How To Shop for Auto Insurance… the Right Way

We show you how to shop for auto insurance by collecting basic information, then obtaining quotes from agents, brokers, and insurers on the web and in person.

What shopping around lacks in good old fashion fun, it’s made up for in the hundreds of dollars you can save in premiums and out-of-pocket costs. Whether it’s car insurance, motorcycle insurance, or another vehicle type the methods are the same.

By following our 9 step plan below we’ll show you how to shop for auto insurance so that you can both get the most out of your coverage and pay the least out of your pocketbook.

We here at FactsOnInsurance want to help you get a bigger bang for your buck! We’ll help walk you through the process of finding the best possible auto insurance policy for your needs on step at a time.

Shopping for Auto Insurance is a Process

As the video above says, “shopping for car insurance isn’t inherently enjoyable… but you could save hundreds of dollars per year.”

That same adage can be said for insuring any other type of vehicle, but with car insurance especially, because it’s such a big topic, people just look at all of the easily visible policies and choose the one with the lowest premium price.

This is not a smart way to purchase any auto insurance policy. The cheapest plan is not always the best plan. There are many other factors that need to be taken into account – your driving habits, the different driving members of your family, the coverage you suspect you will or won’t use, your policy’s deductible, your family situation, and much much more.

What is a “Good” Auto Insurance Plan?

The reality is, this answer is different for everybody. Insurance plans are not “one-size-fits-all.”  What works for you might not meet the needs of your neighbor, your parents, or your friends.

The “best plan” is one which covers all of the financial protections and services that you can see yourself needing and doesn’t break the bank. When you find a “good” policy, you’ll feel comfortable with your ability to pay your out-of-pocket expenses in the event of a car crash, and you’ll feel comfortable with the amount you’re paying in premiums every month.

A Nine-Step Instruction Guide to Shopping for Auto Insurance

Before we get into the details of how to buy health insurance, here’s an overview of our nine step guide to buying Auto Insurance. These methods will work for car insurance policies, but also apply to all the other vehicle types:

  1. Get Prepared
  2. Figure out your Coverage Needs
  3. Plan out your Policy
  4. Collect your Information
  5. Get Auto Insurance Quotes
  6. Compare Quotes and Choose your Policy
  7. Read your Contract, Know your Policy
  8. Sign the Contract
  9. Finalize the Switch

If you follow these steps and the guidelines below, you will be sure to end up finding your perfect, best-fit auto coverage policy, and you’ll likely end up paying much less for it than you would for the expensive, highly-visible options that you would otherwise end up choosing between.

Step 1: Get Prepared

The first step is to do your homework; research important auto insurance topics and become knowledgeable about auto insurance as whole.  Unless you have some sort of background knowledge on auto insurance, you will have a hard time finding the best policy.

Here is a list of topics that you should have working knowledge of before shopping for coverage:

  • You should know the basics of auto insurance – specifically, what it does and how it works.
  • You should understand all of the different types of auto insurance on the market and what each one does.
  • You should know about the costs of auto insurance, about how auto insurance policy premiums and deductibles work.
  • You should know about your state’s insurance requirements and regulations – what types of coverage you’re required to have and what the minimum acceptable limits are on those types of insurance.

You don’t need to know everything (or even most things) about every single topic listed above, but you should know each of the listed subjects well enough to explain it without help from anyone else – what it is, how it works, and the important terms related to it (as well as what those terms mean).

Step 2: Figure out Your Coverage Needs

Knowing your specific financial and coverage needs will make it much more easy to shop for auto insurance.

Once you have a solid knowledge about auto insurance, it’s time to take stock of your personal insurance needs.  It’s time to ask yourself, what do I need to get out of this policy for it to be worth paying a premium every month.

Coverage Needs:

One by one, Loop through each type of auto insurance that we list and explain on our Types of Auto Insurance page.  For each type, decide if that type of coverage is one that is necessary in your life.

Consider all of the following factors when deciding whether or not you need a specific type of coverage:

  • How often will I realistically be in a situation in which I need take advantage of this policy.
  • Is this required by the state? If so, What are the compulsory minimum limits?
  • What financial assets am I protecting.
  • Do I use this vehicle for business? If so, does the policy allow for that?
  • How much is my vehicle worth?
  • Do I have any young / teenage children?
  • Have I (or some other driver on the policy) recently had a bad record of auto accidents or moving violations?
  • Is this coverage an absolute necessity, or would it only be nice to have just in case?
  • How strong is my Health Insurance?
  • Do I have any vehicles which might need a special coverage policy due to their value or unnecessarily-high performance capabilities?

Write all of this information down!  It may be a pain, but it will make the rests of the steps so much quicker and more efficient, and it will solidify your knowledge and understanding of what coverage needs you may have.

For each type of auto insurance that you decide should be a part of your policy, write down the insurance type, its purpose (all of the services and/or  financial protections you would want out of the coverage), any premium/deductible price estimates (if you have them – otherwise, no worries!  You’ll get there soon), and of course, any applicable required minimum limits.

Financial Needs:

One one hand, we now know what coverage you need from your insurance policy; however, the chances are good that price is a significant factor in whether or not a policy is a good fit.  In other words, you have budgetary requirements or financial needs that your best-fitting auto insurance policy will have to meet.

Let’s figure out what your financial needs are from your insurance policy. Pull out your budget, a pen, and something to write on; you need to take some time to come up with realistic, reasonable answers to the following questions:

  1. What is the maximum amount you could afford to spend monthly on an auto policy premium?
  2. At any given point in time, what is the absolute maximum you could afford to spend on the expenses that could incur in the event of an automobile accident.

To interpret what this means, realize that your deductible is the amount you may have to pay if you were to get into an accident.  In other words, if a policies deductible is too close to (or even above) your answer to the second question, that plan does not meet your financial needs and thus is not a good fit.

Clearly, if the premium price of a plan is too much for you to be able to pay it consistently without it causing you financial hardship, that insurance policy is not a good fit for your either.

Step 3: Plan out Your Goal Policy

Writing a goal policy will make shopping for auto insurance easier, quicker, and more efficient; it will also help you get a policy better suited to your needs.  What you learn from the process of making this goal policy will also help you better understand the policy you decide to buy.

Here, you combine the two different aspects of your insurance needs (coverage and financial) into one printed document; your Goal Policy.

To do this, you’re going to write a fake insurance policy for yourself.  It will include all of the following:

  • The list of all covered vehicles
  • The list of all insured drivers
  • Each type of coverage or service you decided that you need (step 3)
  • Any maximum limits that apply to coverages and services
  • A maximum deductible amount that would meet your financial needs. This should be somewhere below the absolute maximum amount you could pay if you got in an auto accident (so that you have a bit of wiggle room).
  • A maximum premium price that would meet your financial needs.  This should be however much you feel you could afford to regularly, consistently pay on a premium (as per question 1 in step 3 above) without it causing you significant financial hardship.

This method of writing your own policy is one of the smartest things you can do while shopping for auto insurance.  Here’s why:

  • From the get go, you know exactly what types of coverage and services you’re looking for.
  • You’re less likely to let a pushy insurance salesman convince you to buy an overly-expensive policy that you don’t really need.
  • You don’t have to trust others to tell you what kind of coverage you do or do not need.  Any for-profit insurance company is naturally incentivized to convince you to buy the most-expensive policies at the least-discounted prices.
  • You have something simple, but comprehensive to compare all other quotes to in the future.  This will be the reference point from which you can judge all other auto insurance quotes.

Step 4: Collect your Information

Once you have planned out a goal policy laid out, it’s almost time to start shopping and getting quotes.  However, every insurance company is going to need some information from you before they can give you even a preliminary quote.

Don’t go shopping for quotes unprepared!  Make sure to have records of all of the following ready for your insurer before you walk through their door, call their phone, or click through their site:

  • The year, make, model and VIN for each vehicle that you’re insuring
  • An estimate of the number of miles you drive each year in each vehicle that you’re insuring
  • Vital information for each driver you wish to put on your policy: full name, occupation, gender, how many years they’ve had a license, and their Driver’s License Number.
  • Info about any accidents or violations that you’ve been involved in within the last 3-5 years.  Bring information on the exact date on which it occurred, who was at fault, any injuries that occurred, any resultant auto insurance claims that were filed, and if applicable, the claim amount.
  • A list of any safety features of the car/s being insured.

It’s also a good idea to check your driving record before shopping for quotes.  If your record’s really bad, you can still shop around for quotes on the normal marketplace, but you might have better luck in the Non-Standard Insurance Market.

Step 5: Get Auto Insurance Quotes

Now that you’ve spent all that time preparing, it’s time to actually get some offers.  When getting auto insurance quotes, get lots of quotes and to get quotes from a variety of sources.  Be resourceful and take advantage of all the quote-finding options available (online quotes, quotes by phone, insurance agents, independent brokers, etc.).

If you’ve already taken the advice from our first 4 steps, this step should be quick, efficient, and painless!  If not, follow the steps above so that, when you do start quote-shopping, you’ll understand what your talking about, you’ll know exactly what you’re looking for, and you’ll be coming to each agency well-prepared.

Visit our page on Auto Insurance Quotes to learn more about understanding, interpreting, and finding auto insurance quotes.

Step 6: Compare Quotes and Decide on a Policy

Once you’ve gathered a wide range of auto insurance quotes from a variety of insurance companies, it’s time to decide on which policy is the right one.  For some people, the best quote is a clear-cut winner and the decision is easy.  For others, choosing the single best policy out of so many is the hardest part of buying auto insurance!

So for the sixth step, you’re going to want to analyze each policy for which you have a quote.  The important thing here is to make sure that your comparison is thorough and holistic – at the very least it should consider how the quote stands up to your goal policy (from step 3 above), coverages, services, dollar limits, premiums, deductibles, potential discounts, and the financial stability and reliability of the insurance company offering the quote.

For more information on how to best complete this step, visit our page on How to Compare Auto Insurance Quotes.  There you’ll find specific criteria on which to judge each quote, advice on how to organize your quote comparisons, and great resources for finding an insurer’s financial stability and customer satisfaction ratings.

Step 7: Read your Contract, Know your Policy

After you’ve compared quotes and decided on a plan, you’ll need to go in to meet with your insurer and sign your actual auto insurance policy.  A lot of people (mistakenly) believe that they don’t need to read their car insurance contract so long as they’ve had it explained to them by a broker or agent.

It is extremely unwise to sign any insurance contract that you have not personally read.  This is a legally binding contract; once you sign it, you’re not just committed, but obligated to stick with that auto insurance.  If, down the road, you feel like you were cheated by your insurer because of a clause in the contract that you didn’t read, you will have no one to blame but yourself.

Since it is a legal document, your insurance is likely to be somewhat of a pain to read through.  However, it gets a lot easier to both read and comprehend when you understand the structure of an average auto insurance contract and what specific pieces of information you need to look out for in the document.

To learn more about reading, understanding, and analyzing your auto coverage agreement, visit our page on how to work with Auto Insurance Contracts.

Step 8: Sign the Contract

Once you have read through the contract, if everything looks good, it’s time to seal the deal.  Sign the contract, start paying your premiums, and enjoy the financial security and peace of mind that comes from being covered by the right auto insurance plan.

Step 9: Finalize the Switch

Now that you’ve finished shopping for a auto insurance policy, don’t forget to finalize this switch by canceling your old policy.  Also, be sure to get your new proof of insurance as soon as possible and keep in with you whenever you drive.

Shopping for Auto Insurance: More Tips and Tricks

  • Be honest in your applications
  • If you can, consider set a whole day aside – preferably on a week when most insurance agencies will be open – to devote to following this 9-step plan saving hundreds on auto insurance.