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Buying Car Insurance for a New Car

man looking at new car at dealership
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Few things are as exciting as buying a new car. Though a bit less exciting, shopping around for car insurance is an essential, legally-required component of purchasing and operating a new vehicle. You’ve found the perfect vehicle, and now it’s time to make sure you find the perfect coverage to keep it protected.

How to get car insurance for a new car

It is illegal to drive a vehicle without insurance, so the process of purchasing coverage should start before you even buy the car. Every state requires motorists to carry a certain amount of coverage, and the first step in your car insurance shopping is to learn what your state mandates.

When you purchase a new car from a dealership, they will offer you their own choices of insurance providers and policies. Although this might sound convenient, buying insurance at the dealership will not leave with any scope for comparing quotes or choosing the most affordable option. Doing your own insurance shopping is a wiser choice if you want to get the best deal.

If you know the car you are going to buy, you can collect quotes online or over the phone. Once you have chosen your provider and the type of coverage you need, you purchase the vehicle and sign the papers at the dealership. Then you contact the insurance company to provide them with the VIN of the new car and make the payment for the policy. Most insurance companies will approve your policy and send you proof of coverage once the payment goes through, and if all goes well, you can drive home in your new and insured car immediately after.

Why it costs more to insure a new car

When you buy a new vehicle, your aim is to protect it from all kinds of damage, especially if it has been financed. In this case, getting only the minimum coverage is not enough. You also need to add collision and comprehensive coverage if you want to protect your new car from physical damages. This hikes up the cost of insurance. On the contrary, an older car that has been through many years of hard work may not require the protection it once did and can get by only with the minimum coverage.

Newer models of vehicles have also been found to cost more in insurance compared to older ones. However, if your vehicle has advanced safety features and a low claim rate in the recent past, the premiums might not be exorbitant.

Car insurance premiums also vary based on your demographics, location, driving record and the type of car you drive. Comparing quotes from multiple providers is the easiest way to tell how much it might cost you to insure your new vehicle.

Necessary and recommended coverage

As stated above, your legally-required insurance coverages vary depending on the state in which you reside. However, if you can afford it, it’s typically advisable to prioritize certain coverages where possible.

  • Comprehensive: Comprehensive coverage is usually optional if you own your car but may be required if your new vehicle is being financed. This coverage pays for repairs needed due to damage incurred outside of collisions. For example, if your car is stolen, vandalized or damaged by bad weather, that’s where comprehensive coverage comes into play.
  • Collision: Collision insurance pays for repairs to your vehicle after it has been involved in a collision with another car or object. If your vehicle is paid in full, you may not be required to have this coverage. However, if your new vehicle is financed, your lender may require it.
  • Personal Injury: Personal injury coverages insure those injured in an accident. States typically require a minimum of $50,000 in personal injury liability per accident and $25,000 per person.
  • Property Damage: Property damage requirements generally cover from $5,000–$25,000 of property damage liability per accident.

Sometimes car insurance add-ons are appropriate and advisable. If you have recently purchased a new vehicle or you’d like to bridge the gap between your car’s actual value and the amount you still owe, you may want to look into the following coverages:

  • New Car Replacement Insurance: When you carry new car replacement insurance, you’ll be covered in case your new vehicle is totaled. The factors that determine whether your vehicle qualifies for this coverage varies depending on the insurance carrier. For example, Allstate will replace the new vehicle if it is two years old or fewer. On the other hand, Liberty Mutual pays cash for a new car if the damaged car is less than a year old and has fewer than 15,000 miles.
  • Gap Insurance: Gap insurance seeks to bridge the gap between the amount you owe on your new vehicle with the total amount of cash value it carries. This scenario is ideal for those who currently owe more than the vehicle’s worth.

How to transfer insurance to a new car

If you already have an auto insurance policy in place, it’s easy to transfer insurance coverage over to your new vehicle. Simply contact your insurance provider by telephone or log-in to your account online to make changes. Let your car insurance agent know you’d like to add a vehicle to your policy, sign off on the desired coverages, and you’re good to go.

Frequently asked questions

How long do you have to get insurance after buying a new car?

In most cases, you won’t even be able to drive your new car off the lot without providing proof of insurance. There is no grace period for operating a new vehicle without being insured. Contact your insurance provider before you consider purchasing a new vehicle.

Can you drive a new car without insurance?

No, you cannot legally operate a new vehicle without being covered by an auto insurance policy.

Is it more expensive to insure a new car?

Often, because the new car has a higher actual cash value, the cost to insure it can be higher as well. However, if the new car is equipped with safety features and upgrades, it may help you qualify for lower premiums.

How can I save on new car insurance?

You can save on new car insurance by shopping around for the best cheap insurance options, considering which types of coverages are most necessary and qualifying for insurance discounts.

Written by
Cynthia Widmayer
Insurance Contributor
Cynthia Widmayer is an insurance contributor for Bankrate and has over two years of experience as a personal finance writer. She covers home, car and life insurance products for Bankrate, The Simple Dollar and among others.