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UPDATED: Mar 13, 2020
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In school, you’re required to take classes that cover everything from grammar and social studies to math and social science. Unfortunately, most high schools don’t prepare students to become financially savvy adults.
Students don’t learn how to do the essentials in life that they need to know following graduation. One skill that you must have if you plan on buying a car is learning how to buy auto insurance.
Auto insurance is mandatory in most states. If you buy a car and you’re the registered owner, it will be your legal duty purchase at least some liability insurance. Failing to do this could land you in court where you could be ordered to pay fees and fines. If you’re worried about the process, here’s a guide that can help you.
Know the Auto Insurance Laws in Your State
The first step to buying auto insurance is learning about the laws in your state. When you buy a car, you have to follow the rules that have been enforced in the state where you plan on registering the car, not the state where the car was purchased.
Think about where you will be living permanently before you start to look up laws and penalties.
In most states, you’re required to carry a minimum amount of liability insurance. These states have a tort auto insurance system where the at-fault party must compensate the victim by paying for damages that they cause.
There are a few states that also require you to purchase protection for yourself.
Here’s a breakdown of common coverage requirements:
- Bodily Injury Liability – Required in tort states and some no-fault states
- Property Damage Liability – Mandatory in all tort and no-fault states
- Personal Injury Protection – Only required in states with no-fault laws
Do you need to carry optional coverage?
There’s a difference between coverage that’s required by the state and coverage that you have the option to buy. You can buy basic insurance and avoid tickets and mandatory court appearances but having minimum requirements may not be enough.
Some optional forms of coverage that you may need include:
- Uninsured Motorist Protection – Pays for your medical bills when you’re in an accident with an uninsured motorist
- Medical Payments – Pays for your reasonable medical expenses
- Comprehensive – Pays for repairs to your car after a non-collision loss and is required when your car is financed
- Collision – Pays for repairs to your car after you’re in a collision and is required when your car is financed
Compare the Premiums for Several Different Vehicles
If you’re not sure what type of vehicle that you want to buy, the best way to keep your insurance costs low is to compare rates for the models that you like the most. Auto insurance prices are based on the vehicle’s safety record, the cost of repair, and the car’s ISO rating.
If premiums are substantially higher for one model, you will know to skip that car on your test drive. When consumers price insurance costs before they even start negotiating the sales price for a vehicle, they will be better able to stay within their monthly budget.
Have Your Information For an Accurate Quote
Your insurance quotes aren’t guaranteed. Quotes are nothing more than non-binding estimates that help you shop the market to find the best deals.
If you want to equip yourself with the knowledge that you need to choose the right carrier, you’re going to need to provide accurate information during the quoting process.
Every auto insurance quoting form is designed differently, but most of the forms ask for the same type of information. The information that’s requested is information that’s used to rate the policy and set you into a rating group.
If there’s an error on something that impacts your rate class, you could have a misquote. Information that you’ll need includes:
- Name, date of birth, driving experience, and occupation for each driver
- Vehicle assignments
- Moving violation information for any infractions recorded over the last three years
- Claims history if you’ve reported any claims in the last three to five years
- Vehicle Identification Number (VIN)
- Vehicle usage, commute distance, annual mileage, and zip code it is parked in
- Credit rating
- Coverage options
How to Bind Your Quote
When you decide on a quote, you need to submit an official application so that your information be thoroughly reviewed. During this time, you can bind the coverage by making your first payment. Make sure that you double check the information so that your premium doesn’t go up after the policy is issued.
Use your time wisely and enter your information into a quote comparison tool to get multiple quotes from leading carriers.
Once you have reviewed these instant quotes, decide where you want to insure your new car and submit an application as soon as you become the legal owner of the car.
Make sure you have the right coverage at the best rate. Enter your zip code into our FREE tool below to get started!