Buying a new car can be a really exciting experience. Whether you’re a new driver picking out your first car or it’s just time to replace your old one, browsing options online or perusing a dealership can be a lot of fun.
Less exciting, however, is figuring out car insurance. You’ll most likely need to set up insurance before you can drive your new ride home.
In this article, we’ll take a look at everything you should consider when it’s time to insure your new car. From policy options to saving money, we’ve got you covered with everything you need to know for the best insurance shopping experience.
What insurance should you get when you buy a new car?
The insurance you get when you buy a new car will depend on what your state requires and the type of coverage you feel most comfortable with. Some add-ons may be more appealing for new cars than for older used cars because of the vehicle’s value. However, a good starting place is to look for a full-coverage policy, which includes comprehensive, collision, and liability coverage.
Do I need to buy car insurance before buying a car?
It’s a good idea to have car insurance before buying a new car, and often, it’s required. If you’re buying a new car to replace an old car or simply adding another, you’re ahead of the game with your current car insurance policy. Whatever your starting point, you’ll want to make sure you have your proof of insurance handy when it comes time to buy your new car.
Most drivers start off with full coverage, which consists of comprehensive, collision, and liability insurance. While often referred to as a package, these three components offer very different types of protection.
Comprehensive coverage is car insurance that covers damage outside of your (or anyone’s) control. These events are often referred to as “acts of God”: think damage from major weather events like hurricanes or a falling tree. Comprehensive insurance also covers damage that results from vandalism or theft. Basically, if your car is damaged by something other than a collision, there’s a good chance it’s covered by a comprehensive policy.
Collision coverage is for exactly what it’s named for: collisions. Whether or not you’re at fault, collision coverage pays for damage to your vehicle when you’re in an accident with another motorist or another thing. Where comprehensive coverage pays for damage from a falling tree, collision coverage would cover you if you drive off the road and hit a tree.
Liability coverage is the part of a full coverage car insurance policy that pays for the resulting damage to other drivers and passengers. Required in many states with certain minimums, liability coverage has two components: bodily injury and property damage. This means that if you were in an accident where someone else’s vehicle was damaged and they sustained injuries, your liability policy would help pay for both costs.
How much does car insurance for new cars cost?
Car insurance premiums depend a lot on personal information. It’s hard to say exactly how much you could expect to pay, but we can take a look at some averages to give you an idea of what to expect.
Let’s take a look at two possible vehicles: a 2020 Honda Civic and a 2015 Honda Civic. Based on Insurify’s proprietary data, the same driver could expect to pay an average of $2,049 annually for a 2020 model but $1,859 for a 2015 model.
Assuming these quotes are for the same driver, what’s the difference between a new and older vehicle? New cars can be more expensive to insure because parts can cost more, and the actual cash value of the vehicle starts off higher. While the 2015 model is slightly less expensive to insure, older cars have their own set of risks, too: fewer safety features and older parts could mean a higher chance of damage.
How can I transfer my current insurance to my new car?
If you already have insurance coverage for your car, you’ll be able to transfer your policy to your new car if you’re making a replacement. If you’re buying a second and third car, there’s a different process to add a vehicle to your existing policy. Both of these processes can vary a bit depending on your insurer. The best way to start the transfer process is to contact your insurance company to learn how.
Insurance grace periods
Insurance companies know that it’s not always possible to get insurance paperwork squared away the same day you drive your new car home. That’s where insurance grace periods come in.
Most insurance companies offer a 7- to 30-day grace period to update your policy with a transfer or additional vehicle. It’s always a good idea to check with your insurance company before purchasing your new vehicle just so you don’t miss a deadline.
Insuring an additional vehicle
If you’re adding a new vehicle to your existing policy, get in touch with your insurer to figure out the process. You may be able to get an estimated premium ahead of time, too.
This is a great time to check for discounts with your current insurer. Many insurance companies offer a bundling discount for insuring multiple vehicles, so be sure to ask about any potential savings that come with adding an additional vehicle.
Gap insurance is a type of insurance coverage that acts as an additional shield against financial loss on a damaged vehicle. It’s almost always required for leased or rented vehicles, but new car owners should consider this add-on, too.
The reason is that new cars depreciate pretty quickly once you drive them off the lot. Even with a good full coverage insurance policy, a car that’s been declared a total loss only gets a payout of the actual cash value of the vehicle at the time of the incident (minus your deductible, of course).
How to get a quote on car insurance for your new car
To get a meaningful car insurance quote, you’ll need to provide some personal information to your car insurance company. This helps them figure out how risky it is to insure you, which then leads to a quote. It also helps prove your identity.
When you’re ready to get a quote on car insurance for your new car, make sure you have this information handy:
- Date of birth
- Driver’s license number
- Vehicle identification number (also known as a VIN)
- License plate number
- Home address
- Average annual mileage
- Information about your driving record
- Desired policy coverage and limits
You could prepare this information to submit over and over again to a bunch of different car insurance companies.
Tips to lower the price of your premium
Car insurance isn’t really “what you see is what you get.” If your insurance premium is a little high for your liking, there are steps you can take to lower your rates over time (and sometimes, right away).
- Bundle policies: Many car insurance companies offer a discount for bundling insurance policies. Usually, this means adding a vehicle to your policy, but larger companies may also include discounts for bundling homeowners or renters insurance. Just keep in mind that once you leave the realm of auto insurance policies, some companies actually use third parties for other types of insurance. This can mean inconsistent customer service, so do your homework to avoid a headache down the road.
- Choose a safe vehicle: Who’s more likely to drive a little on the wild side—a minivan driver or a sports car enthusiast? Car insurance companies take the type of vehicle you drive into consideration when calculating your rate. So if you have the option to go for a car that seems safe, it’s an easy way to get a lower rate.
- Raise your credit score: Surprisingly, your credit score can impact your car insurance rates. But if you have poor credit, the good news is you can get a better rate down the line by raising your credit score. Start by looking at your credit report and finding room for improvement. This can include catching up on bills, not missing future payments, and decreasing your credit usage. Start small, and work your way up.
- Drive less: Some car insurance companies are using the power of telemetrics to offer savings to drivers who spend less time on the road. This can be in the form of a discount for measured driving behavior or a pay-per-mile policy. This discount is best for those who stay under 7,500 miles annually. So if you’re close to that mileage, consider making some changes to your lifestyle. Can you walk, bike, or use public transportation to do your errands or get to work? How about starting a carpool? Those who already rack up lower annual miles may qualify for low mileage discounts with a few simple changes.
- Opt for safety features: If your car is safer, you may be cheaper to insure. Things like anti-lock brakes, airbags, and anti-theft devices can usually qualify you for safety feature discounts.
FAQ: New Car Insurance
How long do you have to add a new car to your current insurance policy?
Whether you’re adding a new car to your car insurance policy or transferring your existing policy to your new vehicle, most insurance companies give you 7 to 30 days to complete the process.
Do I need to own insurance before I buy a new car?
In most cases, yes. Many dealerships won’t let you drive off the lot without providing proof of insurance. Keep in mind that if you just need to add your new car to your existing policy, you can use your current coverage as sufficient proof. Even if a dealership doesn’t require car insurance at the time of purchase, most lenders will.
How can I find the cheapest car insurance for new cars?
New cars can be more expensive to insure, so you’ll want to do your homework to make sure you’re getting the best rate possible on your new ride.
Conclusion: How to get the best and cheapest car insurance
Getting great car insurance coverage at a reasonable price doesn’t have to be a hassle. Using a comparison site can guarantee you’re seeing the best rates for you. Personalized quotes are the best way to understand which insurance companies have the most to offer at a good price.