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UPDATED: Mar 13, 2020
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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.
Insurance Requirements for Policyholders
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.
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.
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
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.
What do you need to provide on your insurance application?
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!