8 Key Tips: First-Time Car Insurance Buyers' Guide

When understanding the basics to find the best deal, you need to hold on tight, 'cause first-time car insurance buyers have some twists and turn to navigate. It's essential to buckle up and get ready for the ride. In this comprehensive guide, we'll share seven key tips that'll make the process smoother than a well-tuned engine.


Now, before you hit the open road, you've got to get familiar with the ins and outs of car insurance. We'll steer you through the different types of coverage, state minimum requirements, and how those premiums are calculated. With our help, you'll be cruising through your car insurance journey like a seasoned pro in no time.

But don't worry, we won't leave you hanging when it comes to saving some dough. We'll show you how to compare quotes, evaluate providers, and even customize your policy to fit your needs. So, let's put the pedal to the metal and dive into our ultimate first-time car insurance buyers' guide!


Getting a Car Insurance for the First-Time

To make an informed decision when getting car insurance for the first time, it's wise to familiarize yourself with the different types of coverage available.

Generally, an auto insurance policy consists of various components, including:


Liability Insurance

Liability insurance is essential as it covers damages caused to someone else's property, such as another vehicle or a fence. It also covers insurance for injuries caused to others in an accident and legal defence costs if you face a lawsuit. Most states require this type of insurance.

You have the option to choose the minimum required coverage or opt for a higher amount. It's important to note that liability insurance does not cover damages to your vehicle.

Collision Insurance

Collision insurance offers protection for damages to your car resulting from an accident, regardless of fault. It also covers damages if you collide with objects like guardrails. Unless you finance your car, collision insurance is typically optional. In the event of a total loss, it pays out up to the actual cash value of your vehicle.

Collision insurance comes with a deductible, which you can choose, and if you file a claim, the deductible amount is subtracted from the payout.

Comprehensive Insurance

Comprehensive insurance, another optional coverage, safeguards your vehicle against theft and damages caused by fire, hail, flooding, vandalism, falling objects, or animal collisions, such as hitting a deer.

Similar to collision insurance, comprehensive coverage has a deductible. If your car is totalled, it will pay out up to the actual cash value of the vehicle.

Other Types of Coverage

Depending on your state's regulations, you might be offered or required to purchase additional types of coverage, such as personal injury protection or uninsured motorist coverage.

It's a prudent step to shop for car insurance before buying a vehicle. Without insurance in place, you may not be able to drive your new car off the dealer's lot. To take the car home with you, you'll need to provide proof of insurance.

Additionally, it's important to budget for insurance costs along with loan payments and vehicle maintenance expenses. Although multiple factors influence insurance premiums, the type of vehicle you drive plays a significant role. Therefore, it's beneficial to have an idea of the most and least expensive cars to insure before finalizing your purchase.

Here’s what you can do ahead of time:

  • Have a make and model in mind. When you're ready to get car insurance for the first time, it's important to have a specific make and model in mind.

Whether it's a shiny new Toyota Camry or a pre-owned Honda Civic you're eyeing, having this information handy allows insurance agents to provide accurate quotes, helping you plan your budget accordingly.

  • Understand what coverage types you’ll need. Understanding the types of coverage you'll need is crucial. Most states require car liability insurance, while if you're financing or leasing a vehicle, collision and comprehensive coverage will likely be necessary.

Knowing these requirements ensures you're adequately protected and in compliance with any contractual obligations.

  • Compare quotes from multiple car insurance companies. To find the best insurance rates, it's wise to compare quotes from multiple car insurance companies. You can either consult an independent insurance agent or use online comparison sites tailored for car insurance.

Remember to compare quotes for the same coverage level, ensuring a fair and accurate comparison among insurers.

  • Ask your insurance agent to set up a policy. Once you've chosen your desired car and have the vehicle identification number (VIN) at hand, asking your insurance agent to set up a policy becomes a straightforward process. By providing the VIN, you can have your policy ready even before heading to the dealership.

In case you don't have the VIN yet, you can still initiate the policy setup by providing essential information like the drivers in your household and the address where the vehicle will be kept. Later, when you finalize your car selection, simply call your agent with the VIN to complete the purchase of your car insurance policy.

8 Smart Tips for First-Time Car Insurance Buyers

Obtaining auto insurance is a practical and essential decision for first-time car buyers, considering all the potential risks involved in driving. It's important to remember that it is also mandatory for first-time insurance buyers to have their vehicles insured.

The law requires first-time insurance buyers to acquire at least CTPL coverage. Since you are a first-time car insurance buyer, why not take advantage of this opportunity to make an informed decision and choose the right auto insurance policy?

The common mistake many first-time insurance buyers make is purchasing a policy right after buying their first car solely for compliance purposes. While this approach helps you comply with the legalities of owning and driving a car, it may not be the most practical option for your finances.

To assist first-time car insurance buyers in selecting the right policy for their needs, here are eight smart tips worth following:

Tip #1: Get Acquainted With the Terminology of Car Insurance to Find the Best Insurance for First-Time Buyers

If you're purchasing auto insurance for the first time, the plethora of technical words can be overwhelming. However, it's crucial to gradually familiarize yourself with insurance jargon, especially when seeking the best insurance for first-time buyers.

By doing so, you'll find it easier to navigate your options and select the right plan that caters to your specific needs. Additionally, understanding these terms will facilitate effective communication with your advisor, ensuring that they comprehend your desired coverage for your car insurance policy as a first-time buyer.

Initially, the terminology might confuse you, but as you continue reading and utilizing the terms, they will become more familiar. This will empower you in your quest for auto insurance for first-time buyers.

Tip #2: Evaluate Your Driving Habits

The ideal car insurance plan is one that adequately caters to your requirements. To find the right policy, it is crucial to assess your driving habits, needs, and typical risks. Before seeking quotes, take the time to analyze your situation.

Do you frequently drive in flood-prone areas? Or do you primarily commute within accident-prone city areas? Are you an avid traveller, often embarking on out-of-town trips?

Your driving habits will significantly impact the coverage that should be prioritized when designing your plan.

Tip #3: Seek Out Reputable and Dependable Insurance Companies

Aligning yourself with trustworthy insurance providers is one of the simplest ways to ensure you receive excellent protection. Especially as a first-time buyer, it is worthwhile to conduct thorough research on different insurance companies before making any decisions.

Explore the internet to learn about the reputation of the car insurance company you're considering, particularly in terms of claim settlement.

Gain knowledge about their claim processing time and financial stability. Diligent research will help you avoid inconveniences after signing a contract.

Tip #4: Compare Insurance Quotes

Some individuals settle for the first quote they receive, but this may not be the most beneficial approach if you're aiming for the best value from your insurance policy. It's recommended to search for other providers and collect at least three quotes to choose from.

Carefully examine the coverage, features, and rates offered in these quotes. If needed, consult an agent to clarify any uncertainties regarding the specified coverage.

While this may initially seem like a time-consuming process, it will undoubtedly help you secure a better deal. If you prefer a time-efficient method, consider conducting your comparison shopping online using platforms such as Kwik.insure.

Tip #5: Take Your Budget Into Consideration

Apart from your vehicle and driving habits, it's important to factor in your budget when comparing insurance quotes. Remember, if you want more coverage and security, it often means higher expenses.

If you feel that something is missing after reviewing the coverage and rates of your options, consider adding extra coverage. Identify the additional coverage you need and calculate the estimated cost. While add-ons come with extra premiums, they provide added benefits.

Be wise with your funds. Avoid stretching your budget and only get the coverage you truly need. This ensures you can pay your premiums consistently, even if your financial situation changes in the future.

Tip #6: Maintain a Good Credit Score

When applying for car insurance, your driving history and vehicle type are considered to determine your premiums. Additionally, insurance providers evaluate your credit score.

Regularly check your credit score even before you start shopping for car insurance. Insurance companies use it to assess potential risks, and a lower score can result in higher premiums. Key factors they look at include payment history, length of credit history, and types of credit.

Tip #7: Utilize Available Discounts

Certain factors, such as age, marital status, driving record, and completion of driver training programs, can make you a "low-risk" customer. This can make you eligible for specific discounts.

Installing anti-theft and safety equipment in your vehicle may also lower your premium. Take advantage of these factors to reduce costs and secure a better car insurance deal.

Tip #8: Read and Understand Before Signing

Before finalizing your insurance plan, carefully review the coverage details. Take your time to understand the items specified in the policy.

Once you're satisfied with the clauses and terms, sign the papers with confidence, knowing that your vehicle and loved ones are well-protected.

Primary Benefits of Having a Car Insurance Policy

1. Coverage for Collisions

True to its name, a car insurance policy offers protection against the financial burden of vehicle repairs in the event of a collision. In most cases, you'll be covered regardless of fault.

This is particularly advantageous when you own a new or relatively new car, as repairs and car parts can be quite costly.

2. Protection for Property Damage Liability

If you are responsible for an accident, this coverage ensures that you are shielded from financial responsibilities concerning repairs for vehicles, property, and other non-human damages.

For instance, if you accidentally crash into your neighbour's fence, this coverage will help cover the costs of repairing or replacing the fence. It also provides coverage for legal fees if any related legal actions are taken against you. It's important to note, however, that damages to your own vehicle are not included.

3. Safeguarding With Bodily Injury Liability Coverage

This coverage provides you with protection from financial obligations in the event that you cause harm or injury to another person in an accident.

It encompasses medical treatment costs, rehabilitation expenses, and, in some cases, lost wages, pain-and-suffering damages, emotional distress, legal fees, and funeral costs.

Simply put, bodily injury liability coverage compensates for the damages suffered by others in an accident for which you are responsible. This includes your passengers, as well as other drivers, passengers, and pedestrians involved.

4. Comprehensive Coverage for Comprehensive Protection

It's essential to remember that the term "comprehensive" does not imply that it includes all the coverage you may need, despite its name. Car insurance terms can be misleading, so it's crucial to pay close attention.

Comprehensive coverage safeguards against damages resulting from incidents other than collisions. These incidents can include theft, vandalism, fire, riots, falling objects, and natural disasters.

Moreover, this coverage provides protection in case your car and/or its contents are stolen.

5. Mandatory Compulsory Third Party Liability (CTPL)

This coverage is required by the Land Transportation Office (LTO) when purchasing a new car or renewing your vehicle's registration.

CTPL safeguards you from financial responsibilities related to bodily injuries, permanent disabilities, and even the death of third parties involved in an accident.

However, it's important to note that CTPL does not provide coverage for you as the vehicle owner or your passengers. Relying solely on CTPL leaves your family and passengers vulnerable to significant financial risks in the event of an accident.

Common Car Insurance Myths You Should Avoid

  1. MYTH: My insurance rates are not influenced by the type of car I drive.

FACT: The type of car you drive does indeed have an impact on your car insurance rates. In Canada, most insurance companies utilize the Canadian Loss Experience Automobile Rating (CLEAR) system.

This system evaluates vehicles based on factors like safety records, susceptibility to theft, and repair or replacement costs. While multiple factors are considered when determining your insurance rate, driving a car with a better CLEAR rating can potentially lower your premiums.

It's advisable to assess how a prospective car measures up before making a purchase. The Insurance Bureau of Canada provides a publicly-available fact sheet that outlines popular Canadian car models and the associated statistics affecting insurance costs.

2. MYTH: Insuring a red car is more expensive.

FACT: The colour of your car has no bearing on your car insurance premium. Your premium is calculated based on various factors, such as your location, driving record, and the make and model of your vehicle. However, the colour of your car is not taken into account.

3. MYTH: Parking tickets lead to increased insurance rates.

FACT: Parking tickets do not directly impact your car insurance rates. While other driving infractions like speeding tickets, failure to stop for a stop sign, and at-fault collisions generally affect your premium, parking tickets do not.

Nevertheless, it's important to note that unpaid parking tickets could affect your ability to renew your car's license plate.

4. MYTH: If my car gets stolen, my car insurance will cover any personal belongings left inside the vehicle.

FACT: Your car insurance policy is designed to protect you, your passengers, and your vehicle in the event of an accident. However, it does not provide coverage for personal items that are stolen from your car, such as your golf clubs, laptop, or smartphone.

The good news is that your home insurance or tenant insurance policy can typically offer coverage for stolen items from your car.

I recommend speaking with your home insurance broker to review the contents coverage of your current policy and explore additional coverage options.

5. MYTH: My car insurance rates will remain unchanged when I move.

FACT: When you move to a different neighbourhood, your car insurance rates are likely to change. Where you live is an important factor in determining your rates, considering the claim history of the area and the distance of your new commute to work.

Therefore, it's highly unlikely that your insurance premium will stay the same after relocation.

6. MYTH: New cars have higher insurance costs compared to older cars due to a higher risk of theft.

FACT: Contrary to popular belief, the majority of frequently stolen vehicles listed by the Insurance Bureau of Canada in 2018 were over a decade old. Insurers consider various factors when calculating car insurance rates.

If your brand-new car is more expensive to insure than your older vehicle, it could be due to higher repair or replacement costs or a higher likelihood of being involved in collisions.

7. MYTH: If I lend my car to a friend and they have an accident, it will impact their insurance rates, not mine.

FACT: If you lend your car to someone and they have an accident while driving it, your insurance coverage will typically be used to cover the claims. Consequently, any claims filed will likely affect your insurance record as well.

When you lend your car, you're essentially lending your car insurance too. So, it's important to choose a driver you trust to drive safely.

8. MYTH: Men always pay higher car insurance premiums than women.

FACT: This is not true for men aged 25 or older. Car insurance rates are influenced by several factors, including driving record, age, location, commute distance, and the make and model of the vehicle.

Men under 25 are generally considered riskier to insure statistically, leading to higher premiums compared to women of the same age. However, after a male driver turns 25 and more personal information and driving history become available, premiums tend to change.

Insurers often prioritize a safe driving record and claims-free history over statistical groups.

9. MYTH: Shopping around for insurance rates will cause an increase in premiums.

FACT: Your car insurance premiums will not go up if you shop around for different coverage options. It's important for drivers to explore their options and compare prices to ensure they find the best coverage that suits their individual needs.

Insurance brokers can assist in shopping the market on your behalf, helping you find the right coverage at the best price. They also act as advocates for politicians, provincial regulators, and insurance companies.

To learn more about the benefits of using an insurance broker, I recommend watching this informative video.

10. MYTH: I must wait until my policy's renewal date to switch or cancel insurance companies.

FACT: You have the flexibility to cancel your policy before its renewal date. However, keep in mind that cancelling mid-term often incur a cancellation fee. It's important to weigh the potential savings of changing your plan early against the associated fee.

Tips for Choosing the Right Car to Keep Insurance Costs Low

Here are ways a first-time car insurance buyer can save money:

1. Explore your options

To save money, it's wise to explore and compare car insurance quotes from various companies. Insurance rates can vary significantly between insurers, so taking the time to shop around can lead to substantial savings.

You can conveniently obtain free quotes online or seek assistance from an insurance agent who can provide quotes from multiple companies, saving you valuable time.

2. Determine the appropriate coverage

Understanding the ideal amount of car insurance you require is crucial. Consulting with an insurance agent can help you assess and determine the appropriate coverage limits. While it's essential not to be underinsured, you also don't want to overpay for coverage that exceeds your needs.

3. Inquire about available discounts

Numerous car insurance discounts exist, offering potential savings. Take the initiative to inquire about these discounts, which can include multi-policy discounts, new car discounts, and defensive driver discounts, among others. By taking advantage of these opportunities, you can further reduce your insurance costs.

4. Maintain a good credit score

In many states, auto insurance companies consider credit as a pricing factor. Having poor credit can result in higher insurance premiums. That's why it's crucial to prioritize maintaining a good credit score. By doing so, you enhance your chances of securing the most affordable car insurance rates available.

First-Time Car Insurance Buyers' FAQs

1. Is Special Auto Insurance Required for Delivery Purposes?

It's important to consult your insurance agent if you plan on using your car for deliveries. Typically, personal auto policies do not cover business-related usage. You might need to consider

2. What Are the Consequences of Driving Without Car Insurance?

Driving without car insurance can lead to both financial and legal repercussions. In addition to fines and penalties, such as license revocation and potential jail time, you may also face higher insurance rates when purchasing a policy in the future.

3. What Factors Make Car Insurance Expensive for First-Time Buyers?

Several factors contribute to the potentially high cost of car insurance for first-time buyers. Insurance rates can vary not only by state but also by city, taking into account variables like population density and crime rates.

Additionally, age and driving history play a significant role, particularly for young drivers who lack experience. For a more detailed understanding of why your insurance rates are high, it's advisable to consult a licensed insurance agent.

4. Can You Buy Car Insurance at the Dealership?

Buying car insurance at the dealership is a possibility, especially if you're financing your vehicle and need collision and comprehensive coverage. However, it's important to note that this convenience might not lead to the best insurance prices.

Dealerships often have limited partnerships with only a few insurance companies, limiting your options. To ensure you secure the most competitive rates, it's recommended to research and compare quotes from various insurers in advance. This proactive approach not only saves you time but also helps you save money when you visit the dealership.

Another aspect to be cautious about at the dealership is the offer of gap insurance. While gap insurance covers the difference between your insurance payout and the remaining car loan balance if your vehicle is totalled, it's often more cost-effective to purchase this coverage through your insurance company rather than the dealership.

Dealership-offered gap insurance can cost between $400 and $900, rolled into your auto loan. On the other hand, obtaining gap insurance through your insurance company typically costs around 5% to 7% of your collision and comprehensive coverage premium, amounting to approximately $15 to $42 per year.

Additionally, buying gap insurance from your insurer allows you to discontinue the coverage when the value of your vehicle approaches or exceeds your loan balance, whereas dealership-provided gap insurance remains in effect until the loan is fully paid off.

5. What Details Should You Provide When Purchasing Car Insurance?

Prior to purchasing a car insurance policy, it is essential to gather specific personal information for yourself and any additional drivers to be included on the policy. These details typically include:

  • The driver's license numbers of all individuals listed on the policy.
  • The date of birth of all individuals listed on the policy.
  • The garaging address of the vehicle usually corresponds to your home address.
  • The vehicle identification number (VIN) for each vehicle being insured.
  • Any safe-driving courses completed by you or any drivers on the policy.
  • Academic grades for student drivers (as good grades may qualify for a discount).
  • An estimation of the desired amount of liability car insurance coverage.

Final Pit Stop: First-Time Car Insurance Buyers' Insights

As we cruise to the finish line, remember, first-time car insurance buyers, that the journey to finding the perfect policy doesn't have to be a bumpy ride. With these 7 key tips under your belt, you'll be equipped to make informed decisions, score some sweet discounts, and keep your insurance rates low in the long run.

Stay safe on the road and enjoy the freedom that comes with your new set of wheels! Keep in mind that the world of car insurance is constantly changing, so stay on top of the latest trends and updates to make sure you're getting the best deal possible.

Don't be afraid to shop around and ask questions – after all, you've worked hard for that dream car, and you deserve the best coverage to protect it. Happy driving, friends, and may your first-time car insurance experience be as smooth as the ride in a '69 Mustang!