How to get car insurance: A step-by-step guide

In a nutshell

Knowing what’s involved in getting a policy and having some information handy when you're ready to buy will make the whole process of getting car insurance go smoothly.

• You have multiple options for buying a car insurance policy, including contacting an agent or broker or buying online directly from an insurance company.
• Developments in “insurtech” have created new ways to shop for insurance and get the best price.
• Follow our checklist to prepare yourself so the process is a seamless and you get the best price.

Here are eight steps to follow when you get car insurance.

1. Find out what required coverages you need

A car insurance policy consists of one or more coverages. Each applies in specific situations and under certain conditions. You can mix and match coverages based on your needs and risk tolerance to create a customized policy. Therefore, your first step should be to find out what coverages you're required to have, either by law or as a condition of your loan or lease.

Universally required coverages

Nearly every state’s laws require drivers to carry liability coverage, typically divided into bodily injury (BI) and property damage (PD) liability. This coverage ensures you're financially responsible if you cause an accident that injures others or damages property other than your own.

Minimum liability coverage consists of three numbers, for example, 25/50/25.

The first number, 25 refers to the fact that your insurance must provide up to $25,000 coverage for the first person filing an injury claim in an accident

The second number, 50, is the maximum amount of insurance coverage for any personal injury claims filed by the insured or any other person involved in an accident, in this case, $50,000

The third number, 25, means that the auto insurance coverage must provide a maximum of $25,000 to pay for property damage.

State-by-state requirements

Some states require drivers to carry personal injury protection (PIP), medical payments coverage (Medpay), uninsured motorists (UM), or underinsured motorists (UIM). These coverages ensure you receive at least some reimbursement for injuries sustained in an accident or damage to your car caused by an uninsured driver.

Lender requirements

If you finance your car with a loan or lease, your lender may require you to carry comprehensive coverage, collision coverage, and gap insurance. Comprehensive and collision pay to repair damage to your own car caused by an accident or an event such as fire or severe weather. Gap insurance ensures you have enough money to pay off the loan or lease if your car is stolen or damaged beyond repairability and declared a total loss.

Check with your state's insurance department to learn what coverages are required by law. Your lender can tell you what coverages it requires for your loan or lease.

2. Decide what optional coverages you want

Once you know what coverages you need, take some time to decide if you want to add any optional coverages. If you don’t have a lender requirement, you can consider comprehensive and collision options.

Other typical coverage options include:

• Roadside assistance: Provides reimbursement for emergency services such as towing and winching, fuel delivery, tire change, and battery jump.
• Rental reimbursement: Helps pay the cost of a temporary rental car if your primary car is not drivable due to an incident covered under your comprehensive or collision coverage.
• New car replacement: Ensures your claim settlement is enough to purchase a new car of similar make and model if your car is declared a total loss.
• Custom parts and equipment: Provides coverage for aftermarket accessories and customizations such as exhaust kits, engine modifications, and paintwork. A standard policy does not usually cover these.

Keep in mind that these and other options will cost you more in premium.

3. Gather the information you’ll need for a quote

Once you have a good idea of what coverages you need and want, you'll want to have handy the information insurers need to provide a premium quote. This information includes:

• Names, dates of birth, driver’s license numbers, and Social Security numbers for all drivers covered by the policy.
• Vehicle identification numbers (VIN) for all cars to be covered by the policy.
• Address where each car is registered.
• Current mileage of each car and estimated number of miles driven annually.
• Purchase date of each car.
• How each car is used (commute, pleasure).
• The insurance company and expiration date for your most recent car insurance policy (your policy's declarations page will be a good reference).

4. Decide how you want to buy

There are multiple ways to buy insurance. Each offers advantages and disadvantages.

Buy through an independent agent

An independent agent represents multiple insurance companies. They can compare rates between those companies to help you get the best price. Licensed by the state, independent agents receive training from the companies they represent to help counsel you in your purchase.

Buy through a captive agent

A captive agent represents a single company and cannot compare rates. Also licensed by the state, a captive agent receives extensive training on their company’s products. State Farm, the country’s largest car insurance company, sells through captive agents.

Buy through an insurance broker

An insurance broker represents you, the buyer, in the insurance purchase. They can usually access the entire available market of insurance products — more than the single product or handful of products that an agent can access. However, brokers may not receive as extensive training as agents.

Buy directly from a company

Many major insurance companies sell policies online, directly to consumers, in addition to through agents. Some newer companies sell only directly to consumers. An online quote and policy purchase can usually be completed in less than a half-hour and can be done any time of day, any day of the year. However, you can expect to receive less personal service and advice than when buying through an agent or broker.

The simplest way to find an agent is to simply Google those in your area or ask friends and family for recommendations.

To start an online quote directly from an insurance company, consider using a site like Insurify or Policygenius. Here, you can get quick online quotes from multiple insurers, and then link directly to the website of the company you like best.

5. Shop around to get the best rate

Don't stop at just one quote. Savvy shoppers know that insurance premiums can vary by hundreds of dollars between companies. Try to check with at least three or four before deciding.

6. Consider doing a little additional research

For added peace of mind, do a little additional research into the insurance companies you’re considering. You can look for things such as:

A.M. Best ratings

A.M. Best is an independent organization whose insurance ratings evaluate the financial strength of companies and their ability to pay claims. Companies are rated from A++ to D. Most major insurers post their A.M. Best ratings on their websites.

J.D. Power rankings

J.D. Power is a consumer research firm that evaluates brands in various industries. Two of its annual rankings include Auto Insurance Satisfaction (overall satisfaction with insurance companies) and Claims Satisfaction.

Consumer reviews

You can also consider reviews and ratings directly from consumers through sites such as Trustpilot.

7. Complete the purchase process

Once you’ve settled on a company and a quote, it’s time to complete your purchase. Retrieve your online quote and follow the prompts to buy, or contact your agent or broker. The insurance company may need additional documentation at this time, and they'll need your first premium payment. Be sure to respond as quickly as possible to the company's requests to ensure your new policy doesn't hit any snags.

8. Cancel your old policy

Last, but not least, be sure to cancel your current policy if you have one. If you don’t cancel, the policy will stay in force, and you’ll have duplicate insurance (and be paying both premiums). On the other hand, make sure you don’t cancel the old policy before the new one goes into effect, especially if you plan to be driving.

Your current policy’s insurance company will require you to sign a form to cancel — return this as soon as possible.

The AP Buyline roundup: The right policy for the right price is within reach

A little preparation and knowledge can go a long way when buying car insurance. Next time you shop for a policy, follow these steps to ensure you get the policy you need at the right price.