How to Buy Car Insurance (Complete Guide)

Before you buy car insurance, make sure to (1) read customer reviews, (2) check your states minimum requirements, and (3) compare quotes online to reduce your rates.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/ciccom-live/41b5e36b-joel-ohman.jpg

UPDATED: May 11, 2020

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It’s that time where you’re looking to get insurance for your vehicle. Whether it’s a new car, used car, or whatever the situation may be, it’s time to get your car insured. We’ve put together this comprehensive guide to help you figure out how to buy car insurance.

So sit tight, buckle in, and let’s get this show on the road.

Are you ready to start your car insurance journey? Use our FREE online tool to start comparing today, all you need is your ZIP code.

Knowing Your Car Insurance Needs

To start us off on this guide, we’ll discuss some of the things you’ll to know and have at the ready when you start getting your quotes. It’ll help better prepare you for some of the options you’ll be presented with when getting your quote!

So keep reading to find out more.

What does your state require?

Most states across the nation require drivers to have something known as the minimum liability coverage. What is the minimum liability coverage?

The minimum liability coverage is the minimum amount of insurance coverage that helps cover the costs of an accident (both injuries and property damage).

This minimum liability coverage is vital as in most states, if you don’t have this, you won’t be able to drive in the state legally.

Not only that but in a lot of states require minimum liability coverage for a very specific reason, that they are no-fault states! What is a no-fault state, and why should that matter to you?

Well, according to the Insurance Information Institute (III), no-fault is a state where any costs that you incur from an accident you are involved with, will have to come from your own insurance provider.

So if you don’t have the proper insurance coverage, you could be paying out of pocket for any costs you have. If you want to know about your state’s particular minimum requirements, make sure to check out our comprehensive state guides.

What kind of coverage best fits your needs?

So you’ve looked at one of our comprehensive state guides, and have a pretty good idea as to what your state requires for car insurance. You’ve taken note of what your states minimum liability coverage is, and now you want to know what other coverage will best fit your needs.

Luckily for you, you’ll have a good number of options available to you, so we’ll just give you a general idea as to some of the other kinds of coverage you can look into.

The following coverage options are valuable options you can add to your insurance policy:

In addition to these extremely valuable coverage options, you also have a few add on’s that you can choose from:

So make sure you review all of the options you have available to you, and which coverage options you want to add to your plan.

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How do you want to buy your car insurance?

Did you know there are a few different ways that you can get your car insurance? That’s right, you can actually use several different methods to obtain car insurance.

In this section, we’ll cover how you will want to buy car insurance direct and buying your car insurance online.

Buying Direct Car Insurance

The more direct way to purchase your car insurance is direct. You have a few options on how to do this, through a captive agent, an independent broker, and specialty agencies. All of which we will explain.

Getting your coverage through a captive agent used to be the method most used back before the internet was a thing.

A captive agent is an individual who works exclusively for an insurance provider, and is the person who you will go to in order to purchase your car insurance policy.

A lot of the larger insurance companies (such as Geico or Progressive) have these kinds of agents in every state. Using a captive agent is extremely beneficial for those of you who would like that in-person assistance in going through the options you have available.

The downside for this is if you aren’t certain of which insurance provider you want to go with. You will need to know which provider you want to go with before you speak with a captive agent.

In contrast to this, an independent broker doesn’t work for one particular provider. They work with a number of different providers who participate, such as Travelers and American Family. The benefit of working with an independent broker is that they are able to help explain the different provider offerings and, like with a captive agent, can guide you through the process.

The downside with working with an independent broker is they may not be authorized to sell all types of policies from a particular insurer, and they aren’t necessarily looking out for which provider will cost you less.

Going through a specialty agency is typically only going to be for those of you out there with less-than-stellar driving records with any recent accidents, DUI’s, tickets or if you’ve had any lapses in coverage. Obviously, the biggest benefit for working with a specialty agency is that they tend to work more with those at higher risk levels, and will, therefore, be able to get you a policy (since most states require you at least have the minimum liability coverage).

So if you want to go buy direct, keep in mind that you have these three options you can choose from.

Buying Car Insurance Online

Buying your car insurance online is probably the most common and most popular method these days. It’s easy, convenient, and quick. So it’s not hard to see why it’s as popular as it is.

We thought it might be helpful in this section to discuss some of the positive things versus some of the more negative things about buying online.

So we’ll start with some of the reasons why buying online is good:

  1. Quick and Convenient: You could sit down at your computer and have all of your insurance needs taken care of with the click of a button.
  2. Instant Access: Instead of having to trifle through a bunch of documents, with the click of a bunch, you can easily pull up any of your policy documentation.
  3. Anytime, Anywhere: Unlike dealing with an in-person agency, you won’t have to worry about purchasing your car insurance during normal business hours.
  4. Online FAQs: A lot of the questions you might have about purchasing online can be found on the company’s website FAQ page.

Now let’s talk about some of the reasons why you might not want to buy online:

  1. No Assistance: Unlike with going into an insurance agency, going online means you will have minimal help trying to figure out what all you will need for your insurance policy.
  2. Knowing the Basics: In order to purchase online, you will need to know about some of the basics of car insurance, and what you are required/would like to have on your policy.
  3. Filing Claims Alone: A lot of providers have customers file their claims online now, so if you don’t have a lot of technical/computer skills, filing a claim may be difficult for you.

So if you’re looking to shop online, take these pros and cons into consideration before you get started.

Getting Car Insurance Quotes

Onto the next step, getting your car insurance quotes! In this section, we’ll give you some of the basic information you’ll want to have on you when getting your car insurance quotes.

Basics of Getting a Car Insurance Quote

The first thing you’ll want to have when getting a car insurance quote is all of the information you’ll typically need to complete a quote.

Check out the infographic below to see what some of this information will be.

Info to have for Quote

Let’s break down this information you’ll need for your quote:

  1. Driver’s License and Personal Information for any Drivers on the Policy: This will be pretty standard, as it’s just the information the provider would need to personalize their quote for you based on factors such as your age, location, and more.
  2. Vehicle Identification Number (VIN): Depending on what type of vehicle you have, the location of where this VIN can be found can vary, but more often than not, you can find it in your vehicle’s registration information
  3. Vehicle Mileage: Providers want to know how many miles you are starting out at, so if they do charge for commute distance, they can know about what your average commute is
  4. Date of Purchase: How old is your car? Do you own your vehicle, or are you leasing it? If you’ve purchased your car outright, did you pay in full or are you making payments?
  5. Driving History: What kind of driver are you? Are you a ‘high-risk’ driver, or are you more of a safe driver?
  6. Insurance Record: Have you previously had insurance coverage? From who? What coverage options did you select then?

Keep in mind that these are just the typical things you’ll need to have to get a car insurance quote. The information you need may vary depending on the car insurance provider you are obtaining your quote from.

Choosing the Right Car Insurance Company

You’ve gotten back all of the insurance quotes, now it’s decision time. Which insurance company should you go with?

Compare Car Insurance Rates

The best piece of advice that we can give to you during this process is to make sure that you compare your car insurance quotes. And not just on their base rates.

There are several different factors you should take into consideration, rate-wise, that can affect which company you will want to go with, such as rates based on the company itself, your coverage level, credit history, driving history, and commute.

If you make any comparison of car insurance rates, you’re more than likely making just the base company rate comparison, which is still important to do.

If we were to use Texas as an example, you can see some of the company rates listed below.

CompanyAverageCompared to
State Average
Percentage Compared
to State Average
Allstate$5,485.32$1,556.9828.38%
The Gen Automobile
Ins Co
$4,849.18$920.8418.99%
GEICO$3,263.39-$664.95-20.38%
Nationwide$3,867.57-$60.77-1.57%
Progressive$4,664.85$736.5115.79%
State Farm$2,879.95-$1,048.39-36.40%
USAA$2,488.12-$1,440.22-57.88%
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As you can see above, just the base rate between all of these different companies in Texas can be very different.

Geico’s insurance rates are approximately 20.38 percent less than the state’s average, while Allstate’s insurance rates are 28.38 percent more!

For your coverage level, you have to be very careful, as you could actually be paying more for less coverage!

Take California, for instance below.

GroupHighMediumLow
Allstate$4,739.46$4,572.72$4,287.09
Farmers$5,307.39$5,038.58$4,651.83
GEICO$3,127.30$2,918.49$2,612.92
Liberty Mutual$3,219.54$3,061.95$2,824.01
Nationwide$5,046.66$4,734.55$4,179.52
Progressive$3,061.73$2,936.65$2,555.04
State Farm$4,541.30$4,273.41$3,793.44
Travelers$3,687.46$3,440.36$2,924.52
USAA$2,892.32$2,746.50$2,445.05
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As you can see, you’d be paying $4,287.09 for a low coverage plan with Allstate in California, while you’d only be paying $3,687.46 for a high coverage plan with Travelers.

Your credit history and driving history both play a factor in what your rate will be, as the better your credit history and driving history are, the less you’ll tend to pay. And vice versa, the worse your credit/driving history is, the more you’ll tend to pay.

In Florida, you could see the following rates for your driving record:

GroupWith 1 DUIWith 1 accidentWith 1 speeding violationClean record
Allstate$8,524.13$7,700.66$7,119.64$6,417.39
GEICO$5,012.72$3,368.94$4,116.12$2,636.72
Liberty Mutual$7,291.64$5,026.31$5,285.32$3,869.33
Nationwide$5,472.37$4,065.71$4,114.99$3,705.32
Progressive$5,490.35$6,519.19$5,915.72$4,407.95
State Farm$3,397.66$3,690.25$3,397.66$3,105.11
USAA$4,070.81$2,755.24$2,341.64$2,233.94
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And you’ll see the following rates in Florida for your credit history:

GroupPoorFairGood
Allstate$10,432.38$6,574.17$5,314.82
GEICO$5,509.78$3,335.60$2,505.51
Liberty Mutual$6,921.08$5,073.66$4,109.70
Nationwide$5,441.06$3,981.62$3,596.12
Progressive$7,278.07$5,169.65$4,302.18
State Farm$4,651.82$3,045.80$2,495.39
USAA$4,639.45$2,266.46$1,645.31
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As you can see from the two tables above, your driving record and credit history can definitely sneak up your insurance rates.

A poor credit history with Allstate alone would cost you $10,432.38 in Florida!

The final sneaky component you might not even think about is your commute. That’s right! Some insurance providers will charge you if you have a longer commute.

If you are a New York citizen, you can expect to see some of the following commute rates:

Group25 miles commute /
12000 annual mileage
10 miles commute /
6000 annual mileage
Allstate$4,806.77$4,675.15
GEICO$2,498.03$2,358.45
Liberty Mutual$6,726.83$6,354.63
Nationwide$4,012.93$4,012.93
Progressive$3,771.15$3,771.15
State Farm$4,646.86$4,578.79
Travelers$4,578.79$3,771.15
USAA$3,799.64$3,723.73
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You can see that while a few car insurance companies charge the same rate regardless of commute in New York, such as Nationwide, a few still do.

If you take anything away from this section, we hope that you take away just how important it is for you to compare insurance rates! The last thing anyone wants is to pay for more when they could actually be getting the exact same coverage somewhere else for less.

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Car Insurance Company Ratings

Besides finding out what kinds of rates you can expect from different companies, you should also check to see how each company is rated. Are they more trustworthy when they need to pay out claims after an accident? Do they have good financial health? What do other customers think about the company? All are questions you should be thinking about when selecting the perfect provider for you.

But how do you get this kind of information, you may be wondering? Well, there a couple of ways that you can get some of this kind of information.

First, if you would like to see what kind of customer satisfaction different companies have, you can check out a study conducted by J.D. Power. They collected customer satisfaction ratings in the different regions across the nation and ranked the highest-ranked companies for those regions for customer satisfaction.

So depending on what region you live in, there are particular companies that stand out the most for customer satisfaction, as seen below:

  • California: Esurance
  • Central: Shelter
  • Florida: Allstate
  • Mid-Atlantic: Erie Insurance
  • New England: Amica Mutual
  • New York: New York Central Mutual
  • North Central: Westfield
  • Northwest: PEMCO Insurance
  • Southeast: Farm Bureau Insurance—Tennessee
  • Southwest: The Hartford
  • Texas: Texas Farm Bureau

As you can see, each region has a completely different company that was highest ranked in that area. That could be due to a number of circumstances, such as the availability of different providers in that region.

Now on the flip side of this, you might want to know which companies you should just flat out avoid, right? The ones who have the highest complaint index.

This information can be a little harder to find, as it depends on what kind of data your state has collected for each provider. But the easiest way to find what the customer complaint index is for your state is by checking out your state’s Insurance Department website.

The final insurance provider rating we’ll discuss in this section is for their financial health. A pretty big and important one, right? Customer satisfaction can be subjective, but knowing what your provider’s financial health is like can help you determine whether they will be able to provide you coverage should you ever need it.

So how exactly can you find this information? Well, there’s an organization known as the A.M. Best Rating that does all of the hard work for you. How does it work? They basically rate all of the different insurance providers on a number of financial factors and give them a grade on their financial health.

It’s kind of like school. The higher the grade is, the more financially responsible that the company has been deemed. The lower the grade, the less financially responsible they are.

If you want a more in-depth explanation for this, check out the video below.

Big Companies vs. Small Companies

There are so many different insurance providers available in the nation that it can seem pretty overwhelming, right? Well, here’s something you might not have known. Insurance companies are divided into two classes, foreign providers and domestic providers.

What’s the difference between them, and how would it affect you? Glad you asked.

A domestic provider is a provider that is local to the state in which they provide insurance coverage, and can only provide insurance coverage for that state. Think of these providers as the smaller insurance companies.

A foreign provider is a provider that is located in many different states and can provide coverage for many states. These are the big insurance providers, so think providers such as Allstate and Progressive.

So how many are going to be available to you in your state? Well, check out the table below to see the number of licensed domestic and foreign providers in your state:

StateDomestic ProvidersForeign Providers
Alabama18858
Alaska4397
American Samoa516
Arizona40943
Arkansas12887
California99671
Colorado10848
Connecticut67729
Delaware101766
Dist. of Columbia6790
Florida114953
Georgia23988
Guam658
Hawaii17608
Idaho10822
Illinois191860
Indiana64958
Iowa73860
Kansas25898
Kentucky7900
Louisiana34819
Maine9696
Maryland32860
Massachusetts48697
Michigan65786
Minnesota39816
Mississippi15907
Missouri43900
Montana14822
N. Mariana Islands1033
Nebraska34867
Nevada9873
New Hampshire50647
New Jersey66778
New Mexico15837
New York173709
North Carolina56855
North Dakota12786
Ohio138851
Oklahoma31873
Oregon18848
Pennsylvania166929
Puerto Rico21137
Rhode Island22727
South Carolina19993
South Dakota16834
Tennessee15930
Texas199937
U.S. Virgin Islands659
Utah9878
Vermont12671
Virginia19908
Washington7854
West Virginia19793
Wisconsin174813
Wyoming2693
Total250942226
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As you can see, there are a lot of insurance providers available in each state.

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Tips on How to Save on Your Car Insurance Rates

Now, we’re down to the final section! Now that you’ve gotten all of your insurance quotes, you’ve done your research on the companies you are considering, and have made your final decision. So how can you now save some extra cash on your car insurance rates?

Well, we’ve got just a few tips to help you save.

First, start out by reading our previous section on comparing insurance rates for factors such as driving record, credit history, commute, and coverage level. This alone can help save you some major cash! Providers charge differently based on their own factors, so if you’re not careful, you could be paying extra for the same coverage that another company offers for a fraction of the price.

Discounts, discounts, discounts. Find out what car insurance discounts your provider offers, and see which ones you can apply for. The perfect thing about this is that you can add as many discounts as you qualify for. If you need help navigating what discounts you may qualify for, check out our comprehensive guide on car insurance discounts.

If you have the ability to bundle your car insurance with any other type of insurance you need with the same company, it might be wise to do so! Bundling gives you a really nice discount, but a lot of providers also will adjust your insurance rates to accommodate both insurance coverage options.

You’ve made it to the end! We hope that this guide was able to help you figure out how to buy the car insurance that you need.

Don’t forget that if you are still in the market for comparing car insurance rates, check out our FREE online tool.

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