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How to Buy Car Insurance

Follow these helpful hints before you sign on the dotted line.


  • Step 1: Check your credit Check your credit report for errors. Insurance companies use your credit rating to help determine your rate.
  • TIP: Request a copy of your credit report by logging onto or by calling 1-877-322-8228. You are entitled to one free copy per year.
  • Step 2: Obey the law Find out the minimum car insurance required by law on your state’s Department of Insurance web site.
  • TIP: Only New Hampshire and Wisconsin don’t require car insurance. But since they do require people to pay for accidents they cause, many people carry it anyway.
  • Step 3: Consider more liability coverage Consider buying more liability insurance than your state requires. Consumer groups recommend a minimum of $100,000 for injuries per person, $300,000 per accident, and $100,000 in property-damage liability.
  • TIP: Most American car insurance does not cover you if you’re driving outside the United States. Some policies are valid in Canada and Mexico, but check if your coverage meets those countries’ requirements.
  • Step 4: Crunch some numbers Collision coverage pays for the repair or replacement of your vehicle. If your car is more than five years old or worth less than $4,000, it may not be worth it.
  • Step 5: Consider comprehensive coverage Comprehensive coverage covers you if someone steals your vehicle or if it’s damaged by a windstorm, fire, hail, or vandalism. But if your car is more than 12 years old, unless it’s a valuable vintage set of wheels, the cost may outweigh the potential benefit.
  • Step 6: Weigh the advantage of add-ons Weigh the advantage of other add-ons, such as extra medical coverage, emergency roadside assistance, and glass breakage.
  • TIP: Consider buying uninsured or underinsured motorist protection, even if your state doesn’t require it. This provision protects you if someone with no insurance causes a collision with you.
  • Step 7: Shop around Shop around. Get a general quote from an insurance company’s web site by plugging in basic information like your zip code and car model. Some web sites offer quotes from several companies so you can compare rates. Just be aware that these quotes reflect a bare-bones policy with no add-ons.
  • Step 8: Ask about discounts Once you choose a company, ask if you’re eligible for discounts. Having air bags, antilock brakes, or an antitheft device can reduce your rates. So can a clean driving record, carpooling, a car with low mileage, and good grades if you’re a student. Drivers between 50 and 65 also may qualify for discounts.
  • Step 9: Choose a deductible Choose the highest deductible you can afford in order to pay the lowest premium possible.
  • Step 10: Pay up-front Once you decide on a policy, pay the entire premium up-front to save the monthly service fee.
  • FACT: An estimated 14 percent of drivers in the U.S. are uninsured.

You Will Need

  • A credit report
  • Knowledge of local law
  • Careful consideration
  • Competing quotes
  • Extra coverage

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