Tips to know before buying auto insurance
Fact-checked with HomeInsurance.com
We’ve all seen the commercials promising insurance premiums as low as $39 a month — that’s nothing new.
The companies aren’t lying to you — they’re simply telling you it’s possible. However, what’s possible isn’t necessarily what’s best for you, and in the case of $39 premiums, that’s probably not the best for your actual coverage needs or long-term finances.
As people called these companies about buying auto insurance for ultra-cheap prices, they discovered that some of the companies were absolutely able to offer those prices — but only if the people were willing to take the bare state minimum liability limits without any coverage for their own car and absolutely no extra coverage options.
Let’s take Virginia as an example. There, state law requires all drivers to carry bodily injury liability coverage of $25,000 per person, $50,000 per accident and $20,000 in property damage coverage.
But the National Security Council reports that average costs for accidents can range from more than $12,000 even when no one is injured to well over $1.6 million in the event of a fatality. You can reach your insurance limit quickly, and then you’re left paying out-of-pocket.
On top of that, your state’s minimum required auto insurance only covers damages you cause to others and their property. It doesn’t pay to repair your car, nor does it protect you against things like theft and vandalism. You’ll need collision and comprehensive coverage for that, which we’ll explore in more detail later in this article.
And that’s the problem with the abundance of “$39 monthly premiums.” Upon obtaining quotes, you’re offered coverage that only makes you legal in the state’s eyes as a car owner. It doesn’t provide
you the insurance you truly need — for you or your vehicle.
In 2012, Fox Business Journal researched how one gets a $39 a month premium. After investigating and mulling over 52,000 insurance quotes, they extracted the factors that result in such a low rate.
As expected, bare minimum liability-only policies got insurance quotes with this premium, and was only possible if you:
- Outright own your car and only need to insure one vehicle
- Don’t have any violations, accidents, claims, SR-22s
,or lapses in coverage
- Have a credit score of 650 or higher
All told, it’s a tough bill to fit. But don’t worry. We can show you what to look for in auto insurance, and we’ve queued up plenty of auto insurance tips to help you get the coverage you need with the lowest possible premiums.
Car insurance actually isn’t that complicated. We’ve built this guide to teach you what you need to know about car insurance. Use it, and buying auto insurance will be a lot easier.
What you need to get an insurance quote
If you’re wondering what to know about car insurance and how to get it, look no further. Here are the details you should round up before you shop for coverage.
Driver’s license and vehicle identification numbers (VINs)
To provide the most accurate quotes, insurance companies check your driving and claims history, usually by pulling a Comprehensive Loss Underwriting Exchange (CLUE) report. When buying auto insurance, have your driver’s license number and VIN numbers for your vehicles so they can pull information needed to provide accurate insurance quotes.
Details about your driving history
If you don’t have your driver’s license number or VIN, you can usually get a decent generalized insurance quote, although you’ll need to relay any violations, accidents
, or claims you’ve had within the last seven years.
Some companies only ask about history from the last three to five years when you’re getting insurance quotes, but since the reports insurers use pull seven years of history, you’ll get more accurate insurance quotes by disclosing all. Note that if you fail to provide any accidents or violations, intentionally or not, and buy a policy, it’s highly likely your rate will change once it reaches underwriting.
Really, one of the best auto insurance tips we can offer is to be honest through the process. And that brings us to your last information gathering to-do.
Information about other drivers
List all drivers in the household unless you specifically want them excluded and your state allows exclusions. It will do you no good to buy auto insurance and have your insurer refuse to pay a claim because you had a sixteen-year-old driver that you “forgot” to mention behind the wheel.
The coverage you need — and the options you may want
Now, you’re probably wondering what to look for in auto insurance as you collect quotes. Buying auto insurance is a personalized process, and policies aren’t one-size-fits-all. Let’s walk through your coverage options so you can decide which ones might be right for you.
First, it’s important to know that each state has specific laws about which types of auto insurance you need and the amount of coverage you need to include in your policy. Find out which auto insurance coverages are required in your state — and the minimum amount you’re required to carry — to make sure you comply with state law. Your insurance agent can help you here.
Liability coverage pays for damages you’ve caused with your vehicle, and 49 states require liability coverage when you drive a car (New Hampshire is the only exception). There are two types of liability insurance: bodily injury coverage, which will pay up to policy limits for medical expenses to the other person if you cause an accident, and property damage coverage, which pays for damage done to another person’s personal property. That could be anything from their car to the neighbor’s mailbox you accidentally backed into.
Medical payments or personal injury protection (PIP)
If you or any of your passengers get injured in an accident, medical payments coverage helps to cover any resulting medical expenses.
Some states call this type of coverage personal injury protection, and several states require it. PIP can also help to cover some other expenses if you’re injured, like lost wages if you have to take time off work to heal.
You need collision coverage if you want your insurer to help pay for repairs to your own vehicle if you’re at-fault in an accident. This steps in to pick up the tab at the auto repair shop if you cause a fender bender, a major collision or run into a tree, pole or your neighbor’s mailbox. Collision coverage can even help to cover damages caused by hitting a pothole.
Comprehensive coverage protects you against risks to your car for instances other than what is covered under collision. It can help pay for repairs if a tree falls on your car or it gets vandalized. It also protects you against car theft.
If someone else causes an accident, their insurance should theoretically pay out for the damages. But what if they don’t have enough coverage, or they’re driving with no coverage at all? In that case, uninsured or underinsured motorist coverage can help. Some states require this type of insurance.
As you’re buying auto insurance, companies will probably offer you other options, too. You might be able to add roadside assistance or rental reimbursement coverage, for example, if you so desire. Really, deciding what to look for in auto insurance depends on what kind of protection matters most to you on and off the road.
What affects rates
Adding any of the above coverages will mean paying more for your auto insurance. But one of the best auto insurance tips we can offer is this: don’t skimp. It’s worth paying a few extra bucks each month to avoid thousands of dollars in expenses after an accident, theft or other unfortunate event.
As far as what to know about car insurance, it’s helpful to be clued into the factors insurers use when determining your auto insurance rates. Those include:
- Your car (make, model, year)
- How much mileage you drive each year
- Your driving history (accidents, tickets)
- Your credit score (in most states)
- The length of your driving experience
- Where you live
- Where you park your car (in a garage or on the street)
- Your gender
- Whether you own, lease or finance your car
- Your marital status
You can control some of these things, at least to an extent. If you have a history of auto accidents, for example, ask your insurer if taking a safe driving course could help offset that, lowering your premium.
In fact, one of the best auto insurance tips we can offer is to ask about discounts when buying auto insurance. You might be able to save for bundling your car insurance with your home or renter’s insurance, being a member of a certain group, having a car with safety or anti-theft features and more.
How to pick the right auto insurance
Now, let’s line up a few auto insurance tips to help you find the best policy at the best price. We’re going to go step-by-step here.
- Step one: Make sure you’re clear on what to know about car insurance before you start shopping. That includes understanding your state’s coverage requirements and the coverages that are important to you. If you live in an area with large trees that could fall on your car, for example, you’ll want a policy that includes comprehensive coverage.
- Step two: When buying auto insurance, get quotes from at least three insurance providers. Make sure you’re comparing apples to apples; get quotes for policies with the same types of coverage and the same limits for each.
- Step three: Based on the quotes you get, consider talking to a local auto insurance agent at those companies. Those individuals will be able to help you find a policy that meets your state’s requirements and your specific needs.
- Step four: Don’t be shy about asking for discounts. Each insurance company should be able to give you at least a few ways to save.
- Step five: Review your policy periodically to make sure you have the right levels of coverage. Also, ask about any new discounts that might be available to you.
Shopping for car insurance doesn’t have to be difficult or complicated, and knowing what to look for in auto insurance coverage is important. Once you know the basics, you’ll realize companies are relatively similar in what coverage is offered — you just have to know what you need and make sure the insurer includes those. The main differences will be:
- Optional extras
- Available discounts
- Coverage limits
Never let an insurer lure you into being under-insured with cheap insurance quotes. While buying auto insurance, keep these auto insurance tips in mind.