Buying car insurance for the first time? Shopping for an auto insurance policy can be an overwhelming experience for first time car insurance buyers, but it doesn’t have to be.
To take the hassle out of your hussle, we’ve compiled a few top tips for first time car insurance buyers, to make it easier for you to navigate this strange new world.
The importance of car insurance
Auto insurance is a legal requirement in most states, with vehicle owners required to have, at least, the bare minimum level of liability insurance.
According to the National Highway Traffic Safety Administration, over 6 million car crashes are reported to the police each and every year. Car insurance is what will protect you against any financial loss should you get into such an accident.
Auto insurance is really quite simple - you pay a premium to your chosen auto insurance company and they in turn agree to compensate you and pay your losses as laid out in your insurance policy.
You’ll be given an insurance card by your provider with all of the details about your premium listed on the card. This card should stay in your vehicle throughout the duration of your cover because it will provide proof of insurance in the event of a collision.
According to the Insurance Information Institute, most policies in the US last for between 6-12 months, so it’s definitely not something you want to take lightly.
Let these top tips help your car insurance purchase run smoothly.
Like any insurance policy, when buying car insurance for the first time, it pays to shop around. Everyone will tell you theirs is the best quote, but the only way to be certain of that is to compare it with another company’s.
Not only will you save money when you shop around, you’ll also be able to see what other extras you can get on top of your insurance - some brokers will throw in added bonuses to sweeten the deal for you, such as roadside assistance or a discount on other insurance purchases.
You’ll have to enter your personal information when you’re getting quotes so be prepared to give a little data away when you’re on the hunt for first time car insurance, but it’ll be worth it when you save $$$. But if you’re dead against this, always read the small print to see how each company will use your information.
And don’t worry about getting multiple quotes. Yes, each car insurance provider will need to run a credit check on you, but it’s only a soft check, so it won’t damage your hard earned credit score.
Remember insurance premium depends on personal factors
According to the National Association of Insurance Commissioners, the insurance policy you take out will depend on multiple personal factors such as: your age, your driving record, your marital status, your credit score, where you live, whether you’re a homeowner or you rent, your gender, any other named drivers and their information, the type of car you own and where you keep it, and finally the limits and deductibles you choose for your coverage.
Insurance providers will increase or decrease your premium rate based on weighing up these factors and determining how much of a risk you pose.
Top tips to reduce the cost of your premium:
- Be a safe driver. If you’ve had slip ups in the past, ask if you can take a defensive driver course to help reduce your rate.
- Choose to drive a safe car. The more ‘safe’ your car, the lower your premium. A minivan, for example, typically has the cheapest insurance premium.
- Park your car in a garage, not on the street.
Get to know the different types of cover
While different states in the US will have different requirements for auto insurance, you’ll find that most basic car insurance policies have 5 types of coverage:
- Liability cover - this is made up of bodily injury liability and property liability coverage. Most states mandate you have a minimum level of liability cover.
- Personal injury protection - this will help pay the medical expenses of anyone in your vehicle. Not every state requires this.
- Collision - this covers the cost of your repairs up to your car’s current market value, minus the deductible that you’ll owe. This cover is usually optional.
- Comprehensive - don’t be fooled by the moniker, this cover is to cover for eventualities that aren’t actually driving related i.e. your car is stolen or damaged in a storm.
- Uninsured/underinsured motorist - this one covers you should you have an accident, that isn’t your fault, but the other driver is uninsured or underinsured. This fills the gaps. It isn’t a requirement in every state.
Other types of insurance are available and can be of benefit including:
- GAP cover insurance. If your car is totalled and you want to purchase a brand new one, this type of insurance will fill the gap between the amount of money your insurance company will pay out i.e. the market rate of your vehicle at the time it was written off, and the price you paid for it brand new.
Each state will list their minimum liability insurance requirement in the format: 25/50/25. The first two numbers relate to the maximum amount of cover for bodily injury liability (in thousands of dollars). The third number is the maximum amount of cover for property damage (again in thousands of dollars).
- Buy more than the basic level of cover if you can afford it, otherwise you run the risk of being out of pocket should something seriously untoward happen.
- Buy insurance strategically. Does your old vehicle really need collision insurance? Does comprehensive insurance really matter when your car has low market value?
It’s worth bearing in mind that there isn’t one size fits all when it comes to car insurance. And what works for your Mom or your friend might not be the best option for you. So do your homework, figure out what you need, and shop around.