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How To Get Car Insurance: A Step-By-Step Guide

Hanna Kielar6-minute read
January 18, 2022

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Car insurance can be a lifeline if you get into an accident. The right policy can provide peace of mind and cover the costs of repairing vehicles, a temporary rental car, or even life-saving medical procedures. Find out how to get car insurance that works for you below.

How To Get Car Insurance In 6 Steps

Whether you're buying a car insurance policy for the first time or have done so many times before, taking some steps to research options and find the best policy for you is important. If you want to learn how to get your own car insurance policy or learn how to buy a car insurance policy for a new-to-you car, follow the six steps outlined below.

1. Gather Driver And Vehicle Information

What do you need to buy auto insurance? It varies by insurance company and their application process, but gathering documents and information you might need ahead of time can speed things up. Whether you're applying for car insurance online, over the phone or in person you should expect to share:

  • Some personal information: Insurance agencies will ask for vehicle owner’s and any additional driver’s information, including name, date of birth and address. The address is typically wherever the vehicle is registered. Some insurance companies might also ask for Social Security numbers.
  • A copy of a driver's license: This includes the driver’s license number and/or state where the license was issued.
  • The car’s information: Information about the car to be insured, including make, model, vehicle identification number (VIN) and current mileage.
  • Driving history: Insurance agencies will factor in your driving history. Those moving violations, accidents or claims on any other policy may cost you.
  • Date of vehicle purchase
  • Proof of prior car insurance

2. Review Your State’s Car Insurance Laws

The laws and requirements for car insurance can vary by state. It's important to double check your state laws when you're purchasing car insurance, especially if you've moved recently and are used to complying with laws in a different state.

For example, most states mandate some level of car insurance, but Iowa, New Hampshire, Ohio and Virginia don't. That said, some of those states will require that individuals demonstrate the financial ability to cover the costs of an accident if they don't have insurance.

In states that require insurance, the coverage requirements can vary. Some mandate only bodily injury and property damage while others require more. Each state has a different minimum coverage threshold.

3. Decide How To Shop For Car Insurance

You can get car insurance through a number of paths. The right option for how to shop for car insurance depends on your personal preferences and how much one-on-one guidance you might like. Check out some of the most popular methods of obtaining car insurance.

  • Directly from the insurer: Typically, you do this online or directly with an insurance office. These policies can be less expensive in some cases because they don't involve agents or middlemen. However, that also means you don't have a specific contact that can help you with purchase decisions or claims. Companies like GEICO and Progressive sell car insurance this way.
  • Via independent agent or broker:Independent agents or brokers aren't tied to a single company, and they can offer you insurance from various companies. That lets them act as a somewhat objective third party to assist you in purchasing the right car insurance plan, though they may add their own fees to the process.
  • Through a captive agent:A captive agent is one that works only with a specific company. This is the model common to companies such as State Farm and Allstate. In some cases, policies are more expensive, but you get expert guidance and have someone to turn to if you ever need help with claims or other issues.

4. Determine What Coverage You Need

Once you know how you want to purchase car insurance, decide on your type of coverage before you pick an insurance company. Knowing what your auto insurance coverage needs are helps you determine quickly which insurance companies can provide you with the best options. Consider the following coverage options:

  • Bodily injury liability:This covers expenses caused in an accident that deemed you to be at fault. This covers expenses associated with injuries that are caused to other drivers and passengers. In most states, some level of bodily injury liability insurance is required.
  • Property damage liability:This covers the cost of repairs or replacement of other people's personal property if the losses occur in an accident that was deemed your fault. In most states, some level of this coverage is required.
  • Collision coverage:This pays for damage to your vehicle if it occurs in an accident for which you were liable. Some people don't choose to pay for this coverage if their car is old or not worth much.
  • Comprehensive coverage: Sometimes shortened to comp coverage, this helps ensure your losses are covered if your vehicle is damaged in an event that wasn't a motor vehicle accident, such as a natural disaster. In some cases, it might also cover theft.
  • Personal injury protection: This helps cover your own medical bills and expenses if you're in an accident that is deemed your fault. 
  • GAP coverage:Otherwise called Guaranteed Asset Protection, GAP coverage helps pay for the difference between the actual cash value of your vehicle and the amount owed on your vehicle at the time of total loss. This is also known as negative equity (the amount you owe minus how much the car is worth). Your insurance company will determine the cash value based on the National Automobile Dealers Association (NADA) trade-in value. For example, if you owe $20,000 on a vehicle and the book value is only $10,000, you could be on the hook for $10,000 if the vehicle is totaled. GAP coverage will help cover the additional $10,000 you owe.
  • Uninsured or underinsured motorist coverage: This helps pay for your own damages if you are in an accident that is someone else's fault but they don't have insurance coverage or don't have enough coverage. 
  • Roadside assistance: This is an addition that you can add to many policies. If you end up stranded on the side of the road, it may help cover expenses such as towing your car to a nearby repair shop.

5. Browse Car Insurance Companies And Policies

Armed with all the information about yourself, your car and your insurance needs, it's time to get insurance quotes. Insurance rates are based on a variety of factors, including:

  • The insurance agency itself
  • Where you live
  • Your credit and driving history
  • How often and far you might drive your car, including whether you'll use it for work
  • The value and type of vehicle
  • How much coverage you need
  • Your preferred deductible amount

You'll need to decide how high you want to go with your coverage. For example, you might opt for $100,000 in bodily injury coverage or $250,000 or more. The higher you go, the more expensive the policy may be. The same is true for your deductible. If you want a $500 deductible, the policy may be more expensive than one with a $1,500 deductible.

Consider your financial situation in making these decisions. Can you afford $1,500 if it comes down to it? Do you have a lot of assets someone could sue you for if you don't have enough liability coverage? These questions can help you balance the functionality of your policy with the cost.

6. Choose The Best Policy For You

Finally, choose the best car insurance policy for you. It should be one that meets your financial needs now, meets any state requirements and provides enough protection to give you peace of mind in the future. Remember to cancel your insurance after selling your car and get a new policy for your new car.

Car Insurance FAQs

Still have some questions about car insurance? Not to worry; we've answered some of the most common car insurance questions below.

Why do I need car insurance?

In most states, you need car insurance because it's the law. You can be fined or ticketed without it. In any state, car insurance provides the peace of mind that bills (yours and others') will be covered if an accident occurs. That can keep you from worrying about major financial issues.

How much does car insurance cost?

According to the Insurance Information Institute, the average amount paid annually for a car insurance policy in the nation is $1,056.55 per year. That can vary widely depending on factors including the age and location of the person, driving record, type of coverage and the vehicle being covered.

If you're looking to save money on car insurance, consider:

  • Comparing different levels of coverage and deductibles
  • Assessing and removing coverage options you don’t need
  • Researching agency discounts, such as good driving discounts

Can I get car insurance online?

Yes, you can get car insurance online with many providers. Follow the steps below to apply for car insurance online:

  1. Complete an application with the insurance provider you chose. 
  2. Send in any documents required by the provider.
  3. Make your first premium payment to ensure the policy is in force.
  4. Download and print any insurance cards and other documents proving you have coverage.

The Bottom Line: Good Car Insurance Is Just Good Sense

Most states require car insurance and even in those that don't, it just makes good financial sense. It protects you against the potential of life-changing financial burdens if you're ever in an accident.

Car insurance provides financial breathing room – you’ll know the deductible amount you can expect to pay per accident. Want even more financial freedom and head space? Take another step toward financial stability and learn how to pay off your car early.

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Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.