How to Buy Car Insurance: A Step-by-Step Guide

What you need to do before you call an insurance company

Before you contact any insurance company, gather three pieces of information: your driver's license, the vehicle identification number (VIN) from your car's dashboard or registration, and a list of any accidents or traffic violations from the past three to five years. Insurance companies will ask for all three, and having them ready speeds up the process. You'll also need to decide what type of coverage you want — this is the biggest choice you'll make, and it depends on whether your car is financed, whether you're required by state law to carry certain coverage, and how much risk you're willing to accept.

If your car is financed through a loan or lease, your lender will require you to carry comprehensive and collision coverage, which pays for damage to your own vehicle. If you own the car outright, you can legally choose to carry only liability coverage in most states — this covers damage you cause to someone else's car or property. However, many people choose to add comprehensive and collision anyway to protect their own investment. Your state also sets a minimum liability limit you must carry; these vary widely, so check your state's Department of Motor Vehicles website or call your state insurance commissioner's office to learn what your state requires.

Key Takeaways

• Gather your driver's license, vehicle identification number, and driving history before contacting insurers, because all three are required to get a quote.
• Liability coverage is required by law in most states and covers damage you cause to others; comprehensive and collision cover damage to your own car and are usually required if you have a loan.
• You can get quotes from multiple companies in one afternoon by calling directly, using online quote tools, or working with an independent agent who represents several insurers.
• The price you pay depends on your age, driving record, the car you drive, the coverage limits you choose, and your deductible — the amount you pay out of pocket before insurance kicks in.
• Once you choose a company and coverage, you'll receive a policy document that lists your coverage types, limits, deductible, and the date your coverage begins.

Understanding the coverage types you'll choose between

Liability coverage pays for injuries or property damage you cause in an accident. It has two parts: bodily injury liability (covers medical bills and lost wages for people you injure) and property damage liability (covers damage to someone else's vehicle or property). Your state sets a minimum for each; a common minimum is $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage. Many people choose higher limits — $100,000 per person and $300,000 per accident — because a serious accident can cost far more than the minimum.

Comprehensive coverage pays for damage to your car from events other than collisions: theft, weather, vandalism, hitting an animal, or falling objects. Collision coverage pays for damage from hitting another car or object, or rolling over. Both come with a deductible — typically $250, $500, or $1,000 — which is what you pay out of pocket when you file a claim. Choosing a higher deductible lowers your monthly premium but means you pay more if you have an accident.

Uninsured and underinsured motorist coverage protects you if you're hit by a driver who has no insurance or insufficient insurance to cover your damages. This coverage is required in some states and optional in others, but many people choose to carry it because it covers your medical bills and vehicle damage when the other driver is at fault but can't pay.

How to get quotes from multiple companies

You have three main routes to get quotes: call insurance companies directly, use their online quote tools, or work with an independent insurance agent. Calling directly takes 15 to 20 minutes per company and lets you ask questions as you go. Online quote tools are faster — usually 10 minutes — but you answer questions without guidance. Independent agents represent multiple insurance companies and can show you quotes from several at once, which saves time if you want to compare many options.

Start with companies you've heard of or that advertise heavily in your area — they typically have the most competitive rates because they spend heavily on marketing. Then add one or two smaller regional insurers if you live outside a major city, because they sometimes offer lower rates in specific areas. Get at least three quotes so you can see how prices vary. The same coverage will cost different amounts from different companies because each uses different factors to calculate risk.

When you get a quote, the company will give you a number that's usually valid for 30 to 60 days. Write down the coverage limits, deductible, and any discounts included in that quote so you can compare apples to apples. A quote that looks cheaper might include a higher deductible or lower coverage limits, which means you'd pay more out of pocket in an accident.

What factors change your price

Insurance companies use several factors to set your rate. Your age is one of the biggest — drivers under 25 and over 65 typically pay more because they're statistically more likely to have accidents. Your driving record matters heavily: accidents and traffic violations stay on your record for three to five years and raise your rate each year they're on it. The car you drive affects price too — expensive cars cost more to repair, and cars with high theft rates or poor safety ratings cost more to insure.

Your coverage choices directly affect price: higher liability limits cost more, and a lower deductible costs more because the insurance company pays more when you file a claim. Where you live also matters — urban areas typically have higher rates than rural areas because there are more accidents and more theft. Some companies offer discounts for bundling home and auto insurance, for taking a defensive driving course, for having safety features in your car, or for paying your premium in full upfront rather than monthly.

How to choose a company and finalize your purchase

After you've compared quotes, choose the company that offers the coverage you want at a price you can afford. Before you buy, read the company's customer service ratings on the National Association of Insurance Commissioners (NAIC) website or on independent review sites — this tells you how quickly they respond to claims and how often customers file complaints. A slightly higher premium from a company with strong ratings may be worth it if you need to file a claim.

When you're ready to buy, you'll provide payment information and choose your coverage limits and deductible. The company will issue a policy document — either by email or mail — that lists your coverage types, the limits for each, your deductible, your premium amount, and the date your coverage begins. Most companies require coverage to start the same day you buy it, so don't cancel your old policy until your new one is active. If you're financing a car, the lender will want proof of insurance before they release the loan funds.

After you buy, you'll receive a policy card to carry in your car and a full policy document to keep at home. The policy card shows your policy number, coverage limits, and the company's phone number — you'll need this if you're in an accident. Review your policy document within the first week to make sure all the information is correct and matches what you were quoted.

What happens if you need to make changes

Life changes — you move, buy a different car, get married, or your driving record improves. Most insurance companies let you update your policy online or by phone, and the change takes effect when ready or on a date you choose. If a change lowers your rate, the company will usually refund the difference for the remainder of your policy term. If a change raises your rate, you'll pay the difference on your next premium payment or in a lump sum, depending on the company's policy.

You can also shop for new insurance at any time, even if your current policy isn't up for renewal. Many people shop every year or two because rates change and new companies enter the market. If you find a better rate elsewhere, you can switch — just make sure your new policy is active before you cancel the old one so you're never without coverage.

Frequently Asked Questions

Do I have to buy insurance before I drive a car off the lot?

Yes, in most states you must have active insurance before you drive. If you're buying from a dealership, you can often buy a temporary policy by phone or online before you leave the lot. If you're buying from a private seller, buy your policy before you take possession of the car. Driving without insurance is illegal and can result in fines, license suspension, and liability for any damage you cause.

What's the difference between a deductible and a premium?

Your premium is the amount you pay each month or year for insurance. Your deductible is the amount you pay out of pocket when you file a claim — for example, if you have a $500 deductible and your car is damaged in an accident, you pay $500 and insurance pays the rest. Choosing a higher deductible lowers your monthly premium because the insurance company pays less per claim.

Can I buy insurance for just one month?

Most insurance companies require a minimum policy term of six months, though some offer three-month policies. If you need coverage for a shorter time — for example, you're borrowing a car for a week — ask about short-term or temporary policies. Some companies offer these, though they're less common and may cost more per day than a standard policy.

What if I have a very bad driving record?

You can still buy insurance, but you'll pay more. Some standard insurance companies won't insure drivers with multiple accidents or violations, so you may need to use a high-risk or non-standard insurer. These companies specialize in drivers with poor records and charge higher premiums, but they're required by law to offer coverage. An independent agent can help you find companies that will insure you.

Do I need to tell my insurance company if I'm not driving my car for a while?

Yes, if you're not driving your car for an extended period — for example, you're storing it for the winter — tell your insurance company. Many offer lower rates for cars that aren't being driven regularly. You still need to maintain some coverage to protect against theft or weather damage, but you can reduce your liability and collision coverage while the car is parked.