New Car Insurance: How to Insure a New Car

When it comes to buying a new car you have lots to consider such as cloth or leather seats, front or four-wheel drive or adding on a package that includes the latest technology. In all of the excitement of your new purchase you may forget to think of one very important thing – your auto insurance.

Before you sign on the dotted line and drive your new car off of the lot, it is important to do some research on car insurance for new cars.

Will My Current Insurance Policy Protect My New Vehicle?

The short answer is yes. Most car insurance companies have a new car insurance grace period in which you can add your new car to your existing policy. This period typically ranges anywhere from seven to 30 days. If you make a claim within the grace period then your new vehicle will be covered with the same limits that your previous vehicle was.

Unfortunately, this is not always a good thing because it is recommended or required to add certain coverages for a new vehicle. It is smart to connect with your auto insurance provider as soon as possible to be confident you are fully protected.

Do I Need Specific Insurance for My New Car?

New car insurance requirements vary based on whether your new vehicle is financed, leased or owned.

  • Financed vehicles. If your vehicle is financed, your financer will typically require that you have collision insurance and comprehensive insurance on your policy. Collision insurance will help to cover damage to your vehicle that results from an accident with another vehicle or object such as a house or a sign. Comprehensive insurance will cover damage to your vehicle that did not occur from a fender-bender, but from damage caused by natural disasters, fire, theft, etc. Financers also typically require a specific amount of minimum liability coverage, which would help to pay for damages to another individual or their property from an accident you caused.
  • Leased vehicles. In addition to the requirements to carry collision and comprehensive insurance and minimum liability limits, lessees may also be required to obtain gap insurance.

Gap insurance helps to cover the “gap” between the value of a vehicle in the event of an accident and the amount that is owed on the vehicle. Auto insurance companies typically determine how much they will pay-out for a covered claim based on a vehicle’s value at the time of the accident. This can be an issue for new cars because they begin to depreciate as soon as they are driven off the lot. In fact, according to the Insurance Information Institute, a vehicle can depreciate as much as 20 percent in its first year.

So imagine you leased a $25,000 vehicle and after a year it was valued at $20,000, but you still owed $23,000 – gap insurance would not only cover the car’s value, but the $3,000 gap that you still owe the lienholder.

  • Owned vehicles. In the case that you own your vehicle outright without a lien or a loan, you would only be required to carry your state’s minimum limits; however you may want to consider increased coverage limits to protect your new investment.

How Much is Insurance for a New Car?

Car insurance premiums are based on the make and model of the vehicle you drive. Therefore your rates may increase or decrease based on the vehicle you have now and the one you are planning to purchase. With that said, it is smart to shop around and get a car insurance quote from your current company as well as from other companies. It is wise to start this new car insurance search process before you purchase your new vehicle and determine required coverages so you aren’t stuck with a car that is too costly to insure.

Looking to buy insurance for your new car? Look no further than Freeway Insurance. Freeway compares rates from top insurance companies to find you the best coverage at the best price. Get a free car insurance comparison online or over the phone at 800-777-5620 today.