

2. Choose how you’re going to buy your policy

You have multiple policy options. The best one depends on your needs and comfort level. Here’s a closer look at the different places to buy car insurance:

Insurance company websites

Many major insurance companies, including Liberty Mutuall and GEICO, offer policies through their websites. Shopping online enables you to obtain a quote from the comfort of your living room at any time of the day or night. However, you’ll be on your own and without any expert guidance.

Captive insurance agents

Captive insurance agents represent a single company. State Farm agents, for instance, are captives. They know the products they sell inside and out and can help you get the discounts and coverage features you need. The disadvantage is that a captive agent can’t help you comparison-shop. If you buy from a captive agent, you’re limited to a policy from the company they represent.

Independent insurance agents

Like captives, independent agents offer expert advice and guidance. However, they represent multiple insurance companies. They can cast a wide net to find a policy that suits your coverage needs and budget. Progressive and Travelers are examples of companies that sell through independent agents.

Captive and independent agents typically earn some combination of salary and commission paid by the companies they represent. Because of this, they usually don’t charge fees for the service they provide to their customers.

3. Gather the information you need for a quote

Your next step is to gather the information you’re going to need to obtain one or more insurance quotes. This typically includes the following:

  • Your driver’s license.
  • The name and date of birth of everyone who will be covered by the policy.
  • Your Social Security number.
  • Your home address and the address where you plan to keep the vehicle.
  • Your occupation.
  • Your marital status.
  • Your driving record, including any violations and citations.*
  • Your insurance history, including any claims filed and your most recent (or current) policy declarations page.*
  • Your car’s vehicle identification number (VIN)

*Insurance companies verify driving record and insurance history information with third-party databases. It’s important to be honest about this information when getting a quote to avoid the appearance of attempting to act fraudulently.

4. Obtain quotes from multiple car insurance companies

Car insurance costs are soaring, so you should always check with multiple companies to ensure you’re getting the best possible price for the coverage you need. If you’re shopping online, check with at least three or four companies. Remember that an independent agent representing several insurers can do much of the legwork for you.

As you shop, keep the following in mind:

  • Car insurance costs can vary significantly depending on the company. According to a recent study of 10 leading insurers by USNews, there was a $1,113 difference in annual cost between the most and least expensive companies.
  • Be sure to compare the same coverages, limits, and deductibles on each quote. This will ensure you’ll get a true “apples-to-apples” comparison.
  • Explore the discounts each company offers. Many insurance companies offer discouonts for bundling (insuring your home and car with the same company), paying the policy annually rather than in monthly installments, having a clean driving record, etc.
  • Check third-party reviews. J.D. Power, for instance, does annual studies of the leading car insurance companies, rating and ranking these companies based on overall satisfaction and claims service satisfaction.

5. Choose a company and complete your policy application

Once you’ve decided which policy to buy, you’ll need to complete a policy application from the company of your choice. If you’ve received an online quote, the information you’ve already keyed in should transfer to the application. You’ll also choose a payment plan.

Double-check the information and follow the insurer’s instructions for making your initial payment.

6. Cancel your old policy (if applicable)

If you’re currently insured, you’ll want to cancel that policy. Contact your insurance company to find out what they require. Typically, you’ll need to sign a document (which the company will provide) that confirms your desire to cancel.

Avoid leaving a gap in coverage between your old and new policies. So, for example, if your new policy starts at midnight on December 1, be sure the old policy cancels no earlier than that date.

7. Confirm your coverage details on the policy declarations page

Once your policy is set up, your insurance company will send you the paperwork. If you’ve chosen a “paperless” policy, you may receive this paperwork electronically; otherwise, expect to receive it in the mail.

The paperwork will include a declarations page. This is a summary of your policy—who and what is covered; your coverage, limit, and deductible selections; a list of your discounts; and more. Review this page to confirm these details. If you see any discrepancies, contact the company or your agent.

You’ll also receive a policy ID card, often called a “proof of insurance.” You should receive one for each vehicle insured on the policy. Always keep the policy ID with you when driving as proof of coverage. If you’re pulled over for a traffic stop or involved in an accident, law enforcement will want to see it. Many states have penalties for driving without proof of insurance.

When should you buy car insurance?

Every driver needs to be insured. So, if you hit the road, even for just a few miles, you must be covered.

If you’re shopping for a car and want to take a test drive, you should be covered under the dealership’s or private seller’s insurance. But once you purchase the car, the responsibility for insurance shifts to you.

Consider the following if you’re uninsured and looking for a car:

  1. As you shop for a car, shop for insurance too. You’ll get to know the cost of insuring different vehicles (which might influence your buying decision).
  2. When you decide which car to buy, go with the best insurance quote (or agent) and purchase the policy. Ensure that the policy’s start date matches the date you plan to pick up your car.
  3. Print your policy ID card.
  4. Return to the dealership or seller, purchase your car, and hit the road insured!

Final considerations when buying car insurance

Consider usage-based insurance (UBI)

A growing number of companies offer UBI, including most of the country’s largest insurers. When you participate in one of these optional programs, you agree to let your insurer gather data about your driving habits. That data may be transmitted to the company through a device you plug into your car or smartphone. The company then uses the data to help calculate your premium. By demonstrating safer driving habits, you may be able to pay less for insurance. Some UBI programs, such as Progressive’s Snapshot and Allstate’s Drivewise, also provide feedback you can use to improve your driving.

Insurance for a new driver is very expensive, but there are ways to save

As any teen (or parent) quickly learns, car insurance costs a lot for a new driver. It usually costs less to insure a teen on a parent’s policy rather than having the teen get their own insurance. Be aware that many companies also offer discounts for having good grades, taking driver education, or being a student away at school who only drives occasionally.

Don’t leave coverage gaps if you work for a rideshare service

Driving for a service such as Uber or DoorDash can be a great way to make some extra cash. But if you work for a rideshare company, make sure you have the right insurance. Because ridesharing technically amounts to using your vehicle for a business purpose, a regular, personal car insurance policy may not cover you if there’s an incident while you’re on the clock.

The good news is that many insurers offer endorsements (policy add-ons) that provide the coverage you need. Contact your insurance company to see what they recommend.

TIME Stamp: Yes, you can get an affordable car insurance policy

Getting car insurance can seem daunting: After all, it’s a complex product, and you have many buying options. But by following a few simple steps and with a little know-how, you can get an affordable policy that lets you drive with confidence.

Frequently asked questions (FAQs)

Why does car insurance cost so much for new drivers?

Young and inexperienced drivers are among the most likely to be in accidents (and thus file claims), according to the Insurance Information Institute and the U.S. Department of Transportation. This is the main reason why insurance costs so much for those drivers.

Can I get insured instantly?

You can get car insurance, perhaps not “instantly,” but certainly within a few minutes.

Companies that offer online policies spend a lot of resources to make their websites quick and easy to use. And if you visit or talk to an agent, they should be able to get you the coverage you need quickly.

How do I get car insurance for the first time?

There are no special steps to take when getting car insurance for the first time. However, if you’re a teen and have the opportunity to add yourself as a driver on a parents’ or guardians’ policy, consider doing so. This is not only easier than buying your own policy but it may be a much cheaper way to be insured.

Is it good to shop around for car insurance?

Car insurance rates can vary by hundreds of dollars between companies, so it’s always a good idea to shop around.

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