Whether you’re looking to buy an auto insurance policy for the first time or you’re looking to try and save money on your premiums, car insurance can be confusing.

When shopping for car insurance, most people have questions – like how much should you be paying? What kind of coverage do you need?

These are important questions. Not knowing the answers could mean that you’re paying for coverage you don’t need.

Do I Need Car Insurance?

There are three reasons why every driver should have car insurance.

Firstly, it protects you against liability – meaning that any damage you do to another driver, car, or property is covered. Liability coverage is also referred to as third-party coverage. Even the cheapest car insurance policies cover liability.

The second reason to purchase auto insurance is that it protects you, your car, and your passengers. This is a type of first-party coverage that covers medical bills and collisions. Comprehensive coverage may also protect your vehicle in the case of theft, vandalism, or a natural disaster.

Finally, purchasing car insurance means you are complying with the law. Almost every single state in the U.S. requires every driver to have liability or third-party coverage as a prescribed minimum.

What Factors Affect My Insurance Premium?

Aside from the coverage and deductible you choose, the other factors that influence your insurance premiums include the car you drive, how far you travel annually, your credit score, your driving record, where you live, and your age.

Insurance companies consider all the above factors when assessing your risk. For example, your insurance premiums may be higher than average if you are under the age of 25, live in a densely populated area, have a luxury vehicle, and have a penalty on your driver’s license.

How Do I Shop for Car Insurance?

While your monthly auto insurance premiums will usually be one of your most significant car expenditures, there is a way to lower the cost.

Comparison Shopping

Insurance rates can vary between providers – even when the coverage is the same. Taking time to compare policies from three insurance providers is the best way to find the lowest premiums for your car insurance.

When you’re ready to compare insurance quotes, gather all your information – such as your vehicle information number, driver’s license information, driver’s history, vehicle mileage, and insurance history (if applicable).

When asking for quotes, make sure you specify the right amount of liability coverage. Although your state will set the prescribed minimum, you may want to request another quote with more liability coverage. Bear in mind that if you don’t have enough liability coverage, you’ll need to pay for a portion of third-party damages out of your own pocket.

Now is also the time to decide if you want to purchase third-party coverage or more comprehensive coverage. Liability coverage will not cover your hospital bills or car repairs if you have an accident, and it won’t cover car theft or vandalism.

Be sure to give each provider the same information and request quotes for the same deductible and coverage.