The auto insurance laws vary based on the state that you live in. However, all of them require some kind of car insurance or proof of financial responsibility.
To choose car insurance, you must pick one that will not only meet the state laws where you live, but a type that will cover all financial damages to the other car if you are at-fault. Expand the coverage to help protect yourself if the other driver is uninsured.
There are many different types of insurance available out there and they may offer different rates for various policies. Throughout this article we will take a look at some of the best options when you are ready to shop around based on the laws in your state and which insurance company will offer you the best coverage for your money.
To help us come up with this information, we took a look at some of the experts of the insurance industry to help list out the most important things to consider when shopping for insurance. And for our top picks for insurance, we focused on reviews and industry expertise to make sure you can pick the right one for your vehicle.
How to Choose Car Insurance
Choosing the right car insurance can take some time. There are so many options out there. Sometimes it will depend on your budget or the type of coverage that you need. You have to consider the car insurance laws in your state to. Some of the things to consider when choosing car insurance includes:
Understanding Car Insurance Laws
Many car owners feel like having this insurance is just an extra cost, but the insurance will not only help if you are at fault for the accident, but can protect you and your family after the accident. When an accident happens, you want to make sure that you are not stuck with a huge bill that you can’t pay out on your own.
We all hope that we are never in an accident and do not need to deal with any claims, but sometimes things happen and we need that help. The right insurance policy will help you stay protected while driving.
Before you purchase your car insurance, you need to understand the different types of insurance available. Most states will require some level of auto coverage from the different categories below:
- Bodily injury liability: Liability will help to cover any injury that you or the policyholder caused to another person. You as well as other family members on the policy could be covered when they drive someone else’s car as long as they had permission first.
- Personal injury protection or PIP: Many states require that the insurance has medical coverage. This is used to pay for any injuries to the driver or passengers of the policyholder’s car. This part may also cover lost wages, medical payments, and other costs resulting from the accidents.
- Property damage liability: This will cover any damage that you may cause to the property of someone else during an accident. It could cover damage to a vehicle along with fences, lamp posts, and more.
- Collision coverage: This can protect you if the car is damaged during an accident or when the vehicle will flip over. Some insurance companies will cover damage that road potholes will cause too.
- Comprehensive coverage: This one will contain more protections than some of the other options. This could help cover you from any loss from theft or damage outside of a collision. This could be issues like vandalism, hail, windstorms, or hitting an animal. Most states do not require this, but it is something to consider.
- Underinsured or uninsured motorist coverage: This coverage will help protect you if you are in an accident and the other person is at-fault, but they do not have insurance at all, or do not have enough insurance to cover you. This will make sure that you can still get help with medical bills and repairing the car. This one is also not required by most states, but gives you more protection.
When you choose a car insurance company, they often ask for the state where you reside or will do most of your driving. This helps them to provide you policies with the required levels of coverage for each of the categories above. You can always add more coverage to any or all of these categories to provide more protection.
Know What You Are Looking For
Now that we know a little more about the different types of car insurance and which ones are required in most states, it is time to sit down and figure out the exact kind of coverage you want. You should have a list of the amenities and the type of coverage that is the most important.
While it would be nice to go with the cheapest option (and if you are really on a budget, you may need to choose that one), often the cheapest option will not always provide the best coverage when you are driving. Many car owners want a company that can provide great customer service so they won’t spend hours on the phone when trying to file a claim.
Knowing what is important to you before you begin shopping will help narrow down the choices. Ideally, your goal should be to find a company that will offer an affordable price, the best coverage, and really good customer service.
Check Out the Company Reputation
With your priorities in hand, you can start to shop around. Look up a few companies online and see which ones have a good reputation and good financial standing. This will require a good deal of research on your part. Compile a list of three or four companies that seem good and then get to work.
A good place to check is with the Department of Insurance for your state. Your state should have a website for this. You can take a look to see if that company is licensed as an auto insurance company in that state. If this information is available, consider looking over the complaint ratios to see if any red flags start showing up.
With that information, you can then look at the financial standing of the company. You will not find this in the same place. Check out other websites. J.D> Power is a good website that can let you know more about this.
Why is the financial standing so important? Auto insurance is a two-way street. You will pay the company for coverage and then when something happens, the company will cover you. You want to give your money to a company who will be financially stable enough to pay damages if it is required in the future.
A final check with the Better Business Bureau is a good idea as well. This is a place where you can find a lot of information about the company including how long the insurance company has been in operation, their ranking from A+ to F, and any customer complaints. This also includes resolutions of complaints to give an in-depth look into the company.
Compare Your Insurance Quotes
By now you should have a small list of car insurance companies you want to work with. It is time to get a few quotes to see where each one falls. You will be amazed at how much the prices of each can change, even for similar policies and you may be able to get more coverage for less depending on the company. Shopping around is always the best for your needs.
You need to get a minimum of three insurance quotes before you choose any company. This ensures that you get the best coverage for the best price. You can often get the quotes online but some choose to call in and test out the customer service of the company as well.
Most car insurance companies will offer different types of discounts as well as a good-driver reward program. If you are someone who is a safe driver and has not been in an accident before, then you will need to get quotes from these to see if a lower rate is possible. Some companies will provide different types of breaks so always double-check to see what you qualify for.
While you are on the website for each insurance company, consider messing around with the coverage amounts as well. This will help you know how much the basic coverage is as well as the price for more coverage. Write these numbers down for each policy or print out the estimates so you can compare as you go around.
Another thing to consider is whether you can get a bundled insurance policy. If you have several vehicles to bundle or you are considering changing your home insurance, you could bundle these together and save more on both combined than doing them separately. It does not hurt to at least loo. Some companies may not be the most affordable with just car insurance but save a lot of money when you bundle with other policies.
When you are comparing these quotes, it is best to really look at the quotes. Do not pick one over the others because it is the cheapest. Your goal is to go based on value and the amount of coverage you can get for the price while remaining within your budget.
How to Set Deductibles and Choose Coverage
The best car insurance policy will have a good balance between manageable costs and good coverage. When you try to figure out how much coverage you want and the right amount for the deductible, think through all the financial resources that you have. More assets in hand mean that you may want more liability coverage. It is never a good idea to put any asset at risk by not getting enough coverage.
If you have money in the bank, then a higher deductible is a good idea to save you a little. For example, if you have enough to afford $1500 out of pocket when an accident happens, you can choose a higher deductible and save money on the premium each month. Without that money already in savings though, a lower deductible may be a better option.
When choosing either of these two things, you need to consider the value of the vehicle. Older vehicles may not be worth as much in coverage. If the car is already 25 years old and has a high deductible, then it does not make much sense to get collision and comprehensive on it. You would only get a small amount back each month. Even if you can afford it, consider putting that extra money aside and putting it towards a newer car.
What Items Do I need for Insurance Shopping?
When you are ready to shop, you will need a few important documents in hand to help you pick the right policy. There are a lot of questions to consider while building up your policy and having the necessary documents nearby will make this easier. Some items to keep near include:
- Your current policy if you already have one.
- An amount that you currently spend each month on car insurance.
- The VIN for each car you want to cover
- The Driver’s license for each person who will be on the policy.
- An estimation of how far the car goes each year.
- A reference of the requirements in your state for car insurance.
There are many different things that the insurance company will consider when coming up with a quote. They will want to factor in lifestyle information and demographics to give the most accurate rate. Some questions they may ask is whether you own or rent a home, whether you are single or married, and even your age.
During the process, be prepared for the insurance to check into your past driving record to see whether there are accidents or driving violations. These could raise your insurance rates. Most states allow for a credit check as well; there is a special credit score reserved for insurance. You may want to check your credit score ahead of time to see if there are any issues of concern there.
Through this process, the insurance company is trying to determine how much of a risk you are for them to insure. The better your driving history with fewer accidents and the better your job history, age, demographics, where you live, and even whether you rent or own your home will help the insurance figure out if they are willing to take a risk for you.
Each insurance company will determine this risk differently. This is why you can ask five different companies for quotes and get five different coverage amounts and prices for those policies. It is also why you should shop around and get at least three quotes to make sure you are getting the best policy for your money.
Purchase the Insurance
After checking into all of the different insurance quotes and deciding which policy has the best coverage for the price, you should purchase the insurance. If you are working with an agent, they will be able to file the policy and get it started for you. If you do this online, it will often just take a press of the button and a few moments of processing and your policy will be in place.
Most insurance policies will be valid from the date you purchase them. You can change this though. If you need it to go into effect after the current policy is done, you can choose the date when the policy should start. That may change when your due date is and how much you owe for the first month.
Some insurance companies will give a discount if you pay for the policy six months to a year in advance, rather than going month by month. This can save you some money if you have that amount available. Choose which method you would like to use.
Evaluate Your Coverage Periodically
Once you purchase the insurance policy, you should be set to go for some time. Unless there is a major change in your circumstances, you should find that the coverage will do well. If you move or get a new car, you will need to call and make those changes.
However, it is not a good idea to just get the car insurance and then ignore it for many years without checking in on it. You should check-in with your current policy on occasion to see if they will decrease your premiums or have a new policy that may fit you better. Anytime some of the following happen you should consider checking your policy:
- You get a new car: You will need to update the policy to show this new car. Depending on the type of vehicle and if it has certain safety features, the amount of the policy may get down.
- Moving: Some areas may have higher policy premiums than others (living in a city versus living in the country).
- Getting older: When you turn 25, your policy amounts should automatically go down. If they don’t, then contact your insurance to see if this is an option for you.
- Getting married: You can combine the two separate insurance policies into one and see whether there are some discounts. Just by being married the insurance company will see you as more responsible and can lower rates.
- Purchasing a new home: This is a great time to see if bundling your insurance will save you money.
Even if there is not a major life change that happens, it is a good idea to check in and compare rates between your insurance company and some of the other options. You never know how rates can change and after a few years, one of the other companies may be able to offer a good policy with the same or better coverage than you currently get for a better price. When you see that, it may be worth your time to switch and save money.
Can My Rates Go Up Once I Purchase?
Another thing to consider is whether the rates you get from the insurance company will go up. We would like to assume that once we lock in an insurance premium that the amounts will never change. This is not the case. Sometimes the rates go up just because of inflation and they will naturally see a small increase every few years.
However, there are some life events that could automatically increase your rates. And some of these may be a large increase to your rates depending on the situation. Some of these include:
- Moving: Sometimes moving will lower your rates, while other times it will raise the rates. It all depends on where you go. If you move form a rural setting to a city, then your rates will go up.
- Traffic violations: The more traffic violations that you have, the higher the insurance company will raise your premiums. This is because the violations have made you a bigger risk than when you first got a policy.
- Filing a claim: Each claim that you file has the potential to increase your rates. It will depend on what type of claim is done. If you have comprehensive coverage to protect yourself and you file a claim because the at-fault party can’t cover the expenses, this will not hurt you as much as a claim for an accident where you are at-fault.
- Adding a teenager onto the policy: It is a right of passage, but adding your teenager to the policy when they are ready to drive will add to the premiums. There are several ways to reduce how much the premium goes up for this so talk with your agent ahead of time to prepare.
If you are worried that your premiums are getting too high with your current insurance provider, it may be time to shop around again and see what options are available. You can also discuss the situation with your agent to see if they can do something to lower your premium.
Do I Need Insurance When Purchasing a New Car?
You do not need to have insurance when you buy a new vehicle. If you are car shopping and do not know which car you will purchase ahead of time, it is hard to get an insurance policy in place before the purchase.
Keep in mind that. You will need some kind of auto insurance to drive it home. And the policy needs to meet the minimum requirements of the state before you can take the car at all. You can show them the policy that is on another vehicle you own or on the vehicle you just traded in. Some dealerships may have you pick out insurance and get a policy in place before you leave the lot.
When purchasing from a private party or from a dealership that does not require insurance on the car before leaving, you should still get a policy in place as soon as possible. This not only keeps you and the car protected, but you will need proof of insurance before you can license and register that vehicle in your name. The sooner you get it done, the better.
If you already have a policy on your other vehicles or had a policy on a vehicle you just traded in, you can still use the same policy to cover the new car. Your rates are likely to change based on the type of vehicle. You will need to provide your insurance agent with a few details including the make and model of the vehicle along with the year. They often need the VIN to check the vehicle as well.
It is best to enter into a solid purchase agreement before you add a new insurance policy on the car. This is why it is not required to already have insurance when you purchase a new car. It makes no sense to start paying insurance for a car that you do not purchase. Since it is simple and quick to add a new car to your policy, you can easily get this done once you have made the purchase.
The Best Car Insurance Choices
Now that you know how to shop for car insurance, it is important to find the right type of car insurance for your needs. There are many great companies throughout the country that can provide competitive rates on their policy. They may offer different prices based on your past driving history, the type of car you are driving, and where you live.
We went through and found some of the best nationwide car insurance companies that you should shop around and compare. Some of the best include:
USAA – The Best for Military
This is one of best insurance companies if you are in the military. They treat their customers the best and the process to file a claim is one of the best in the market. They have many affordable plans for customers as well based on the type of vehicle, driving history, and more. The biggest drawback is the limited availability of this company since they are only available to members of the military, veterans, and immediate family members of these individuals.
Geico – The Best Cost
If you are looking for a car insurance company that is easy to work with and affordable, then Geico is one of the best choices. Most customers of Geico were happy with the service and had no plan to stop using them in the near future. The claims process is also simple without a bunch of hoops to jump through.
Allstate – The Best Customer Service
Customer service can make or break a car insurance company and Allstate has some of the best customer service in the industry. They have friendly customer service representatives and are there to provide some of the best service to all of their customers. If you want to have a real person answer the phone and be there for all of your questions, then Allstate is the right choice for you.
Progressive – The Best Options
When it comes to Progressive, you will get to enjoy a lot of different policy options. They even offer a comparison tool to help you decide whether you would like to work with them or one of the competitors based on your unique needs. They have decent customer service, whether you work with them online or on the phone, and their claim process is not too bad. They do not have as high of ratings as some of the other choices though and many customers did not plan to renew with progressive.
State Farm – The Best Claims Process
Most of the car insurance companies out there today will have an easy claim process for you to use. But when you want one that will get the claim filed quickly, can answer all of your questions, and keeps you up to date with the process, then State Farm is one of the best. State Farm is often considered a good value for the money too so it is one to check out when shopping for car insurance.
American Family Insurance – The Best in Discounts
Many policy holders with American Family Insurance find that they are able to qualify for a lot of discounts that are not found with the other insurance companies out there. This can potentially save you a lot of money, especially if you qualify for most of them. They have a steer into savings discount just for switching your policies over to them, loyalty discount, and even a multi-vehicle discount to help you save more money while being safe on the road.
About THE AUTHOR
I've spent many years selling cars, working with auto detailers, mechanics, dealership service teams, quoting and researching car insurance, modding my own cars, and much more.Read More About Charles Redding