Tips for first-time car insurance buyers

Christel Deskins

If you’re a first time car insurance buyer, it can all seem a bit confusing. There are multiple types of insurance to consider, for example, and many factors that go into getting the best quotes. © Dhwee/Getty Images Dog sticking his head out the window while the car he is […]

If you’re a first time car insurance buyer, it can all seem a bit confusing. There are multiple types of insurance to consider, for example, and many factors that go into getting the best quotes.

a dog sticking its head out the window of a car: Dog sticking his head out the window while the car he is riding in is in traffic.

© Dhwee/Getty Images
Dog sticking his head out the window while the car he is riding in is in traffic.

But it can also be an exciting time. It’s your chance to find a great policy that perfectly fits your unique circumstances. By doing your homework and learning everything you can about insurance, you’ll find the best auto insurance for first time buyers.


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If you’re not sure where to turn for help, read on. Here are some of the top car insurance tips that a first time insurance buyer can use to save money and gain peace of mind.

Know your state’s minimum car insurance requirements.

Most states mandate that drivers carry bodily injury and property damage liability insurance at a bare minimum. Every state has different required liability limits, so make sure you read up on them.

The minimum coverage required by your state, however, may not be enough to provide you adequate financial protection. For instance, you could still be on the hook for large sums of money if you cause an accident and you don’t have collision insurance to cover the repairs to your own car. A bare-bones policy might also not provide enough coverage to replace a new car that’s been totaled or pay for severe injuries suffered by other drivers and passengers injured in a crash.

Decide how much coverage you need

The amount of coverage you’ll need will vary based on your age, where you live, vehicle type, miles driven credit score, and more.

In addition to liability coverage, auto insurance policies also offer a variety of different coverage options as add-ons to the base coverage.

  • Personal injury protection (PIP) covers you (and you passengers) if you sustain injuries in an auto accident. This can potentially cover funeral expenses and lost wages. It’s different from your bodily injury coverage, which pays for costs of those in the other car following an accident.
  • Uninsured motorist coverage covers you for damages caused by an uninsured or underinsured motorists. This also covers you in the case of hit-and-run accidents. Some states require uninsured motorist coverage.
  • Collision insurance covers you for damages to your car, truck or SUV sustained in a collision with another vehicle.
  • Comprehensive insurance covers your car for all damages that are not related to a collision with another vehicle, such as hitting an animal, fire, theft, vandalism and falling objects.

Some insurers offer other optional coverages, such as rental car insurance or gap coverage, which can help you pay off your car loan if your car is totaled. Each insurance company has different offerings, so you’ll have to check and see what’s available with the insurer you choose.

If you have a sizeable auto loan, you’ll likely be required to purchase enough collision and comprehensive insurance to cover the amount of the loan should you get into an accident.

Shop around for the best fit

First time auto insurance buyers might think that all insurers will offer roughly the same coverage and premiums, but that’s not the case. It’s important to shop around for the best and most affordable car insurance policy for your unique circumstances.

It’s possible to find the best cheap auto insurance, but it can take some time. Quotes can differ quite a bit from company to company.

Also make sure to look into factors such as the financial stability of the insurance company, the quality of their customer service, and whether they have an up-to-date insurance license with the state in which you live.

Learn how to get discounts on your premiums

The underwriter of your policy considers multiple elements when determining your premium rate.

“Many first time car insurance buyers don’t realize how many factors affect the base rate you get quoted,” says insurance expert Laura Adams. “Your age, gender, marital status, address and credit are some of the data points that play a role, in addition to your driving record, annual mileage and the make and model of your vehicle.”

But if there are many factors involved, there are also many ways to save money on your premiums. According to Adams, “First-time car insurance buyers may not understand how much money they could save on premiums by qualifying for various discounts. What’s available depends on the insurance carrier, so it’s critical to ask for discounts and work to qualify for more of them.”

In the end, Adams says, “The best auto insurance tips are to shop several carriers, and be proactive about asking about potential ways to save money on your insurance.”

Raise your deductible

If you’re willing to take on a bit more risk and pay more out-of-pocket in the event of an accident or damage to your car, you can save big on your premiums. According to the Insurance Information Institute, raising your collision and comprehensive coverage deductible from $200 to $1,000 could reduce your costs by 40 percent or more.

Drop some coverage

If you have an older vehicle or a used car that’s not worth much money, it might not make sense to carry an expensive insurance policy. As a rule of thumb, it’s not worth having collision or comprehensive coverage on a car that’s worth less than 10 times the insurance premiums.

Equip your car with extra safety features

Everyone loses if your car gets stolen, including your insurance company. So, if you install anti-theft devices, such as steering-wheel locks, tire locks and electronic tracking systems, your insurer is likely to offer you a discount. These devices cost money upfront but can quickly pay for themselves.

Drive safely

Auto insurers reward you with lower premiums when you prove that you can drive safely. Some companies offer discounts if you enroll in a defensive driving class. The longer you go without getting into an accident and filing a claim, the larger the discount you can get.

Drive less

If you are retired or work from home, you may be eligible for a low-mileage discount. Usually the mileage you have to stay below is 7,000 miles per year. If you can start car pooling, biking, walking or taking public transportation to work, you might be able to lower your premiums.

Pay in yearly installments

Some insurers offer a discount if you pay for an entire year of coverage all at once, rather than paying monthly.

Also, there might be late fees if you get behind on your monthly payments. You can avoid that risk if you pay in a lump sum.

Use paperless billing and auto pay

Paper billing requires the purchase of physical products and postage, and chasing down payments ties up insurance company resources. So, it’s no surprise that some insurers offer discounts if you reduce the amount of paperwork they have to deal with and streamline your payments.

Improve your credit

Car insurance companies use credit as a factor in determining your premiums, so you can lower your costs if you boost your credit score. You can improve your credit if you stay on top of your debt payments, understand how your credit utilization affects your score, be smart with credit cards you apply for, and monitor your credit report for fraud.

Get good grades

“Student drivers who make good grades qualify for discounts,” Adams says. “But many families and drivers in high school, college and graduate school may not be aware of the potential savings.” Usually if you maintain a GPA of 3.0 or above you will get a significant discount.

Bundle your policy

“Bundling policies, such as your auto and home or renters insurance, is another excellent discount that first-time insurance buyers should consider,” according to Adams. Many companies offer a discount if you have multiple insurance policies under the same plan. If you already have home insurance, it could make sense to get a car insurance policy with the same company.

Frequently Asked Questions

What insurance company has the cheapest rates?

There is no one company that always has the best insurance for first time car buyers, since your rates will vary from company to company, and you’ll want to get several quotes. A good place to start your search for inexpensive auto insurance is with our Cheap Car Insurance Companies of 2020 report.

What types of car insurance do I need?

You’ll need to have at least the minimum liability coverage mandated by your state. If you can afford it, we suggest you buy more liability, though, to protect you fully in the event of an expensive accident. If your car is newer or you owe money on it, you’ll also want to consider collision and comprehensive coverage as well.

What other factors should I consider when I’m shopping for car insurance?

Customer service is one. There are several organizations that rate customer service, including J.D. Powers, Consumer Reports and the Better Business Bureau. You’ll also want to consider the financial stability of your insurer, which is monitored by companies such as Moody’s and Standard and Poor – many insurers include these ratings on their websites.

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