How to Find the Best Car Insurance

Best Car Insurance Buyer’s Guide

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Looking for savings? Here are the facts you need to find the best car insurance policy in 2021.

Getting a good car insurance policy doesn’t have to be hard. In fact, a few clicks while you’re sipping your coffee could save you money on car insurance.

Before you go wandering around looking for a good deal, know what you’re looking for. Knowing how to buy car insurance the right way could make the whole process easier — with a better deal at the end.

Not sure how to get started or what words like “liability” even mean? Check out the following buyer’s guide to getting auto insurance.

What the Law Says

Almost every state¹ requires drivers to have auto insurance. The only state without any insurance requirements at all is New Hampshire. But even there, drivers have to prove that they can pay for damages if they’re in an accident and they’re at fault.

And in Virginia, drivers can pay a fee to avoid having car insurance. It’s called an Uninsured Motorist Fee and it costs $500 for the year. It doesn’t let you off the hook in an accident, though, and it doesn’t provide any protection.

The “financial responsibility” requirement is universal in all 50 states and the District of Columbia. Car insurance or otherwise, you have to prove that you can cover losses in an accident.

Most people do this by buying car insurance. It’s certainly the easiest route.

But the following states give you a choice about how to show proof of financial responsibility:

• Arizona
• Kentucky
• Maine
• Mississippi
• Montana
• Ohio
• Rhode Island
• Tennessee
• Washington
• Wisconsin

In these states, requirements vary but usually include a cash bond or surety for a specific amount. For example, you can buy a minimum cash bond of $30,000 in Ohio instead of buying auto insurance.

But even in states that don’t require car insurance, motor vehicle departments still strongly encourage drivers to carry insurance. That’s because auto insurance provides protection for a whole host of unexpected things, not to mention damage to other cars and people.

We’ll get to that argument later. For now, know that every state except New Hampshire and Virginia requires drivers to show proof of financial responsibility — and that usually means car insurance.

How much car insurance do you have to buy? That’s a big it depends.

Broadly speaking, most states require two types of coverage: bodily injury liability and property damage. We’ll talk about those terms in the next section. Amounts vary by state.

You’ll probably see car insurance coverage written in an xx/xx/xx formula. A policy with 25/50/25 coverage, for instance, means:

• $25,000 for bodily injury per person, per accident
• $50,000 for bodily injuries for 2+ people, per accident
• $25,000 for property damage to vehicles that aren’t yours

There are other kinds of coverage, too. But most states only require the most basic auto insurance. Florida, for example, only requires $10,000 each in property damage and personal injury protection.

How much auto insurance you have to have really depends on where you live.

Car Insurance Lingo

Like all insurance paperwork, car insurance uses jargon that you might not understand at first. We won’t cover all of the possible terms you’ll see as you shop for coverage, but we do want to touch on the basics.

These are the most common phrases² you’ll encounter:

• Collision coverage: Not required by any state, collision coverage pays for car repairs or replacement after an accident.
• Comprehensive coverage: This kind of coverage pays for damage due to things other than a collision, like theft, fire, flooding or vandalism.
• Liability coverage: If you’re at fault in an accident, liability coverage pays for the damage to the other vehicle and any injuries to the driver/passengers in the other vehicle. It does not cover you, your passengers or your own car. It’s categorized as bodily injury liability and property damage, as we mentioned earlier.
• Personal injury protection (PIP): Some states, especially no-fault accident states, require personal injury protection (PIP). It might also be called medical benefits or something similar. This coverage pays for things like medical bills, lost wages and other expenses for you (as the driver) and your own passengers. It’s designed to keep car insurance rates lower because it can keep smaller auto injury claims cases out of the court system. Not many states require PIP.
• Underinsured/uninsured motorist coverage: These policies sometimes get lumped together, but they cover different scenarios. Underinsured motorist coverage covers your injuries and property damage if the at-fault driver doesn’t have enough car insurance to cover it. Uninsured coverage pays for damages and injuries if the at-fault driver doesn’t have any coverage at all. Most states don’t require either type, but it’s a good idea.

Tip: if you’re reading through a policy and can’t make out what it’s saying, ask somebody for help. That could be someone you know, of course, but it could also be an independent agent or even a proper internet search for the term.

Don’t be afraid to ask questions in general. The more you understand up front, the better you can make a decision about your coverage.

Auto Insurance Dos & Don’ts

Your state’s minimum auto insurance requirements are enough, right? No need for more?

Wrong. Really wrong, actually.

Even state motor vehicle departments know this. Most actively encourage drivers to get more robust policies than the state requires.

Auto insurance costs less with less coverage.

But saving money on the front end could cost you a lot on the back end, like when you’re hit by an uninsured driver who speeds off into the sunset without so much as a “sorry.”

Let’s circle back to liability coverage for a second.

As we mentioned earlier, liability coverage pays for damage to the other car and other driver/passengers in an accident. Most states require it, and most states only require low minimum caps.

Why should you buy more than the minimum state requirements?

Let’s use the Aloha State as an example. Hawaii law requires drivers to carry minimum liability coverage of 20/40/10, meaning $20,000 bodily injury per person / $40,000 bodily injury per accident / and $10,000 property damage per person. These are the max amounts that your insurance carrier will pay out.

If injuries and damages cost more, you may have to pay out of pocket for the difference.

Accidents vary in scope and damage, but the last thing you want to worry about after a bad wreck is how to pay for the other person’s totaled car.

Before you settle for your state’s minimum coverage amounts, understand the risks involved.

Do . . .

• Buy as much coverage as you can comfortably afford. You don’t need to shell out thousands of dollars a year for a good car insurance policy. But you should also avoid falling into the “cheap as possible” trap if you can. Just about any policy that covers liability and property damage will help you in a wreck, but think longer term than that. If you have more room in your budget, opt for a policy that costs a bit more and covers more as a result.
• Invest in the extras that make sense for your driving habits. If you use your personal car a lot for work or a side gig, you’ll need better coverage than someone who only drives on the weekends. Consider your driving habits and skills. Can you change a tire on the side of the highway? If you run out of gas, are you comfortable walking to the nearest gas station for help? Roadside assistance may not be necessary for everyone, but it’s one of those car insurance add-ons that makes sense for some people. Plus, extras can be nice to have — as long as you can afford them.
• Shop around regularly. Car insurance is not a set-it-and-forget-it product. Every six months, look at your policy again and see if it’s working for you. You might find a better deal just by calling your current insurer and asking for a price drop. If not, start shopping. Being proactive can help you save money.

Do not . . .

• Assume only the big names offer good deals. Car insurance commercials might be entertaining, but they don’t tell the whole story. You don’t have to go with a big brand to save big money. Shop around some of the smaller, independent or lesser-known brands. You might be surprised to find a new favorite.
• Pay for bells and whistles that you won’t need. This might sound like a contradiction of our earlier point, but don’t waste money on coverage you don’t need. Lots of extra features — roadside assistance, rental car service and even comprehensive coverage — might not make any financial sense for you at all. Assess your needs as a driver and shop from there. Don’t let ads convince you that you need more than you do.

How to Buy Car Insurance

Ready to start shopping? No time like the present. But before you start clicking around to compare rates, you’ll need to gather some information.

Make sure you’ve got the following³ handy when you apply for car insurance:

• Your car’s details, including make, model, year and features. You’ll also need to know the VIN and a good estimate of how many miles you drive a year.
• Info on all the drivers in your household applying for a policy, including age, driving records and habits, and anything that might help you get a discount (military or student status, for example).
• Details about where you keep your vehicles. Is it secure? Garage vs. street parking? These details will affect your coverage and premiums.

It might seem like a lot of information to get, but having it available ahead of time will help you get an accurate quote. Car insurance quotes vary based on where you live — and that’s putting it mildly. You might pay $1,200 a year in Georgia for a policy that costs $800 in Arkansas.

And speaking of premiums, let’s talk about how to save money on car insurance.

Car insurance doesn’t have to break the bank. Even a small amount of legwork can net big savings depending on where you live and who you are. Here are some good options for saving money⁴ on premiums:

• Group discounts: If you belong to an organization, club or other membership program, check to see if it offers discounts for members. You could also check with your employer to see if you get better deals with certain insurers.
• Student or military discounts: Students who take car safety courses may get a discount on premiums. Military members might also have access to special deals and savings depending on the insurer.
• Bundled policies: If you can bundle your car, renters, homeowners or other insurance policies together, you might save a nice chunk of change. Always check to see if an insurer offers bundled savings.
• Low mileage/low use discounts: Believe it or not, some insurance companies offer discounts or premium breaks for low usage. If you don’t drive much, look for a policy that offers low-mileage incentives.
• Good credit history and/or good driving record discounts: Good credit scores and a clean driving record might be enough to score some real discounts on premiums, especially if you keep it up over the life of your policy.
• Higher deductible: The deductible is what you pay out of pocket before the insurer pays its share of the claim. If you can afford a higher deductible, you might be able to save on your premiums.

And now that you know what to look for in a policy and how to save money on car insurance, start shopping.

You’ve got options for shopping, of course. You could:

• Go directly to an agent who represents one company;
• Browse plans on a specific company’s website;
• Talk to an agent or broker who represents several companies; or
• Compare rates from several companies at once using an independent site, like this one.

If that last option feels a little biased, it’s because it is.

We wanted to streamline the process of buying car insurance. So we did. Just a few clicks and you’ll have access to lots of car insurance options that fit your budget and needs.

But seriously.

Shop around.

The best way to find the right car insurance is to compare rates from more than one company. And to do that, you need to know what your state requires and, more important, how much coverage you need to protect that sweet ride.

Sources

¹ Information on auto insurance requirements in states mentioned was obtained through individual state insurance websites.

² Automobile Insurance Guide

³ What information do I need to give to my agent or company?

⁴ How to save money on car insurance