The guide to buying car insurance in the USA

Car insurance is a bit different type of commodity: you buy one in a hope that will never use it. Indeed, your policy kicks in when your much-cherished car is stolen, attacked by vandals, or damaged in an accident or because of a natural disaster.

While we all want to believe that we will never have to grapple with this sort of thing, holding a car insurance policy is obligatory almost everywhere in the nation, and not having one can lead to serious problems, leaving one nearly (or completely) bankrupt.

Your safety on the road depends not only on your ability to confidently operate your car and observe all traffic rules. It is also an adequate policy that adds an extra layer of protection to your ride, giving you peace of mind that you are pretty safe from unbearable financial burdens, whatever happens to you, your passengers, or your car. The only thing left is to buy proper coverage. In this guide, we will lead you through the entire process of purchasing a car insurance policy in the USA.

Step 1: Nail down the size of your coverage

Your search for the right car insurance starts with evaluating how much protection will suffice you. Every state applies its own requirements, so you will need to find out what minimum coverage is obligatory in the place where you reside. At the American Property Casualty Insurance Association website, you can learn the mandatory types of vehicle insurance in each state.

Once you know the compulsory coverages in your region, you have a better understanding of how much car insurance is necessary to stay compliant with local automobile financial responsibility laws. For example, in Texas, drivers must have $30,000 bodily injury liability, $60,000 property damage liability, and $20,000 personal injury protection (this is usually expressed as 30/60/25 in insurance papers).

Your accuracy at the wheel should also be considered. If you cannot boast of a stellar driving record, if you ever have been guilty of fender benders, or you just love to drive fast on a highway, then you should include extras to your compulsory coverage.

For example, a collision plan will compensate for your losses if your car is crumbled in an accident or damaged from running into an inanimate object such as a tree, shop-window, or road sign. Comprehensive coverage takes your insurance even further since it protects your vehicle not only from collisions, but any kind of damage, including fire, theft, vandalism, natural catastrophes, etc.

Still, collision and comprehensive coverages are not must-haves, and you may safely go without them if you are a careful, experienced driver, owning a good reliable vehicle, living in a non-criminal neighborhood, and knowing for sure that your auto will never be totaled in a road crash. You can skip any coverage that is not required by law.

Step 2: Check out your current policy

Now you need to know how much value your current auto insurance brings you. Review your policy: what type of coverage does it provide? How much does it cost you per month/year? Does your carrier offer discounts and bonuses to help you cut your bill? Is your insurer straightforward with satisfying your claims? Are you overall happy with your provider? Answers to these questions will help you understand whether your existing underwriter suits your needs, or there are good reasons to move to another dealer.

Step 3: Review your driving history

Bad driving credit can make your quote soar, which is why you should check for tickets with your local state motor vehicle department before applying for a policy. Excessive points and violations in your past can make you look a high-risk driver in the insurer’s eyes, translating into exorbitantly high premiums. The good news is that points on your license go away over time (they can remain in your driving history for 1-10 years), so wait until they all disappear from your license before you get a quote.

Step 4: Stir a peg

When you have expurged your driving credit and are certain that your current carrier does not meet your needs, you can start shopping for an auto policy. In the era of thriving information technologies, you do not need to scout around your community and wasting precious time on the same talks with local agents.

The Internet is full of quote comparison websites allowing you to get instant quotes from dozens of insurers and pick the best deal that suits your life situation and budget. You just enter your information (license number, vehicle registration, car brand and model, and some other essential data) in the application form, and, in a matter of seconds, receive lots of offerings for easy comparison.

However, not all the carriers offer their services through such quote comparison aggregators, so it makes sense to go directly to the company’s website to find out whether they have something interesting for you. When browsing the site of the chosen insurer, you can request a callback or dial their toll-free number (if there is any) to get a consultation and calculate your quote, so you do not waste time and effort on filling out their online application form. Sometimes a website cannot calculate your quote instantly, and you may be asked to provide your contact information, so their agent gets in touch with you later for discussion.

If you are not a tech-savvy user, you can get a quote in an old-fashioned way: through a captive agent. A captive agent is a clerk that works only for a single insurer and guides you throughout the process, and it is also a person whom you apply to when you get in a car accident and need to file a claim for reimbursement. Big-name players such as Progressive, GEICO, and Allstate have reps in nearly every locality. These agents earn a percentage from selling policies to clients.

It is also possible to obtain a policy from an independent agent or broker. These clerks do not work for a single company, but cooperate with various insurers at once, so they can offer you a good variety of options from different underwriters to cherry-pick a better deal. Independent agents also earn from selling policies, meaning they are highly motivated to provide you with an excellent service, but at the same time, they often try to impose extra features and add-ons to your main plan, which is a bit annoying. Brokers also sell policies from multiple carriers, but they will charge you with a certain commission for their services.

Step 5: Know your insurer

So, you have narrowed your choice to a couple of candidates with the help of a quote comparison website, an agent, or a broker. Do not blindly follow the recommendation of an agent or broker – they are interested persons, and their judgments are surely biased. You should investigate your potential insurer by yourself for a clearer picture. There are vital questions you should ask a manager before taking the plunge:

• What car insurance types are mandated by local laws? A beginner driver may not be aware of what coverages are obligatory in their state, and the company’s rep should give a brief rundown on must-haves.
• What is your deductible for every compulsory policy? The deductible is the certain sum paid out of pocket by the policyholder before a carrier will pay any expenses.
• Whom my policy will cover? An important question many beginner drivers forget to ask their policy provider. Be inquisitive about whether your insurance will pay if your friend/relative borrows your car and gets in an accident. Will you be covered if you borrow someone's vehicle and crash it, or if you damage a rental car.
• What are my monthly/annual rates for different types of coverage? What will happen if I fail to pay my premium on time?
• Do you have any discounts I may qualify for? Even if you are an inexperienced driver, you still can expect huge savings on your car policy if, for example, you get good marks in your college, or your car is stuffed with modern safety devices. Discounts are a good way to reduce your car insurance, so do not be shy to quiz your company on perks for clients.
• What are my payment options? Can I pay my premium in installments, or do I have to provide the whole sum in advance? You may find it difficult to pay the entire annual premium, so inquire about available payment options.
• Do you offer a 24/7 claim service? If you have got in an accident on Saturday night, you definitely do not want your insurer to start its business only at 9 o’clock on Monday. A decent company is ready to process your claim at any time of the day, including midnight and weekends.  

Step 6: Evaluate the company

When you have completed your comparison and gathered all necessary information on the price and coverage from several companies, it is time to make up your mind and choose the right dealer to fit you in every respect. Your buying decision should not only be based on the final price. Indeed, the company’s financial stability is a more important consideration as it reflects the brand’s ability to pay out claims. Overall customer satisfaction speaks volumes about how the company treats its policyholders.

There are lots of trusted resources over the Internet where you can check virtually any insurer in terms of its financial strength, customer service, and fairness. For example, the National Association of Insurance Commissioners allows you to find vital information about every underwriter in the USA, including its licenses, financial situation, complaints, and more. Or go you your state insurance department to learn about typical customer complaints and read comparison surveys. You may fish lots of important information from authoritative reputation agencies such as A.M Best, J.D. Power, Standard & Poor that publish real customer reviews and experiences related to dealing with this or that brand.

Step 7: Review your policy

When you have completed your research and settled on one seemingly good company, pore over your policy. Make sure it contains the coverage you asked for, without any add-ons that you did not request. Pay attention to what the insurer says about the body shop repairs if your car gets in a crash. A solid company will agree to pay for authentic manufacturer parts, while a so-so dealer will denote in your policy that it only pays for aftermarket or like-kind-and-quality parts. The latter variant is highly undesirable if you own a new car that has never been repaired before.

Step 8: Close your old policy

When you have bought your dream plan that corresponds to your requirements and budget, make sure you terminate your old policy, if you have ever had one. It is advisable that you always have your card at your fingertips and can quickly prove your insurance in an undesirable event of an accident.