Car Insurance Shopping FAQs--Answered!

When shopping for car insurance, we often get confused and overwhelmed with the requirements and the number of policies available to us. It may even be more difficult if you are a first time buyer who wants to get the cheapest possible rates that offer the best coverage. Lighten up because here are the frequently asked questions about auto insurance shopping.

Q: Is it really a requirement to get car insurance?

A: Yes. In fact, almost every state requires that you have liability car insurance, which would cover damages to other people's vehicles and property. Even if you live in a state where car insurance is not mandatory, you still must show proof of financial capacity to pay for any damage you cause in case of an accident. Otherwise, you will have to purchase your own car insurance.

Q: Should I buy car insurance first before I buy a new car?

A: You will only need car insurance before you can drive around with your car--provided that this is your first car and first time to buy car insurance. If you are financing the vehicle, your lender will likely require you to have insurance at the time of the purchase anyway.

If you are just replacing your old car and thus you already have existing car insurance, you have 14 to 30 days to inform your car insurance company of the purchase. This is necessary because your car insurance rate will then be adjusted based on the new vehicle model. It may be tempting not to inform your car insurance company especially if you bought a sports car to replace an old truck but you could be driving without coverage if this happen.

Q: How can I reduce my car insurance costs?

A: Always shop around for auto insurance quotes and ask the auto insurance companies for discounts. You can also lower your rate if you have a clean driving record so you might want to start driving safely from now on.

Q: How can I reduce my auto insurance rates for my teen driver?

A: Do not add your teenager to your policy until he or she gets her driving license. Just because they have reached driving age doesn't mean they need to be listed on your policy as this would greatly increase your cost. Wait until they have acquired their license and make sure you are buying them an old simple car instead of the shiny sports car they desire. If your teen has good grades he or she may qualify for discounts as well.

Shopping for car insurance can be much easier for you with the advice and tips above. Car insurance companies provide you with a very valuable service, but that doesn't mean you should have to pay top dollar. Comparing car insurance rates can be time-consuming, but it will save you a lot of money in the future.