Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Mar 13, 2020

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Here's what you need to know...

  • Whenever you’re buying auto insurance on a car that you drive for personal use, you need to have an insurable interest in the vehicle that you’re covering
  • Insurable interest means that you could suffer financial loss if you had a loss in your vehicle
  • To get insurance, you must meet the underwriting guidelines set by the insurer before you will qualify for insurance
  • When you decide to apply for insurance, you need to have exact information like the VIN, your driver license number, exact dates of tickets and accidents, and lien holder information

When you buy a car, one of your first responsibilities as a vehicle owner is buying insurance. If you buy the vehicle outright, you’re only responsible for buying the minimum amount of insurance that’s required by state law.

If you finance the vehicle, you must buy the state-mandated coverage and physical damage coverage as well. Also, you may want to check with your lender to ensure you meet their requirements.

You can’t expect to buy insurance in the finance office when you’re negotiating the vehicle price and interest rates. Instead, you should have quotes prepared before you visit a dealership or a private seller’s home.

If you’re not sure what you’ll need to get car insurance, here’s a guide that can help you prepare in advance so that you can avoid common mistakes that first-time buyers make.

Start comparison shopping by entering your zip code into our FREE comparison tool!

Insurance Requirements for Policyholders

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You buy car insurance to help protect you from financial loss if you ever have an accident or another type of auto loss. Since auto insurance policies are contracts, you must eligible for coverage with your car before starting one.

You must be subject to financial loss if something were to happen to your car. Otherwise, you will not be eligible for insurance. This concept is known as insurable interest requirement.

If a loss wouldn’t affect you financially, there would be no purpose for you to buy auto insurance. In most cases, you must be the registered owner, a co-owner, or a spouse of the owner to qualify.

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What information do you need to get an auto insurance quote?

Many consumers put off pricing the cost of insurance when they don’t exactly know what type of car they want to buy. Just because you don’t have all of the details doesn’t mean that you can’t start soliciting quotes.

In fact, it’s best to solicit quotes for several different models just to see which models are most affordable. Here’s what you need:

  • Year, make, model, and trim level of the car
  • Name, date of birth, licensing experience, and employment status of each driver
  • Driving history and ticket history of each driver in the home
  • Accident record for each driver in the home
  • Where you live and where the vehicle will be stored
  • How many miles you’ll commute in the vehicle or how many miles you’ll drive annually
  • Which driver will be assigned to the vehicle as the primary driver
  • Approximate credit rating (in states where credit is used)
  • What type of coverage you are seeking (complete with limits and deductibles)

How to Decide How Much Insurance You Need

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If you come to the questions about coverage options and limits, it can be difficult to decide which limits are right for you.

Ultimately, your budget is the most important factor when you’re picking limits and optional coverage types. Since building a comprehensive policy should be your biggest priority, it’s very important to assess your needs.

When it comes to liability coverage, you need to be sure that you have high enough limits to pay for potential claims that can be made against your policy.

While there is no surefire way to ensure that you are fully protected, most experts recommend that you carry $100,000 per person and $300,000 per accident for injuries and $100,000 per accident for damages (100/300/100).

You don’t have to buy physical damage coverage under state law. But if you have a lender, a lessor, or you own a car that retains value, physical damage coverage may be required.

Physical damage consists of comprehensive and collision, which each pay for repairs that need to be made to your own vehicle.

What is the difference between a quote and application?

You solicit quotes to estimate how much coverage will cost on a specific car through a specific carrier. When you are given a quote, it is not binding.

The actual price you will pay isn’t determined until you submit an application and the application is underwritten. You must provide more specific details on your application.

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What do you need to provide on your insurance application?

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When you are ready to submit an application, you will need specific paperwork to find the information that you need to bind insurance.

Most of the information that you need can be found on your old insurance documents or on your declaration page. Here’s what you need to ensure your application is accurate:

  • Driver license number and a copy of your driver license
  • Copy of past license numbers if you’ve been licensed in another state
  • Dates of convictions if you have a past infraction
  • Dates of at-fault accidents reported within the last three years
  • Proof of good grades
  • Letter of experience showing your past insurance coverage
  • VIN and odometer reading
  • Loss payee clause on financed vehicles

Having what you need to get car insurance will make it easier when it is time to buy coverage. The best way to find the best deal on coverage is to use our FREE online rate comparison tool. Enter your zip code to get started!

References:

  1. http://economictimes.indiatimes.com/definition/insurable-interest
  2. http://www.tdi.texas.gov/pubs/consumer/cb020.html
  3. https://enlightenme.com/auto-insurance-information/
  4. http://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/State-by-State-Minimum-Coverage-Requirements
  5. http://www.iii.org/article/what-auto-insurance
  6. https://www.irmi.com/articles/expert-commentary/insurable-interests-and-interests-insured-in-property-insurance
  7. http://www.investopedia.com/terms/i/insurable-interest.asp
  8. http://guides.wsj.com/personal-finance/insurance/how-much-car-insurance-do-you-need/
  9. http://www.iiat.org/infocentral/policy-coverages/auto-dealers-(iso)/covered-autos-coverage/physical-damage-coverage
  10. http://carinsurance.about.com/od/WaystoSave/tp/What-Is-An-Insurance-Quote.htm
  11. http://carinsurance.about.com/od/RulesofThumb/a/Paperwork-Needed-For-Car-Insurance.htm
  12. https://www.irmi.com/online/insurance-glossary/terms/l/loss-payable-clause.aspx