How to Shop for Car Insurance in 5 Simple Steps


Buying car insurance might seem complex, but it’s simpler than you think. By breaking down the process into manageable steps, you can secure a policy that offers robust protection at an affordable rate. This guide will steer you through the essentials of shopping for car insurance, making the journey straightforward and stress-free.

family getting in car

Step 1: Gather Information

Kicking off your car insurance shopping journey involves collecting some vital information:

Personal information: Car insurance companies need basic details like your name, address, and age. This data informs your insurance premiums, since factors like age and location can affect risk assessment. You will also need your state driver’s license number, since the insurance company will run your license to look for accidents and tickets. Finally, be prepared to provide your Social Security number for a credit check.

Vehicle details: Information about your vehicle, including the make, model, year, and safety features, also impacts your insurance costs. Have your VIN (vehicle identification number) handy because you’ll need that when you choose a company to write your policy. You will also need your car’s current mileage reading and the average number of miles you drive per year. Some agencies and carriers offer lower rates for people who don’t put a lot of miles on their car.

Current insurance details: If you already have car insurance, you’ll need information about your current policy and premiums. This will serve as a useful comparison point when you get new quotes.

Having this information on hand ensures the car insurance quotes you receive are as accurate as possible, streamlining your shopping process.

Step 2: Determine Your Car Insurance Coverage Needs

One of the key steps in shopping for car insurance is understanding your unique coverage needs. Let’s take a closer look at the factors that should influence your decision:

Your car’s age and condition: The age and condition of your vehicle can impact the type and amount of car insurance coverage you need. For example, a brand-new vehicle may warrant more comprehensive coverage, including collision and comprehensive insurance, to protect against potential repair or replacement costs.

If you just purchased a new car using a car loan, you may want – or your lender may require – gap coverage. This is to cover the difference between the car’s value and the amount left on the loan if your vehicle is totaled in an accident.

On the other hand, if your car is older and has a lower value, you might decide to only go for the required minimum coverage.

Your financial situation: Your financial health should also influence your coverage choices. If you have substantial savings, you may be able to opt for higher deductibles to lower your premiums. Conversely, if you don’t have a financial cushion to absorb high out-of-pocket costs, a policy with lower deductibles and more coverage might be a safer choice.

Legal requirements: Each state has minimum insurance requirements, usually including liability coverage for bodily injury and property damage. Be sure to familiarize yourself with the laws in your state to ensure your policy meets these basic requirements.

When it comes to specific coverage options, you have several types to consider:

Liability insurance: This is typically a mandatory coverage that pays for bodily injury and property damage you cause to others in an accident.

Collision coverage: This optional coverage pays for repairs to your vehicle after an accident, regardless of who’s at fault.

Comprehensive coverage: Another optional coverage, comprehensive insurance covers damage to your car from incidents other than collisions, like theft, vandalism, or natural disasters.

Uninsured/underinsured motorist coverage: This type of coverage kicks in if you’re hit by a driver who doesn’t have enough (or any) insurance to cover the costs of the accident.

If you’re looking for a high level of protection, you might consider a “full coverage” policy, which generally includes liability, collision, and comprehensive insurance. Though it comes with higher premiums, a full coverage can potentially save you from significant out-of-pocket expenses in the event of a major accident. Remember, the best insurance coverage is the one that offers you peace of mind at a price you can afford.

Step 3: Choose How to Shop for Car Insurance

Now that you know what car insurance coverage you need, it’s time to start shopping. You have several paths:

  • Direct from the insurer: Purchasing auto insurance directly from an insurance company, either online or through an insurance representative, allows for direct communication with your insurance carrier. That can be beneficial for service and claims handling. However, shopping through the insurance company may lack the personalized service of working with a local agent.
  • Captive agents: These agents represent one company and can provide detailed information about their auto insurance policies. While they can give you personalized service, their offerings are limited to the insurance products of the company they represent.
  • Independent agents or brokers: These professionals can provide auto insurance quotes from different companies, helping you compare car insurance rates. They can provide a broader view of the market but might lack the intimate knowledge of specific products that a captive agent has.
  • Online agencies and carriers: It’s faster than ever to compare car insurance quotes online today. Some insurance websites curate quotes from a variety of insurance providers and act as an agency to write policies through national carriers.

Take time to compare car insurance companies, and don’t just focus on national carriers. Often, local and regional insurers have competitive rates and better customer service.

Step 4: Compare Car Insurance Companies

When you’re ready to compare car insurance, price is just one piece of the puzzle. Digging a little deeper can help you make a more informed decision. Here’s what to consider:

Reputation: An insurance company’s reputation can be a good indicator of what you can expect. Check online reviews and ratings to get a sense of how satisfied customers are with their service. Look for trends in feedback—are customers generally pleased with their claims handling, or do many complain about the company’s communication?

Customer service: Great customer service can make a world of difference, especially when filing a claim or addressing billing issues. Look for car insurance companies that have a track record of excellent service, availability, and responsiveness.

Financial stability: Financial stability is essential in an insurance provider. It assures you that the company will be able to pay out claims, no matter how large. Look for carriers with high ratings from Moody’s, A.M. Best or Standard & Poor’s. The best car insurance companies will have A or better ratings.

Balance of cost and coverage: While you’re likely looking for affordable premiums, remember that the cheapest option isn’t always the best one. Some companies may offer lower car insurance rates but fall short in coverage or customer service. Always consider the balance between cost, the scope of coverage, and the quality of service when choosing your insurance provider.

Remember you want a company that offers a good rate, but also reliability, quality service, and the protection you need. Your car insurance is a safeguard against financial disruption—it’s essential to choose a provider you can trust.

Step 5: Buy Your New Policy

Once you’ve compared policies, you’ll want to make your choice. Once you’ve received the paperwork to sign, read it over to ensure your coverage limits are correct and that your premiums align with the quote you received.

If you’re switching insurance policies, avoid a lapse in coverage. Cancel your old policy after the new policy is in effect. If you are due a refund for canceling before your old policy expired, your old carrier should backdate the cancellation to the date your new policy began. You don’t want to pay two auto insurance companies at the same time.

Maximizing Savings: Car Insurance Discounts and More

Beyond shopping around for the best policy that fits your needs, you can lower your auto insurance costs in various ways.

  • Safe-driving discounts: Most car insurance companies offer discounts for safe driving, owning a car with safety features, or completing a defensive driving course. Some companies today will offer substantial savings if you allow the insurer to place a device in your car that tracks your speed, safe-braking, and other good driving habits. Always ask about available discounts.
  • Bundling policies: You can often save money by bundling your car and home insurance policies with the same carrier. This also provides the advantage of one point-of-contact for your insurance needs.
  • Higher deductible: Opting for a higher deductible can lower your premiums. But remember, if an accident occurs, you’ll need to pay that deductible out-of-pocket.
  • Usage-based insurance program: Many car insurance companies offer reduced rates for college students who leave their cars at home and don’t drive during the school year. This is also true for other low-mileage drivers, such as those who work from home or have a short commute. If you don’t drive a lot, ask about these discounts.
  • Credit score: Most companies use credit scores to set premiums, so maintaining good credit can help save money on your car insurance policy.
  • Shop around: It’s good practice to compare car insurance rates periodically to ensure you’re getting the best deal. Prices among insurance carriers can vary greatly, so comparison shopping can lead to substantial savings.

By following these steps, you can shop for auto insurance with confidence and secure a policy that offers the best value and peace of mind. Remember, car insurance isn’t just a legal requirement—it’s financial protection that can save you from devastating costs after an accident. Happy shopping!

Frequently Asked Questions

How often should I shop for car insurance?

It’s a good idea to shop for car insurance every one to two years, or whenever there’s a significant change in your life that might impact your insurance rates (like moving, getting married, starting college, or buying a new car).

What if I can’t afford car insurance?

Car insurance is a legal requirement in most states, so it’s crucial to budget for it. If affordability is an issue, consider shopping around for better rates, opting for a higher deductible (which can lower your monthly premiums), or seeking a state-sponsored low-income car insurance program if one is available in your area.

Does the color of my car affect my insurance rate?

Contrary to popular belief, the color of your car does not impact your car insurance rates. Car insurance companies consider factors like your car’s make, model, age, safety features, and your personal driving history, but not the color.

Will my insurance cover me if I drive someone else’s car?

In most cases, car insurance follows the vehicle—not the driver. So if you’re driving a friend’s car and get into an accident, their car insurance policy would typically be the primary coverage. However, your personal auto insurance policy might provide secondary coverage.

Can I negotiate my car insurance rates?

While you can’t negotiate rates in the same way you might haggle over the price of a car, you can often lower your rates by asking about discounts, adjusting your coverage, or improving your driving record. Always compare rates from multiple insurers to find the best deal.

Dawn Allcot
Meet the author

Dawn Allot is a personal finance writer and content marketing expert specializing in finance, travel, real estate, and technology. In addition to her work at Crediful, Dawn regularly writes for Bankrate, GoBankingRates, and The Balance.