buy car insurance

You’ll save money if you can get on your parents’ insurance policy.

Delving into the unknown is always a little scary, and when money is involved the stakes get even higher. But there’s no reason to get sweaty palms and heart palpitations just because you’re getting ready to buy your very first car insurance policy. As long as you stay focused on the basics, and do a little comparison shopping, you can face the insurance giants with confidence, and maybe even score a few discounts you didn’t know were available.

Determine What Kind of Car Insurance You Need

You need different kinds of car insurance to cover different kinds of incidents. Every state requires you to carry liability insurance, although some states will allow you to post a bond in lieu of carrying liability insurance. Liability kicks in if you are responsible for an accident that injures another person or damages their property, but it doesn’t pay anything for your own injuries or damages to your car.

You’ll need collision insurance and medical payments or personal injury protection insurance to pay for damages to your car and to cover any injuries you sustain in an accident when you are at fault. Comprehensive insurance covers your car against non-accident damage, such as a hail storm or vandalism. And since there’s no guarantee that the other guy carries sufficient insurance if the accident is his fault, you can buy uninsured/underinsured motorist insurance. Collision and comprehensive insurance are not required in any state, although your lender might require such coverage. Some states require you to carry uninsured motorist or personal insurance protection insurance.

How Much Car Insurance Is Enough

Minimum requirements for liability insurance are dictated by state law, and vary from state to state, but it’s up to you to decide if state minimums offer sufficient protection. The average cost of an incapacitating injury was $70,500 in 2011, according to the National Safety Council. If you’re carrying $30,000 worth of personal injury liability insurance, you’d be on the hook for the other $40,500. “Insurance is peace of mind for the what-if situations,” says Deborah Belknap, a claims specialist with The Crichton Group in Nashville, Tennessee. “Carrying the minimum will let you drive legally in your state, but the real purpose of insurance is to protect your assets, which could include your home, your savings, your investments or even your future earnings. We recommend carrying personal injury liability insurance with coverage of at least $100,000 for one individual and $300,000 for all injuries sustained in a single accident. The increase in premium is really minor compared to the increased coverage.”

Setting Your Deductibles

Your insurance company looks at your deductible as your “skin in the game.” It’s the amount you have to cover before the insurance company starts paying. There are no deductibles for your liability insurance, but choosing the right deductible for your collision and comprehensive policies can have a major impact on your premiums. “The risk of a comprehensive claim is lower, so carrying a $250 deductible or even less makes sense,” Belknap says. “For collision I don’t recommend go lower than $500 or even $1,000 because of how much that lower deductible will increase your premium. But it depends on the vehicle and how much you have in savings to cover the cost of minor repairs.”

Ask About Discounts

Auto insurance can be expensive, but you don’t always have to pay sticker price for it. A number of insurance companies offer discounts if you fit into a particular category. “You’ll always get the best discount for being a safe driver,” Belknap says, “but there are other deals available. If you’re still in school, ask your agent about good student discounts, and packaging your auto policy with your homeowners or other vehicles can also earn you a discount.” You might get a break for taking a defensive drivers course or if your car has certain safety or anti-theft devices. It never hurts to ask, and it could save you some big bucks.

Shop Around for Best Rates

It pays to shop around, but just make sure you’re comparing apples to apples. Get quotes based on the same levels of coverage with the same deductibles. Auto insurance is a competitive industry, so there will likely be a range of price options available, but price is not the only factor worth considering. “The primary issue is service and trust,” Belknap says. “You want to an insurance company that is stable and reputable, with at least an “A” rating by a major independent ratings organization. The bottom line is always claims. You want to know that when you need them, your insurance company will be there to take care of you.”

When it comes to finding the best auto insurance, check with the Better Business Bureau or your state insurance commissioner to see if there have been complaints against the companies you are interested in. Consumer ratings agencies, such as JD Power & Associates, provide customer satisfaction ratings that can help you choose.