Having the right car insurance is a critical factor of vehicle ownership. Without the right coverage, you could be subject to penalties and high costs, such as traffic tickets for not having insurance, suspension of your driver’s license, and increased future insurance premiums. You’ll need to meet your state’s minimum coverage requirements, so don’t skimp on insurance. Work with an insurance agent to make sure you’re adequately covered, or you could end up in a mess — getting sued for damages or having personal assets taken from you, for example — if you’re involved in an accident.
If you’re about to buy your first car, make sure you protect it — and yourself — with the right car insurance coverage. Here’s what you need to know to get the right car insurance for the first time.
Step-By-Step Guide to Buying Car Insurance
To choose the right insurance, get recommendations from friends, family and coworkers instead of just shopping for the lowest rates — you want to make sure you are working with a company that will be there for you in the event of an accident or emergency, said Richard Johnson, communications partner at USAA, an auto insurance provider. Quality customer care is an important factor to consider when you’re shopping for car insurance, too; you don’t want to have to worry about claims or unexpected expenses if you end up in a serious accident.
Here’s how to get car insurance:
- Research state requirements. All states except New Hampshire require drivers to have auto liability insurance. The amount of coverage required varies by state.
- Choose car insurance companies to research. Get a referral from a family member or friend or do an online search for car insurance companies.
- Get rate quotes. Get multiple quotes for the same amount of coverage so you can decide which plan best fits your budget and needs.
- Contact an insurance agent. Talk to an agent about additional coverage options you think you might need.
- Select a suitable plan. Your agent can help you choose a plan that meets all your needs.
- Review the paperwork. You’ll receive a summary of your insurance coverage along with your insurance cards. Review everything carefully and contact your insurance agent if you have any questions.
- Carry proof of insurance: Keep an insurance card in your glove compartment in case you get pulled over for a traffic violation or are in an accident.
Types of Car Insurance Coverage
Five basic types of insurance are available for vehicle owners. Refer to this list make sure you’re covered correctly.
- Liability coverage: This includes bodily injury liability coverage and personal property damage liability coverage. You’ll need to get liability coverage when you register your vehicle or get your driver’s license — it pays for injured parties’ medical expenses and property damage when you’re at fault for an accident.
- Collision coverage: If you hit a fixed object — like a post or wall — or if you end up in a collision with another vehicle, this type of coverage will pay for expenses to repair your car.
- Comprehensive coverage: This reimburses you for damages unrelated to a car accident, such as vandalism, theft, animal collisions, and even hail and fire.
- Uninsured/underinsured motorist coverage: If an uninsured or underinsured driver causes an accident and cannot pay for your damages, this type of coverage ensures you are covered.
- Personal injury protection: Some states require all drivers to carry a minimum of PIP, which covers any other costs related to the accident, such as rehabilitation expenses.
If you shop around, you’ll find some car insurance companies offer optional, customized coverage. For example, Farmers Insurance offers a “New Car Pledge” that provides you with a brand-new vehicle — minus your deductible — if your car is totaled during the first two years or 24,000 miles you own it. Other options include incident forgiveness, which enables you to get a traffic ticket without a rate increase, and towing and roadside assistance.
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Car Insurance Cost Factors
You might wonder how insurance companies calculate auto insurance quotes. Your driving record plays an important role here, said Johnson. “Drivers with accidents or tickets might pay higher rates than drivers who have a clean driving record.”
Insurance companies need to gauge risk to determine your rate. That’s why they take your location into account — a high-crime or accident-prone area could increase the chances that you’ll be in an accident and your insurance company will have to foot the bill.
Other factors that determine what your premium include:
- How many miles per year you drive
- Where you park your car
- Your age and gender
- The type of car you drive
- Your credit history
Ways to Lower Car Insurance Costs
The average annual cost of an auto insurance policy is $800, according to the Insurance Information Institute — but there are ways to lower your premium. Check with your insurance agent to see if the company offers special discounts, such as a break for being in the military or for being a good driver.
A few other ways you can lower your car insurance costs include:
- Clean up your driving record. You can lower your costs by driving safely. “The longer you maintain a clean driving record, the better your results will be,” said Johnson.
- Take a defensive driving course. You can prove you’re a safe driver by completing a formal course. “There are many options — available online or in person — and drivers can save by taking one of these courses every few years,” said Johnson.
- Qualify for a discount. You might qualify for a discount if you’re getting insurance coverage for a newer vehicle or being added to a policy with multiple vehicles. If you’re still living with your parents, you might be able to get a discount on car insurance if they add you to a family plan.
- Earn a loyalty discount. Some companies, such as USAA, offer a discount for being a loyal customer. Even though you’re buying car insurance for the first time, consider choosing a company you can stay with so you can lower your car insurance costs over time.
Getting car insurance is a top priority when you get behind the wheel of your new car, and you’ll need to shop around to find the best plan. You do have some options to reduce your car insurance premium, and you’ll qualify for better rates if you maintain a great driving record. Take some time to explore different plans and ask your agent questions so you can make the most informed decision.
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