How to choose the right auto insurance coverage for your new car

Bought a new car during the pandemic? Don’t forget this critical step. (iStock)

The coronavirus pandemic has many Americans shying away from public transport. The result? Increased personal car sales — especially from dealerships offering home delivery service. In fact, according to a study by automotive marketplace Cars.com, vehicle sales are up 35% at dealerships offering this hands-off perk. In more public-transit-heavy cities like New York and Chicago, sales are up even more (81% and 65%, respectively).

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If you’re one of the millions who has purchased a car since the pandemic began — or you plan to in the near future — don’t forget to secure the right insurance before getting behind the driver’s seat. As with your car purchase, buying insurance can be done online just as easily. Check out Credible's auto insurance options now.

Here’s what you need to know about finding an auto insurance policy and getting coverage:

How to find the right car insurance coverage

Car insurance is important for a few reasons: First, in most states, you’re required to have it to operate a vehicle. These requirements usually include some level of both property damage and bodily injury liability. In most cases, you’ll face penalties, such as monetary fines or even having your license suspended, if you don’t carry at least the minimum amount.

On top of this, auto insurance protects both you and your vehicle. If you damage another car or hurt someone in an accident, it can help cover the costs of repairs and the other driver’s medical bills. Conversely, if you or your car is injured in a collision, it can ensure your expenses are paid for as well.

6 types of car insurance coverage to know

There are a number of items that car insurance can cover. Here’s a quick look at the most common types of coverages:

  1. Property damage liability: This coverage is used to cover expenses associated with property damage — meaning damage done to someone else’s car, house, mailbox, lamp post or any other item in an accident you cause.
  2. Collision: Collision coverage is similar to damage liability, only it’s for your car, not other drivers’. It will cover the costs to repair damage to your vehicle (minus any deductible) if it’s in an accident.
  3. Bodily injury liability: This one covers the costs of any injuries that other drivers or passengers sustain in an accident you’re at fault in. Your state likely has a required minimum for bodily injury coverage.
  4. Medical payments coverage: Similar to bodily injury liability, this coverage is used for medical costs and other expenses associated with an injury. The difference? It’s for you and your passengers — not the other way around. This can also be called Personal Injury Protection or PIP.
  5. Comprehensive: Comprehensive coverage is a sort of catch-all coverage that will cover losses incurred in a theft, natural disaster, act of vandalism or accident involving an animal.
  6. Uninsured motorist coverage: Also called underinsured motorist coverage, this protects you in case you’re hit by an uninsured driver (or one with not enough coverage to pay for the damage). With this coverage, your insurance would pay the difference between what the other driver pays for, and what’s actually required to repair the vehicle. It’s also helpful in hit-and-run situations.

There are also add-on coverages you may be able to choose, like gap and glass coverage, though these vary by insurer. That’s why it’s important to compare several auto insurance companies, as well as their coverages, before signing up for a policy. Credible’s auto insurance marketplace can help with this process.

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How to shop for car insurance

To shop for auto insurance, you’ll want to get quotes from a number of insurers. You can do this by contacting each insurer separately (most have quote forms on their websites) or through an online marketplace like Credible.

Before shopping, make sure you know your state’s required minimums. You can usually find this through your Department of Motor Vehicles.

Once you have a few quotes and are ready to start comparing plans, you’ll want to look at a few factors, including the premium, the coverages offered and when the premiums come due. Some insurers may quote you a lower monthly price, but it’s really for a six-month policy. Others may seem higher, but the policy is for much longer (typically a year). Make sure you’re comparing apples to apples.

Finally, ask insurers about potential discounts. Many offer premium reductions for good credit, bundling your policy, being a good driver and more, so see what you could be eligible for before moving forward.

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How to select the right car insurance company

Beyond pricing and coverage, you should also look at an insurer’s reputation, as well as its claim processes. Some offer online- and app-based claims, which reduce post-accident hassle significantly.

The bottom line is that comparing your options is critical. If you’re looking for the best coverage at the best price, use Credible to start shopping plans now. You’ll get free, personalized quotes from several insurers in minutes.

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