Learning to be a smart driver was one thing, but becoming a smart insurance shopper? That’s a whole different learning curve. Here we’ll go over a few basic steps for finding the auto insurance you need at a fair price, complete with tips from insurance industry experts.
Decide whether to buy through an agent or DIY
You can purchase car insurance through an independent agent, who will compare coverage and quotes on your behalf, or compare quotes and buy direct from the provider on your own. DIY auto insurance shopping is often most convenient since most companies let you compare rates online. If your insurance needs are pretty straightforward and you prefer not to hop on the phone with an agent, this is likely the best route for you.
An independent agent can be helpful if you’re not feeling confident about choosing the right coverage or are having trouble finding affordable insurance on your own (for example, if you have a poor driving record or filed multiple claims in the past). An independent agent can also help you combine multiple policies and find the best auto and home insurance bundling deal.
“Additionally,” says Bill Hebert, Regional Director at Mercury Insurance, “independent agents can identify discounts for you, and they often work with smaller, regional auto insurance companies who provide great service and may have lower rates.” This is a good option for people who prefer hands-on, personalized assistance.
Figure out how much coverage you need
Each state has unique auto insurance requirements. You’ll have to purchase at least your state’s minimum for liability insurance, and some states also require uninsured motorist, PIP coverage, or MedPay. Experts often recommend purchasing liability limits higher than the state minimum if possible for better financial protection.
“Chances are that you will need more liability insurance than the state requires because accidents cost more than the minimum limits. If you’re found legally responsible for bills that are more than your insurance covers, you will have to pay the difference out of your own pocket.”
Of course, it’s important to keep the value of your car and assets in mind when setting coverage limits. You might even want specialized coverage if you have niche insurance needs, like a custom or vintage car, a teen driver on your policy, a poor driving record, etc.
“Car insurance shoppers should have a good idea of what their needs will be when using the vehicle. For example, if the shopper has an older vehicle that isn’t worth more than the deductible on a comprehensive policy, they should determine if this is worth the additional premium. Or, if they’re going to be using the vehicle for a gig economy job like driving for Uber or Lyft, then they’ll want to look into coverage options to supplement the personal auto policy.”
Be sure to research coverage options and decide what you need before comparing companies or quotes. If you check rates and then realize you need more coverage when you buy, your premiums could end up being higher than you anticipated.
For more information about coverage, see our complete guide to auto insurance.
Research the best auto insurers for you
Next, find a few providers that offer the coverage you need, along with great service and strong financials to back your policy. We evaluated fourteen top-notch auto insurance companies in our review of the best auto insurance; these are a good place to start when requesting quotes.
Compare quotes and choose the lowest bidder
Once you’ve gathered a list of promising insurers, it’s time to do a head-to-head price comparison. Quotes can vary widely, so we recommend checking rates from as many companies as possible to find the best value on the coverage you need.
And remember, price isn’t all that matters. The “best” auto insurer is one that gives you an affordable rate and peace of mind that your claim will be settled fairly after an accident. That’s why it’s important to keep strong coverage and customer satisfaction in mind while you shop.
“The most important factors to consider are not just price, but the actual coverages being sold. Certain carriers offer really cheap insurance and people first realize how truly limited their coverage is only when they have an accident. Like with most things in life, you get what you pay for.”
Shopping pro tip: Auto insurance rates depend on coverage, among other things. Be sure to use the same coverage levels each time you request a new quote to get an accurate comparison between insurers.
Learn how to save without sacrificing coverage in our guide to cheap auto insurance.
Purchase your new auto insurance policy
The hard part’s over. You’ve found an auto insurance company that meets your coverage needs and price point. The last thing to do is simply hit “buy.” Some companies will let you buy directly online, while others will offer you an online quote but finish the sales process through an agent. Either way, follow the steps your insurer lays out for you.
Shopping pro tip: Many companies will cut you a deal for paying premiums as a lump sum. Check rates for an annual payment or six month payment as well as a monthly payment to see how much you could save by paying your auto insurance up front.
Cancel your current policy
You can cancel an auto insurance policy at any time. If you move, get a second car, or add a new driver, you don’t have to wait until your current coverage ends to shop for better rates.
That said, you should only cancel your current auto insurance after securing a new policy. If you have a “gap” in coverage, you’ll pay more with your next provider. When you are ready to cancel, most companies will have you sign a formal letter or notice of cancellation, so call your insurer or check their website to figure out what steps you need to take.
Insurers are required to refund pre-paid premiums if you end your coverage early, though some will charge a cancellation fee — generally around 10% of your remaining premiums or a flat fee between $25 and $50.
Review of the best auto insurance companies
How to switch car insurance companies
Why 40% of drivers don’t shop for auto insurance as often as they should