call

How To Shop for Car Insurance

Whether you're buying car insurance for the first time or switching auto insurers, shopping around may help you find your desired coverage at the best price available. Online comparison tools, like SmartFinancial, make it easy to compare policies from hundreds of insurers.

Below, we break down the steps for shopping for car insurance — from gathering the necessary documents to signing on the dotted line.

How To Shop for Car Insurance in Six Steps

Buy your new car insurance policy by following these six simple steps:

  1. Compile the necessary documents and information

  2. Find out what your state's minimum coverage requirements are

  3. Determine what type(s) of coverage and how much of it you need

  4. Compare multiple policies

  5. Ask for discounts

  6. Buy your policy

Step One: Compile the Necessary Documents and Information

When requesting rates from auto insurance companies, you will need to provide certain information to get the most accurate quotes, including:

  • Zip code

  • How many people live in your household, including spouses/partners, children and roommates plus any other drivers that will be listed on the policy

  • Number of tickets you've received

  • Number of prior accidents

  • Car mileage

  • Vehicle year, make and model or vehicle identification number (found on the interior dash or driver side door jamb)

  • Car insurance history

  • Age

  • Sex

  • Driver's license number

  • Marital status

  • Occupation

  • Contact information

Note: Your insurance quote may require your credit score, which the insurer would then pull from your credit report. Credit pulls for insurance quote purposes are generally soft inquiries and should not negatively affect your credit score.

You will need to provide certain information to get the most accurate quotes.

Car insurance quotes may not always require the above information. If you're speaking with an insurance agent, however, you'll want to supply as much as possible so you can accurately compare rates.

Step Two: Learn Your State's Minimum Coverage Requirements

Most states will require drivers to carry a certain amount of liability insurance coverage. Uninsured/underinsured motorist (UM/UIM) and personal injury protection (PIP) coverage are not as commonly required but may be necessary in your state.

The minimum required coverage limits will vary by state and will generally fall within the following ranges:

  • Bodily injury liability coverage: $15,000 to $50,000 per person and $30,000 to $100,000 per accident

  • Property damage liability coverage: $5,000 to $2,500 per accident

  • Uninsured/underinsured bodily injury coverage: $20,000 to $50,000 per person and $40,000 to $100,000 per accident

  • Uninsured/underinsured property damage coverage: $5,000 to $25,000 per accident

  • Personal injury protection: $5,000 to $50,000 (only for states that offer no-fault insurance)

Step Three: Determine What and How Much Coverage You Need

Meeting your state's minimum car insurance requirements will enable you to legally drive but you may want to consider additional auto coverages based on your ability to pay for your car repairs and in case you cause a very expensive accident.

Coverage Type

Required by Law

Description

Bodily Injury Liability

Most states

Pays for the medical expenses (e.g., ambulance fees, hospital fees, x-rays) of other parties injured in an accident you are responsible for causing (you are the at-fault driver)

Property Damage Liability

Most states

Pays for the property damages (e.g., vehicle repair bills) of other parties injured in an accident you are responsible for causing (you are the at-fault driver)

Collision

No

Covers your property damages due to your vehicle coming in contact with another vehicle or object regardless of who was at fault

Personal Injury Protection

Some states

Covers your medical expenses, loss of income and death benefits related to a car accident, regardless of who caused it

Medical Payments

No

Pays for your medical expenses due to an auto-related accident, regardless of who caused the accident

Uninsured/Underinsured Motorist Bodily Injury

Some states

Pays for your medical expenses if the other driver was at-fault for an accident but did not have enough insurance or has insufficient coverage

Uninsured/Underinsured Motorist Property Damage

Some states

Covers your property damages if the other driver was at-fault for an accident but did not have enough insurance or has insufficient coverage

Comprehensive

No

Covers various non-collision losses, such as theft, fire and vandalism

You may want to consider auto coverages based on both your ability to pay for car repairs or a very expensive accident.

Step Four: Compare Multiple Policies

Comparing rates and coverages from multiple insurers is useful in narrowing down your options. Speaking with an insurance agent, you'll get the most accurate quote based on the answers you provide about your driving history, vehicle model and more. Some carriers offer quotes after you complete an online questionnaire.

When comparing quotes, be sure you're comparing apples and apples. Comparing a quote for full coverage to another quote for liability-only coverage would be an "apples-to-oranges" comparison.

Using an insurance marketplace, like SmartFinancial, can help consumers skip the tedious and time-consuming process of contacting car insurance companies individually. Instead, we offer the convenience of completing only one online questionnaire about your insurance needs to bring you several competing quotes. We do this after analyzing policies in your area to match you with policies with the coverage you desire and at the lowest price available.

Step Five: Ask About Discounts

Before committing to an auto insurance policy, ask the insurance company about their available discounts.

  • Multi-policy discount: Save money on premiums when you purchase more than one policy from the same insurance company (e.g., home and auto bundle).

  • Multi-car discount: Lower your premiums by registering multiple vehicles under a single policy.

  • Vehicle safety/anti-theft discounts: Installing or purchasing a vehicle with safety devices (e.g., anti-lock brakes, airbags, daytime running lights) may qualify you for a premium discount.

  • New car discount: Your insurer may discount your policy if your vehicle falls below an age threshold.

  • Good driver discount: Receive a premium discount if you've maintained a clean driving record for a certain period, such as no claims filed within three years.

  • Defensive driver discount:Save on car insurance if you complete a defensive driver course that teaches good driving behaviors, like maintaining a safe distance from the car in front of you.

  • Good student discount: Good grades can translate into lower auto insurance premiums if you maintain a certain GPA. You may need to provide a copy of your report card and a signature from your school's administrator.

  • Pay-in-full discount: Pay your policy in one upfront premium (instead of in regular payment intervals).

  • Early bird/renewal discount: Buying a new policy or renewing your existing policy before it expires can net you some savings.

  • Usage-based program discount: Some insurers offer a usage-based program, like Allstate Drivewise (anyone can sign up), which uses telematics technology to analyze your driving behaviors. If you exhibit good driving habits (e.g., avoiding abrupt braking and speeding), you can qualify for a discount.

Step Six: Buy Your Policy

After choosing a new insurance provider, it's time to sign and make it official. If you're switching car insurance carriers, you will want to buy the new policy before canceling the old one. Be sure to inform your new insurer when your old policy's term expires, to ensure your new policy's start date does not create a lapse in coverage. If there is an overlap in coverage between the two policies, your old insurer may offer a refund for unused premiums, if any — although a cancellation fee may apply.

Your car insurance premium may be charged on a monthly, quarterly, every six months or annual basis depending on your insurer. Some insurers offer a pay-in-full discount if you pay for your entire policy in a single lump-sum payment.

How Often Should I Shop for Car Insurance?

Shopping for car insurance annually before your existing policy's term expires is generally a good rule of thumb. With auto insurance rates constantly shifting, shopping around can help you maintain your desired coverage while securing the best price on the current market.

Certain life events can signal when it's time to shop car insurance quotes, as well. Moving to a new house in a different zip code with a lower crime rate, for example, may lower the cost of comprehensive coverage. If you start working from home, then a pay-per-mile policy with premiums that reflect your annual mileage may be worth considering.

Ready to Shop for Car Insurance?

Factors That Affect Your Car Insurance Rates

The coverages and limits you choose will directly affect your car insurance rates:

  • Type of coverage: A policy that covers just your state's minimum car insurance requirements will be cheaper than a full-coverage policy with collision and comprehensive protection.

  • Coverage limits: You can increase the dollar amount of how much your insurer will cover you but at an additional cost.

  • Deductible: Increasing your deductible — your out-of-pocket cost before your car insurance covers the bill — can lower your car insurance premium. Conversely, a lower deductible can result in a higher premium.

  • Application of discounts: Bundling, multi-car and other discounts can lower your car insurance premium.

Your vehicle and driving habits are factors in determining your auto insurance premium:

  • Vehicle year, make and model: Insurers will consider your vehicle's age and model when calculating your premiums.

  • Driving/accident history record: An extensive accident history — especially with you at fault — can result in higher premiums.

  • How much you drive: Drivers with a higher annual mileage tend to pay higher premiums than somebody with lower annual mileage.

If you’re switching car insurance carriers, you will want to buy the new policy before canceling the old one.

Your location and personal characteristics can affect how much you pay in car insurance:

  • Your zip code: Some coverages, like comprehensive, are more affected by zip code due to some areas having higher rates of theft, vandalism and other crime.

  • Age: Younger drivers are typically subjected to higher premiums due to their driving inexperience.

  • Gender: Men typically pay higher premiums, likely due to being more likely to drive more miles than women and engage in risky driving practices. Some states have banned the use of gender as a factor when calculating car insurance premiums.

  • Where you park your car: You may qualify for a lower premium if you park your vehicle safely in a closed garage versus outside on a street.

Risks of Lying on Your Car Insurance Application

Your auto policy will likely carry language that can deny coverage if you commit insurance fraud — this includes lying on your car insurance application. Surveys have shown that over 10 million Americans have lied on their car insurance application, with the most common lies including:

  • Reporting a more favorable accident history

  • Providing an inaccurate address (location can affect car insurance rates)

  • Not reporting all drivers on a policy

  • Omitting information about traffic citations

  • Lying about a vehicle's parking location (saying you park in a garage when you really park on a public street)

Lying on a car insurance application is typically done to lower a car insurance rate. However, it can have the opposite effect because you're considered a higher risk. If you file a car insurance claim and your insurer discovers you lied on your application, they can deny you coverage and completely cancel your policy.

Tips To Keep Your Car Insurance Rates Cheap

There are multiple ways to lower your car insurance premium, including driving safely, increasing your deductible and improving your credit score.

Maintain Safe Driving Behaviors

A clear or minimal accident history is  the best way to keep your auto insurance rates as low as possible. Enrolling in a telematics program, like Allstate Drivewise or Nationwide SmartRide, can qualify you for a discount if you're a safe driver. These programs use technology to analyze your driving habits, including how hard you brake, how often you speed and if you drive at night.

Increase Your Deductible

Increasing your car insurance deductible can lower your car insurance premiums. Your deductible is how much you need to pay out-of-pocket before your insurance company covers the difference. For example, if your car repair bill is $1,200 and your deductible is $500, you will pay the deductible and your car insurer will cover the $700 difference.

We recommend increasing your deductible only if you're a safe driver with a minimal accident history and an emergency fund. Otherwise, multiple accidents with a high deductible can easily drain the wallet.

Explore Car Insurance Discounts

Auto insurers offer a wide array of discounts to incentivize consumers to or renew their auto insurance policy or switch insurance carriers. From bundling and safe driver discounts to being a good student, you should generally find at least one discount you can qualify for (see our list of discounts above).

Before committing to an auto insurance policy, ask the insurance company about their available discounts.

Try a Pay-Per-Mile Policy

If you're a low-mileage driver (typically 10,000 miles or fewer), then pay-per-mile car insurance can be an affordable alternative to traditional car insurance. Pay-per-mile policies charge you based on how many miles you drive — the less you drive, the more you save. National car insurers, like Nationwide, Allstate and Liberty Mutual, offer pay-per-mile policies.

Improve Your Credit Score

Credit-based insurer scores are sometimes used as one factor among many when calculating your car insurance premium. Since your insurance score is based on your credit report, adopting favorable financial habits, like paying your credit card bill on time and reducing your total debt, can improve your insurance score over time. This may contribute to lower premiums over time.

Not all insurers will consider credit-based scores during the underwriting process.

FAQs

What is a car insurance quote?

A car insurance quote is an estimate for the cost of a car insurance policy an insurance company provides an inquiring customer. The estimate is based on various factors, including driving history, vehicle details and zip code. The final cost of the car insurance policy may be different from the initial quote after the insurance underwriting process is completed.

Can you shop around for auto insurance?

Yes, insurance rates shift regularly over time and shopping around annually helps drivers update or maintain their coverage at the best price available. Some insurance companies offer an early bird discount when you buy a new policy or renew an existing policy before your current car insurance term expires.

What is the cheapest way to shop for car insurance?

Outside of calling insurers one by one for an auto insurance quote, using an online shopping comparison tool, like SmartFinancial, can help you save time and money. SmartFinancial analyzes over 100 insurance carriers in your area to match you with an auto policy based on your needs and budget — completely free.

What should I look for when shopping for insurance?

Price and customer service are good metrics for evaluating an insurance company. Be sure to ask about available discounts to snag the lowest auto insurance premium possible. Using third-party rating services, like J.D. Power and the National Association of Insurance Commissioners (NAIC) index), can offer insight into customer satisfaction by the insurer.

Does shopping for car insurance hurt your credit?

When providing you with an insurance quote, insurers may pull your credit score but it is typically only a "soft pull," which should not affect your credit score. Soft inquiries will remain on your credit report until they fall over time but should not adversely affect your credit score like a series of credit "hard pulls" would.

Shopping for Car Insurance Made Easy

Why take hours to collect auto insurance quotes from multiple insurers when you can get them in minutes? SmartFinancial's online comparison tools are easy to use and completely free. Enter your zip code below and answer a few questions about your coverage needs. In minutes you'll get competing auto insurance quotes.

Get a Free Auto Insurance Quote Online Now.