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- You may be overpaying for your car insurance if you're not shopping around regularly.
- You can get quotes online in minutes with online carriers that pull public records.
- The auto insurance company you choose is just as important as the coverage.
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If you live in the US, you probably need affordable auto insurance to get on the road. The requirements vary by state, and additional conditions may apply if you're financing or leasing your car. State laws typically require liability coverage to protect others around you if you cause an accident. Some states also require a small amount of personal medical coverage.
But a lot gets lost in translation when you start talking about collision, comprehensive, uninsured, underinsured coverage, and otherwise how to buy car insurance. It's easy to cut important coverages because we don't understand what we're dropping. If you know the basics, though, buying car insurance doesn't have to be so scary, and anybody can do it.
How to Get Car Insurance before Buying A Car and Select Your Coverage
Before you start shopping, you need to know what you're looking for. You may have heard the following words being thrown around. Keep reading to get a better idea of what the terms mean.
- Collision coverage: As the name suggests, collision coverage pays for the cost of auto repair after a collision with another car, certain stable objects, etc. Auto financing companies typically require collision coverage to keep an auto loan active.
- Comprehensive coverage: Collision coverage covers car repair costs associated with other causes. Vandalism, collisions with deer and other animals, and natural disasters are common uses of comprehensive coverage.
- Bodily injury and property damage liability: Liability car insurance covers the costs of the other party when you cause an accident. These could include property damage, injuries, or deaths. Experts warn many new drivers to go above the state minimums for liability coverage. The cost to raise your limits is relatively low. The cost of medical expenses and property damage after a significant accident will quickly exceed state minimums, leaving you open to financial ruin if you don't have enough liability protection.
- Uninsured/underinsured motorist coverage: This covers medical bills in accidents where the driver at fault doesn't have enough insurance coverage.
When asked about accidents involving uninsured or underinsured drivers, Charlie Wendland, Head of Claims at Branch Insurance, said, "We've seen data that supports a potential uptick in uninsured drivers as a result of pandemic shutdowns. What that means to the general motoring public is that you could be at greater risk of being involved in an accident with an uninsured driver. If you are not carrying uninsured motorist coverage on your auto policy, and God forbid you get into an accident and are injured, your own health insurance may be the only thing that covers your medical bills and losses like lost wages will likely not be covered."
He specifies, "the best way to make sure that you are indemnified due to the fault of an uninsured driver is to protect yourself through uninsured motorist coverage." - PIP or MedPay: This coverage pays a limited part of your medical bills after an accident. If you choose PIP over MedPay, it can cover a more comprehensive range of costs, including lost wages, childcare, and other expenses associated with an accident.
"Full coverage" is a policy that includes collision, comprehensive, and liability. Each state sets its minimum insurance requirements centered around liability. Some states also require a small amount of medical coverage for you. So it's best to check the law in your state. You'll also need collision and comprehensive coverage if you have a car loan.
Decide Who Is on Your Policy.
You might think about insuring only yourself, but insurance is a family affair. Insurance companies want to know who might be driving your car. In roommate situations, this would not necessarily apply. But it might apply if you live with siblings, parents, or other family members.
In most cases, you'll need to add these drivers to your policy:
- Any drivers living with you who have a license without an individual policy. Wendland recommends that, especially for parents with young teenagers, auto insurance should be secured "as soon as they receive their license and you expect them to start driving your car."
- Other adults who drive your car regularly. Nannies and other domestic workers are good examples. But if you have a family member who visits every weekend and drives your vehicle, the permissive use exceptions get tricky. If anything happens, Wendland warns, "It extends the investigation because the insurance company will have to investigate as to whether or not that driver has their own insurance, did they have permission to drive the vehicle, and other relevant investigative questions."
Go Shopping
Now that you know what your policy might look like, it's time to go shopping. There are three options here. You can:
- Get quotes online
- Call insurance providers directly
- Work with an insurance agent in your state
Before you start shopping, you'll need to gather some details, including:
- Year, make, and model of your vehicles
- Current mileage and how many miles you drive in a year (the average for adults is about 15,000)
- Drivers license numbers for everyone on the policy
- Any infractions or accidents drivers have on their records
Compare Quotes and Check The Companies Out
Shopping can be overwhelming, but getting at least three car insurance quotes is best. Make sure that you compare apples to apples and that each policy has identical coverage. In other words, if you have collision and comprehensive coverages on one quote, make sure you have it on all three. If you increase your liability coverage to 50,000/100,000, ensure all quotes have that amount. If comparing companies that offer varying terms, also make sure you're comparing the monthly cost of car insurance (some insurers will issue policies in 6-12 month terms).
Once you know which company you'd like to go with, do a little background check. Read reviews of the company and visit the National Association of Insurance Commissioners to see how often complaints are filed against the insurer. While an affordable price is essential, you want to know your insurer will be responsive when you need it.
Sign Up and Pay Your Premium
Once you've identified an auto insurance company and policy, you'll have to decide how you'd like to pay. Insurers often issue discounts for paying for the entire term upfront, but many people find it more manageable to make monthly or quarterly payments.
Once your first payment goes through, you can get on the road confident and insured. You'll get proof of insurance that you can take to your lender and car registry.
Now that you have a new policy, it's time to cancel any old policy. First, see if your new auto insurance company will handle part of the process for you. You might be surprised at just how simple switching auto insurance can be. If your old insurer requires more input, most procedures can now be completed online or over the phone.
Shop around Regularly
You might think the work is over now that you're insured. But to maintain the best rate, experts say you should shop for car insurance quotes at least once a year. That might seem like a hassle, but it could save you hundreds or even thousands of dollars. More importantly, it's free. Even if you're working with a licensed car insurance agent near you, the insurance company pays them. You just pay for the policy.