On the hunt for a new car insurance policy? Whether you’re getting a new car or just looking to make a switch, it’s important to follow the right process to ensure you get all the coverage you need at a fair price. Let’s talk about how to shop for auto insurance and save in 2024.
Why Auto Insurance Rates Are Rising
Before you begin your search for auto coverage, you’ll want to get to know the landscape you’ll be navigating. Over the past few years, auto insurance rates have been rising at an alarming rate, far outpacing inflation. According to Bankrate, the average cost of both full coverage and minimum coverage auto insurance increased by 19% in 2023. Going in 2024, the average driver can expect to pay $2,395 per year for full coverage, or $738 if they just want to meet minimum requirements.
While car insurance rates vary widely depending on state, demographic, driving history, and more, experts cite a few major factors contributing to rising premiums across the board:
- Repair costs: Between inflation-fueled labor cost increases and a rise in high-tech vehicles with specialized parts, car repairs have become more expensive in recent years. This trend has led to an increase in claim sizes, leaving insurance companies to raise rates to cover their costs.
- Car thefts: According to the National Insurance Crime Bureau, vehicle thefts have been continuously climbing over the past several years. In 2023, we saw 1.02 million total thefts, a 27% increase from 2019. As the risk of replacing a stolen vehicle increases, full coverage policies are raising costs to match.
- Risky driving habits: The COVID-19 pandemic had a lasting impact on many aspects of daily life, including our driving. Researchers report that with fewer cars on the road, many drivers started adopting riskier habits, which have largely persisted over the years. With this increase in reckless driving, car insurance companies are prepared to cover more incidents each year.
Despite the recent increases in insurance premiums, experts predict that they could come down in the future. The biggest advice to drivers looking to lower rates is practicing safer habits on and off the road– avoid distracted driving, stop speeding, and take precautions to keep your car safe from theft. Not only will you do your part to drive down accidents, but you may even qualify for some safe driving discounts in the meantime.
How to Shop for Car Insurance (Step-by-Step)
With the range of insurance options at your disposal, it can be difficult to navigate at first. Once you’re ready to start shopping, here’s an easy process you can follow to find the best policy for you.
1. Gather Your Essential Info
When shopping for auto insurance, you’ll need to gather specific information to provide to each carrier in order to get a quote. For your convenience, start by consolidating everything into one document or folder so you can access it as needed.
While the quote request process may vary slightly by company, most require the same basic information. Try to fill this in as accurately as possible in order to generate a quote that reflects your actual rate.
Basic personal information:
- Full name
- Address
- Date of birth
- Social security number (SSN)
- Gender
- Marital status
- How long you’ve lived at your current address
- Whether you own or rent
Vehicle details:
- Make/model/year
- Vehicle identification number (VIN)
- Mileage
- How your car is used (pleasure, commute, business)
- Whether you own, lease, or finance
- Where your car is parked
- Anti-theft devices or safety features
Driving history:
- Age at which you got your first auto license
- Whether you’ve completed a driver training course
- Motor vehicle accidents or violations
Current insurance information:
- Whether you’re currently covered by an auto insurance policy
- How long you’ve had your insurance
- When your policy expires
- Coverage limits
While you may be able to answer most of these questions off the top of your head, it’s useful to have key documents and numbers on hand to reference. For example, locating your Motor Vehicle Report (MVR) and insurance declaration page can help set you up for success.
2. Figure Out Which Policy You Need
Understanding the different types of auto insurance policies is crucial for selecting the right coverage. Let’s go over the most common policy types you’ll want to consider.
Bodily Injury Liability Coverage (BI)
Bodily Injury Liability insurance steps in to cover the expenses for someone else if you’re responsible for injuring them in an accident. It includes coverage for medical bills, lost wages, and pain and suffering, extending not only to you but also to any listed drivers on your policy.
Do you need it?
Most likely, yes. Having BI coverage is a requirement in every state except for Florida, but it’s a good idea to have it regardless in case of an accident.
Property Damage Liability Coverage (PD)
Property Damage Liability insurance protects you in situations where you’re at fault for an accident that results in damage to another person’s vehicle or property. It handles the repair costs for the other party’s vehicle or any other property harmed in the incident.
Do you need it?
Yes. Unless you’re a New Hampshire resident, PD coverage is required by law. However, even drivers in The Granite State would benefit from this policy to protect against hefty repair costs.
Personal Injury Protection (PIP)
Personal Injury Protection, or PIP, covers medical expenses for you and your passengers following a car accident, regardless of who’s at fault. It also provides coverage for lost income, childcare expenses, and funeral costs related to the accident.
Do you need it?
It depends. If you live in a no-fault state (or Connecticut), Personal Injury Protection is required by law. However, no matter where you live, it’s worth including on your policy to supplement your health insurance, and to protect your passengers.
Collision Coverage
Collision insurance covers the costs of repairing damage to your vehicle resulting from a collision with another vehicle or object. It’s a crucial component of a full-coverage insurance policy.
Do you need it?
Possibly. If you’re leasing or financing your vehicle, collision coverage is required by your lender. However, even if you own your vehicle outright, collision coverage still may be worth the investment.
Drivers who own older cars retaining little value may consider forgoing this policy, since it only pays out as much as the car is worth. Either way, it’s still a good idea to weigh the risks and benefits before rejecting any coverage.
Comprehensive Coverage
Comprehensive insurance takes care of damages to your vehicle that don’t stem from collisions, such as those caused by severe weather, vandalism, or theft. It’s typically included in full-coverage policies.
Do you need it?
Maybe. We recommend following the same guidelines for comprehensive and collision coverage. While it’s required for those leasing or financing their vehicle, it’s still a smart move for those who own a car they want to protect.
Underinsured/Uninsured Motorist Coverage
Uninsured Motorist (UM) coverage steps in to cover your expenses if you’re in an accident with a driver who lacks auto insurance. Underinsured Motorist (UIM) coverage protects you if the at-fault driver’s insurance limits are insufficient to cover your costs.
Do you need it?
It depends, but probably yes. UM coverage is mandated by law in 20 states, and UIM is required in 14. However, it can be critical in protecting you against unexpected costs, especially if you live or frequently drive in an area with a lot of uninsured motorists.
Insurance requirements vary widely by state, so it’s important to check whether your policy meets required minimums. See this chart from the Insurance Information Institute for reference.
3. Decide on a Deductible and Coverage Limit
Once you’ve decided which policies you need, you’ll want to figure out where you want to set your deductible and coverage based on your finances and risk tolerance.
In an auto insurance policy, your deductible is the amount you must pay out of pocket before your insurance coverage applies to cover a claim. You can often select different deductibles for different types of coverage. For example, you may set your deductible at $500 for collision coverage and $250 for comprehensive coverage. Liability insurance typically doesn’t have a deductible.
As a rule of thumb, the higher your deductible, the lower your insurance premiums. However, it’s important to assess whether you can afford to pay the out of pocket amount in the case of an incident. In other words, even though it’ll save money in the short term, it might not be worth choosing a higher deductible if it outweighs your savings.
A coverage limit, on the other hand, is the maximum amount that your insurance will pay out for a claim. Similar to your deductible, your limits can vary by coverage type. For example, you may see your liability limit displayed as three numbers: $10,000/$25,000/$15,000.
In this case, your insurer will cover a maximum of $10,000 in bodily injuries per person, $25,000 in bodily injuries per incident, and $15,000 in property damage per incident. You’ll need to confirm that these amounts meet the requirement minimums for your state.
Unlike deductibles, auto insurance coverage limits have a direct relationship with your insurance premiums. In other words, opting for higher coverage limits leads to higher rates.
4. Compare Quotes Across Carriers
Once you have your information and coverage needs figured out, it’s time to start shopping around. To compare car insurance quotes, you can request them through a variety of channels, including directly from an agent at an insurance company, through a broker or independent agent, from a company’s website, or with an online comparison tool.
We’d recommend starting with a comparison tool to get quotes from several different carriers for free. Typically, a car insurance quote will also include information about discounts you qualify for, and how much you can save.
5. Choose an Auto Insurance Policy That Works for You
After reviewing several quotes and considering your options, it’s time to select an auto insurance policy that offers the coverage you need at a price you can afford. Keep in mind that you may need to provide documentation to confirm your information and qualify you for discounts.
Lying for better car insurance rates can lead to serious consequences, including policy cancellation, rejected claims, higher premiums, and even fraud charges. That’s why it’s essential to make sure that you have proof to back up what you tell your carrier.
More Ways to Save on Auto Insurance
Take advantage of car insurance discounts
Many car insurance companies offer discounts for things like good driving records, multiple policies, and safety features on your car. Be sure to ask your insurance agent about what discounts you may be eligible for.
Popular discounts to look out for include:
- Student discounts: If you or a family member is enrolled in high school or college full-time, you may be able to get a discount with a qualifying GPA.
- Group discounts: If you belong to a group such as a professional organization or a military branch, you may be eligible for a group discount on car insurance
- Military discounts: If you’ve served any time in the military, you may qualify for special savings. In some cases, this may also apply to family members.
- Early shopper discount: Buying a new policy before your current one expires can get you a special rate.
- Defensive driving discount: Many providers offer discounts for completing defensive driving courses, which teach you how to avoid accidents and reduce your risk of getting a ticket.
- Safety features discounts: Some insurance companies offer discounts for installing safety features such as anti-lock brakes, airbags, and anti-theft devices.
Bundle your insurance policies
If you have other insurance policies, such as homeowners or renters insurance, consider bundling them with your car insurance. Many companies offer discounts for bundling policies.
Consider buying a less expensive car
The type of car you drive has a big impact on your insurance rates. Cars that are more expensive to repair or more likely to be stolen tend to have higher insurance rates. When you’re shopping for a new car, be sure to consider the insurance costs.
Drive safely
One of the best ways to save money on car insurance is to avoid accidents. Getting a ticket or having an accident can cause your rates to go up significantly. Be sure to drive safely and obey the traffic laws.
What’s Next: Find Your New Car Insurance Policy Now
Ready to start shopping for auto insurance? There’s no need to wait. Check out our free rate comparison tool to find a policy that works for you.