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In most states, you need a minimum amount of car insurance coverage to drive a car. Even in the few states that don't require insurance, you may need to verify that you have enough assets to cover claims if you hurt someone or damage someone's property. Additionally, if you have an auto loan or lease, the lender may require you to have additional types of car insurance or higher-than-minimum coverage amounts.
Do You Need Car Insurance to Buy a Car?
You might not need auto insurance to purchase a vehicle, but you need to meet the minimum coverage requirements for your state before you can drive your new car.
The minimum requirements may include multiple types of car insurance coverage.
| Common State Minimum Coverage Requirements | |
|---|---|
| Liability insurance | Pays for damages and injuries you cause when you are the driver and determined at fault in an accident |
| Uninsured and underinsured motorist insurance | Covers injuries and damage if someone else causes an accident and doesn't have enough (or any) insurance coverage |
| Medical payments or personal injury protection (PIP) | Offers coverage if you or your passengers are injured, can't work or die because of an accident |
Learn more >> How Much Car Insurance Do I Need?
When you buy the car from a dealer, the dealership may ask for proof of insurance before releasing the car. If you already have an auto policy, your insurance coverage might temporarily cover your new car—contact your agent to make sure. Some dealers also offer temporary policies that you can purchase and use while shopping for a permanent policy.
Financed or Leased Car Insurance Requirements
If you're taking out an auto loan or leasing the car, the lender or leasing company will likely require you to have full coverage. This adds the following additional types of car insurance to the minimum requirements:
- Collision: Covers costs when your vehicle is damaged during a collision, such as when you're in an accident, hit a pothole, back into a wall or hit an animal.
- Comprehensive: Covers theft of your car and damage to your car when you're not driving, such as when there's a natural disaster or someone breaks into your vehicle.
You may need to maintain full coverage and specific coverage amounts until you pay off the loan or end the lease.
Do You Need Car Insurance to Rent a Car?
You need to be insured while you're driving a car, even if it's a rental car. If you have an auto policy, it may automatically cover your rental car with the same types of coverage. If not, you can purchase a short-term policy or buy insurance from the rental car agency.
Rental car agencies generally offer several types of policies for liability, medical expenses for you and your passengers and your personal property. Additionally, there may be a loss damage waiver or collision damage waiver, which covers damage to and theft of the rental vehicle.
You'll be offered the coverage even if it replicates what you already have, so compare the options and see if you can save money by declining unnecessary policies.
For example, your auto policy may cover liability, your homeowners or renters insurance could cover your personal property, and some credit cards offer rental car protections that cover collisions and theft.
Learn more >> Do I Need Insurance to Rent a Car?
Do You Need Car Insurance for a Car in Storage?
You aren't legally required to have car insurance for a vehicle that you're keeping in storage. However, you won't be protected if someone steals the car or it's damaged during an accident or storm.
If you want some protection, you might be able to save money by keeping your collision and comprehensive coverage while pausing liability coverage. Or, depending on your insurance company, just the comprehensive coverage.
When you're paying off an auto loan or leasing a car, you may need to maintain your collision and comprehensive coverage—and maybe liability coverage—even if the vehicle is in storage.
Even if you can't or don't want to cancel your policy completely, you might be able to save money if you're not driving the car. For example, your insurance company may offer a low mileage discount. Or, you could see how much coverage costs with a pay-per-mile insurance policy.
Learn more >> Do I Need Insurance on a Stored Car?
How to Buy Car Insurance
You can buy car insurance online or over the phone, but compare policies, coverage amounts and premiums first. Here's how:
- Review the types of coverage. Make sure you understand the different types of coverage and what they include and exclude. Also look into car insurance extras, such as gap insurance, rideshare driving insurance and roadside assistance.
- Gather your information. You'll generally need to share information about yourself and the vehicle you're insuring. Make sure you have your driver's license handy, along with the car's vehicle identification number (VIN). If you haven't bought the car yet, you could use the make and model of the vehicle you want to buy.
- Compare quotes. Collect quotes from several companies to see which one will offer you the best deal. You can go company by company, or use an online comparison tool to quickly gather multiple quotes.
- Review the companies. Cheapest isn't always best. Try to find reviews of your top choices to learn more about the features they offer and other people's experiences.
- Purchase your policy. Once you pick an insurance company and policy, you can choose when you want the policy to start. You might save money if you pay for the entire policy upfront, or if you enroll in autopay with a linked bank account instead of a credit card.
You can also review the car insurance discounts that the companies offer to see if you might qualify for any discounts that weren't included in your quote.
Learn more >> Step-By-Step Checklist for Getting Car Insurance
How Much Does Car Insurance Cost?
The average annual cost of car insurance was $1,765 in 2023 according to AAA. However, your costs can vary significantly depending on multiple factors.
Some of these you can control, such as the types of coverage you purchase and your coverage limits. Others you can't change in the moment, such as your age, how many years of driving experience you have and where you live.
There are many other factors as well, such as the type of vehicle and whether you're using it for a regular commute. In most states, your credit history and a credit-based insurance score can also affect your rates.
Take these factors into account when looking for ways to lower your car insurance premiums.
Regularly Compare Car Insurance Quotes
Even if you already have a car insurance policy, getting comparison quotes once or twice a year can be a good way to save money. With Experian's car insurance comparison tool, you can answer a few questions about your current coverage and get matched with personalized quotes.
Experian partners with over 40 insurance companies and can help you switch policies if it makes sense. If not, the tool can monitor quotes in the background and let you know if something changes.