Whether it’s a new car, a lease, or a pre-owned model (or used, if we’re not being fancy), getting behind the wheel of a fresh car is always a thrill. What’s not so exciting: Shopping for insurance for those wheels.
Nobody wants to think about damage to an engine or transmission, or which replacement parts are better. That’s where we, and a good insurance policy, come in.
Just what kind of rates and coverage are best for you? Is there really a difference in value between Farmers, State Farm, AAA, Allstate, Geico, Progressive, or the local insurer down the street? Which company should have the honor of selling you insurance?
Here’s everything you need to know before buying your perfect policy.
Know the minimums
The second you get a new car (or used, or leased), your home state will have something to say about it. And that’s this: There’s a legally required minimum amount of coverage you probably need to have. Usually, this minimum falls under a category called “liability coverage.” Automotive liability insurance compensates a person other than the policyholder (that’s you) for personal injury or property damage. It doesn’t matter whether your car is an Audi, a Ford or a Lexus, a compact, a coupe or an SUV, or an electric, hybrid, or gas guzzler – these rules apply to everybody.
Here’s an example of what we’re talking about, courtesy of the great state of California. The minimum liability insurance requirements for people driving in that state are $15,000 for injury or death to one person; $30,000 for injury or death to more than one person; and $5,000 for damage to property.
During your insurance shopping adventure, you may also run across offers for comprehensive or collision insurance. We’ll explore that more later, but know this: That’s not liability coverage. It does not meet vehicle financial responsibility requirements for many states, including California.
Once you know your state’s required coverage minimum for automotive insurance, you can move on to exploring other, optional coverages.
If you can afford it, don’t stop there
You may have noticed something about that liability insurance up there: It doesn’t pay for any injuries affecting you, or your passengers. And that’s a problem.
That’s where full-coverage insurance policies come in. Unless you really cannot afford it, you want to protect yourself from unexpected costs associated with breakdowns or accidents. Just what kind of coverage are we talking about? Any decent policy should cover, at least:
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Personal injuries (insurers often call this PIP or personal injury protection), which will cover your medical expenses no matter who is at fault in an accident.
Uninsured motorists. Ever wonder how much protection you get if an uninsured driver hits you? Not much, unless you have this.
Collisions – you know, costs associated with run-ins involving another vehicle, or even an object like a garage door.
Comprehensive coverage. We’re not talking about oil changes, necessarily, though that would be nice. No: Not every car-related disaster involves vehicles or even you. Think about vandalism, weather, falling objects, and wayward bears – the possibilities really do boggle the mind. But insurers have thought of this, and they build these scenarios into any decent policy.
Here are a few other types of coverage that a good policy might have.
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Gap coverage, which sounds strange, but is actually pretty simple; it covers the difference between what you owe on a car loan and its value after depreciation.
Car rentals – the cost of renting a car in case yours is out of commission.
Roadside assistance. This needs no introduction, especially if you’ve ever had to call AAA.
Don’t do it alone
Now that you know what kind of insurance you want for your auto, don’t get daunted by the shopping process. There’s no reason to hunt down individual websites looking for rates. Similarly, there is no reason for having to put together an Excel spreadsheet with all those numbers. There are websites that will do that work for you. The Zebra and Insurify are two of them. Think of them as an insurance agent that doesn’t require you to talk to a person on the phone. This way, you can find the best value for your money, on your own time and terms.
If you’re not sure whether a comparison site is a decent one, know this: Any trustworthy site will factor in your state’s minimum requirements.
Oh, and about saving money…
We would be remiss if we didn’t mention a few ways you can save money on car insurance. If you’ve seen any kind of automotive-insurance commercial in recent years, you’ve probably heard the term “bundling.” If you already carry insurance for, say, your home or apartment, it’s worth asking those insurers if they can offer you a break on your sedan or compact.
Another way to save money (though this may cost you down the road) is by playing with your monthly insurance premium – the amount you pay regularly to stay insured. The more of a premium you pay, in general, the less you have to pay in deductibles later on in the event of an accident. If you’re on a strict budget, and you’re a safe driver, a smaller premium may be right for you.