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Finally saved up for a new car, but can't afford the insurance?

Updated Apr 15, 2024

If you've been saving up for a new vehicle, you may be frustrated to find that rising vehicle, repair and insurance costs are delaying this big milestone. Average car insurance rates are on the rise, so you may be shocked at the rate you are quoted as you explore coverage for your new car. Fortunately, shopping around and considering your personal rating factors can help you find a car insurance policy within your budget.

How much is insurance for a new car?

The average annual cost of auto insurance in the U.S. is $2,299 for full coverage and $637 for minimum coverage. Car insurance for new vehicles is typically higher than coverage for older models since the vehicle's replacement cost is higher. That said, premiums vary greatly based on the make and model as well as your personal rating factors. The following factors influence the insurance rates you'll see for your new car:

  • The car itself: The make, model and age of your car significantly impact your insurance rates. Newer vehicles, luxury models and those with poor safety ratings generally cost more to insure.
  • Your driving record: Drivers with speeding tickets, accidents or other infractions generally pay more for coverage.
  • Your credit history: In many states, your credit history influences the price you pay for auto coverage. When buying a new car, your credit score also influences the interest rate on your car loan.
  • Demographic factors: Age, gender, marital status and even your ZIP code can all influence insurance costs in most states. Younger drivers typically face higher rates, while married drivers typically receive slightly lower rates​​.
  • Your deductible: Opting for a higher deductible can lower your premium, but it means you'll pay more out-of-pocket if you file a claim​​.

These are just a handful of the dozens of rating factors that affect your car insurance rate. Comparing personalized quotes will give you the most accurate estimates of what you will pay for coverage.

Are new cars more expensive to insure?

Newer cars are typically more expensive to insure than older models, largely due to the higher cost associated with their repair and replacement. With advancements in technology, newer vehicles often come equipped with cutting-edge safety features and sophisticated systems, from autonomous driving aids to complex infotainment setups. While these enhancements can improve safety and driving experience, they also mean that even minor accidents could result in costly repairs due to the high-tech components involved.

Additionally, the MSRP (manufacturer's suggested retail price) of a new car is usually higher than that of an older model, which can increase the insurance premium as the potential payout from the insurer in the event of a total loss might be significantly larger.

The specific model of new car plays a role in determining insurance premiums. Durable cars with low repair costs and high safety ratings could see relatively low new car insurance rates, while luxury vehicles or those with expensive parts and higher theft rates might be pricier to insure.

Estimating your cost of insurance for a new car

Estimating your car insurance cost for a new vehicle is probably easier than you think. The following steps will give you an idea of what you could pay for coverage:

  • Assess your coverage needs: On top of your state's minimum coverage requirements, you'll likely be required to carry full coverage insurance if you finance or lease your vehicle. Speaking with a licensed insurance agent can help you decide how much coverage makes sense for your unique circumstances.
  • Understand your personal factors: Your driving history, location, household drivers and other personal factors impact your rate. Understanding these factors can help you address any that could be pushing your rates up.
  • Explore discounts: When comparing quotes, considering potential discounts will show you how you could save with a particular carrier. Review discounts and tally up how many apply to you.
  • Gather and compare quotes: Ultimately, comparing quotes is the most accurate way to estimate your car insurance premium. Even if you haven't purchased a car yet, you can compare quotes for the models you're considering to see how coverage costs vary across providers.

You may be surprised at how much rates vary based on your chosen make and model. To give you an idea of how premiums range, consider the average rates for a few popular models:

Model Avg. annual full coverage premium Avg. annual minimum coverage premium
BMW 330i $2,744 $634
Ford F-150 $2,149 $626
Honda Odyssey $1,987 $601
Subaru Outback $1,854 $590
Tesla Model 3 $3,349 $631
Toyota Prius $2,331 $635

How to get cheaper insurance for a new car

The best way to find cheap car insurance will depend on your circumstances. The strategies below are a good starting point for finding low rates without sacrificing coverage:

  • Compare quotes before buying: Different new cars come with different insurance costs. Include quotes comparison in your shopping process to get an idea of what you'll pay for coverage with each model you're considering.
  • Look for insurance-friendly features: Cars with domestically-made parts and high safety ratings generally have lower insurance costs. The Insurance Institute for Highway Safety issues vehicle safety ratings, and Kelley Blue Book maintains resources to help you research estimated repair costs.
  • Bundle insurance policies: If you're purchasing a new car and have other insurance policies, bundling them with the same provider could unlock discounts.
  • Maintain a good credit score: In most states, a positive credit history will earn you lower insurance rates.
  • Drive safely: Insurers consider your driving record when rating your policy. A clean driving record can make a significant difference and may even earn you extra discounts.
  • Opt for higher deductibles: Choosing a higher deductible could lower your insurance premium. However, most insurance experts recommend keeping your deductibles low enough that you could comfortably pay them out of pocket with little notice.

Should you wait to buy a new car?

Deciding whether to purchase a new car now or wait depends on your insurance rating factors. Unfortunately, average insurance rates are projected to remain high across the U.S. for the foreseeable future. However, if your quoted rates are high due to risk factors you could improve, waiting could benefit your rate in the long term, especially if you're purchasing your first car rather than a replacement for an existing vehicle.

Re-evaluating your chosen make and model could be a wise first step. Some vehicles are inherently more expensive to insure due to their value, performance characteristics or repair costs. If your heart is set on a specific car that's known for higher insurance rates, it might be worthwhile to explore alternative models that offer similar features but are cheaper to insure.

Regarding rating factors, it's helpful to discern which ones might change in the near future and which are less likely to. For instance, if high insurance costs are tied to your age or driving record, waiting might not offer any significant advantage, as these factors change gradually over time. However, imminent changes in your personal circumstances could make a difference. For example, if you're planning to move to a safer neighborhood or to a home with a covered garage, these changes could positively impact your insurance rates, making it potentially beneficial to delay the purchase until after the move.

Also, if you anticipate improvements in your credit score or a change in your driving habits that could qualify you for lower rates, waiting could be advantageous. It's also worth considering the broader economic context, as insurance rates can fluctuate based on factors beyond your control, such as changes in the insurance market or regulations.

If you're still on the fence, consulting a licensed insurance agent about your personal circumstances may help you make a more informed decision.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze May 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Model: To determine cost by vehicle type, we evaluated our base profile with the following vehicles applied: BMW 330i, Ford F-150, Honda Odyssey, Subaru Outback, Tesla Model 3, Toyota Prius and Toyota Camry (base).

Written by
Ashlyn Brooks

Ashlyn Brooks is a finance writer with more than half a decade of experience, known for her knowledge in areas such as taxes, insurance, investing, retirement, finance news, and banking products.

Edited by Editor, Insurance