When you’re in an auto accident of any kind, car insurance is the vital financial barrier that saves your wallet from having to pay for medical bills, auto repairs, and other expenses. Car insurance is so important that every US state requires drivers to have some amount of coverage.
But whether you’re a new driver purchasing car insurance for the first time or looking to switch providers to a better policy, it can be tough to know how to shop for car insurance that fits your budget and needs.
Today, let’s break down how to choose the best car insurance policy step-by-step.
First, figure out what your state requires for minimum car insurance coverage. Every state has car insurance minimums, including minimums for both the dollar amount your policy covers and the type of insurance you have in your name.
For example, South Carolina requires every driver to carry:
While you can have more car insurance coverage than state-mandated minimums, you must have these minimum amounts or insurance types to legally drive in your state of residence. Luckily, any automobile insurance provider in your state will automatically provide policies starting at these minimums.
Generally, states mandate auto insurance minimums to prevent people from unnecessarily suing each other for accidents. Car insurance usually covers any damage you cause to another driver’s vehicle and vice versa.
For example, say that you bump into another car while on the road, causing the other driver to experience whiplash. The whiplash leads to a few pricey medical bills. But instead of you having to pay those bills directly, your car insurance provider covers them for you. If you were to be injured in an auto accident caused by another driver, the other driver’s insurance would cover the bills.
It can be tough to figure out what the difference is between different types of car accident coverage. Here’s a quick breakdown of the different car insurance types you’ll encounter as you shop:
Once you figure out what your state requires in terms of minimum automobile insurance, start shopping around and contacting insurance providers. Get at least three quotes from different insurance companies before signing on any dotted line.
Be sure to provide the same information to each provider when filling out your application or car insurance quote request. Different insurance companies may offer different premium rates, deductibles, and other financial factors that can make one or another better for your budget.
Of course, you should also take a hard look at your finances before signing up for new car insurance. For example, if you can only afford to pay $100 per month in car insurance, you can automatically eliminate providers that charge more than this for their coverage.
Remember, if you have a good driving history and few or no accidents on your record, you’ll usually enjoy lower insurance premiums and deductibles. The reverse, unfortunately, is true if you’ve been in one or more accidents recently, even if they weren’t your fault.
Aside from comparing direct auto insurance rates and premiums, you should also compare perks, discounts, and any other benefits insurers offer. This step can be very helpful if two insurance providers are similar, and you need to break a tie.
For example, one car insurance provider may offer perks like roadside assistance. Another might provide a discount based on your employer or profession (This is more common with professions like teachers, emergency service personnel, healthcare workers, etc.).
At this stage, you should be down to one or two auto insurance providers at most. All you have to do now is choose between them!
Still having trouble picking the right auto insurance provider? It might help if you ask yourself a few questions. Write down your answers, then apply those answers to each insurance provider to see which is right for your needs.
If you don’t drive your car very often, you might go with an insurance provider that offers mileage-based vehicle insurance. This type of insurance can be cheaper on average, but only if you drive 100 miles or so each month.
If you drive much more than this, standard auto insurance policies are likely better and cheaper.
Depending on the value of your car, you might pick a provider that comes with comprehensive or collision insurance.
If you love your car and can’t stand the thought of replacing it after an accident or theft, the extra insurance coverage might be worthwhile.
If you use your car mostly or exclusively for your work, like a rideshare service or a delivery service, keep in mind that you can’t use your personal auto insurance for accidents that occur while you’re “on the clock”. So, you may need to pay for additional insurance through your employer. If you’re lucky, your employer may pay for this insurance on your behalf.
Lastly, consider where you usually park your car. Comprehensive car insurance may be much more attractive if you’re parked in an open area or near moving traffic. On the other hand, if you store your car in a garage, comprehensive insurance could be a waste of cash.
In the end, you can shop for the perfect car insurance policy by comparing your budget and your needs, then examining what each insurance provider offers. Go with your gut and remember that you can always upgrade your auto insurance coverage later down the road if you change your mind.
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Sources accessed 7/11/2022 –
South Carolina DOI – Automobile Insurance
Insurance Information Institute – What is auto insurance?
Insurance Information Institute – What is covered by a basic auto insurance policy?
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