Skip to main content

New Car Insurance: How to Insure a New Car

A young couple who just purchased their first car smiles at the car sales agent who hands them the keys to it. They have new car insurance.

Updated 03/30/2021

When you buy a new car, there are many factors to consider—like add-ons and upgrades—but nothing is more important than getting your new car insurance. The new car insurance grace period differs per insurance carrier, but it ranges between 0 to 30 days. If you must make a claim within this period, your insurance carrier can cover your new car with your previous vehicle’s plan. However, it’s best to get your new car insured as soon as possible.

Buying a new car involves a lot of choices that come at you suddenly. Do you want leather seats, front- or four-wheel drive, or an add-on 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. However, if you drive off the lot without it, the clock is ticking to when you need to officially cover your new car. If you forget, then you can end up driving while uninsured.

Driving Without Insurance? Not a Good Idea.

The new car insurance grace period flies by, whether it’s just a week or under a month. With all of life’s demands and a busy schedule, it can be easy to miss the important detail of car insurance. However, this oversight doesn’t exclude you from some consequences that can interrupt your life.

Driving without auto insurance is a serious infraction in the United States. In all but two states, driving without coverage is illegal. Being caught in an accident without insurance can mean jail time, heavy fines, and even a suspended license. After a suspension, you may be able to get driving privileges back with a restricted SR-22 license that involves more expensive non-standard insurance.

Thankfully, obtaining a policy that is just right for your new car takes just a phone call. An insurance agent can offer you the best options for your new car’s value and characteristics and offer you the best quotes for your budget. Don’t let your new car insurance grace period sneak by. Instead, put a new plan on the top of your to-do list. It’s an easy thing to do that will spare you some avoidable problems.

Will My Current Insurance Policy Protect My New Vehicle?

The short answer is yes. But when buying new car insurance, grace period timelines can differ. Though your current insurance policy will protect your new vehicle for a short while, it may not be a good fit. Most car insurance companies have an insurance grace period new car owners rely on to have enough time to set up a new policy. During this time, you can add your new car to your existing policy or get a new plan from a different carrier. Any claim within the grace period will cover your new vehicle with the same limits that your previous vehicle had.

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. For instance, your new vehicle may have an anti-theft device that can offer you some discounts. Or, you may want to add roadside assistance or higher liability coverage in case your higher-valued car is damaged.

Do I Need Specific Insurance for My New Car?

Yes, insured car insurance has a few requirements, but they differ because they are based on whether your new vehicle is financed, leased, or owned. Each type of vehicle use involves different levels of risk to the insurance carrier, so costs may be higher for different options.

Financed Vehicles

If your vehicle is financed, your financer will typically require you to have collision insurance and comprehensive insurance on your policy. Collision insurance will help cover damage to your vehicle resulting 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 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 cover the “gap” between the value of a vehicle in the event of an accident and the amount 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% in its first year.

Imagine that 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. To find out your state’s minimum requirements, contact your local department of motor vehicles. However, it may be in your interest to have more protection than just the minimum if you don’t want to pay for a large part of incidental repairs.

How Can I Get New Car Insurance?

Before you sign on the dotted line and drive your new car off the lot, it is important to research car insurance for new cars. The rates differ, and the types of coverage you need to be financially protected differ from a less costly used vehicle. To get the best rates for more demanding coverage, it’s smart to shop around for the best deals by getting multiple auto insurance quotes.

There are a few ways to get new car insurance. First, you can try to stick with your former insurance company and recalibrate your old car’s plan and adjust it to your new vehicle. This will involve different rates that are usually higher.

If you want to find a new insurance carrier, you can go online and enter your vehicle’s information on any insurance company’s website and receive approximate quotes. These online forms produce estimated figures based on your car’s general data. You must repeat this process on each website that you visit. After comparing quotes, you can call back the company you like the best.

Another option is to call an independent insurance agent. This professional can speak to you and get specific information to retrieve more accurate quotes from multiple carriers at once. They can even recommend ways to reduce your premium with exclusive discounts. This is the fastest way to comparison shop and to see how much it costs to insure your vehicle. By speaking with an agent, you can also get expert advice on what types of coverage are recommended so that you get the right type of protection while you’re on the road.

How Much Is Insurance for a New Car?

Car insurance premiums are based on the make and model of the vehicle you drive. The average cost is $1,592 per year, which amounts to around $133 per month. This figure is for a person with high credit and a good driving history. Other factors like age, location, type of vehicle, marital status, and more can also influence this rate to make it higher or lower. Any at-fault accidents increase the average premiums. For instance, car insurance averages $2,439 per year after just one at-fault wreck and can cost over $3,000 after a DUI.

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. Start this new car insurance search process before purchasing your new vehicle and determine required coverages so you aren’t stuck with a car that is too costly to insure.

And though new vehicles are more expensive than a used car, it doesn’t always have to be more costly to insure. New cars come with some of the latest technology, such as advanced safety features, anti-theft devices, and parts that are more available on the market. These factors can make the ultimate price not as high as you think. It’s also possible to lower insurance rates with some discounts.

How Can I lower Car insurance rates?

New cars can have higher auto insurance rates than used cars for their typically higher value. They haven’t depreciated yet and are insured based on their full value. As the car ages, it will be less expensive to cover due to depreciation alone. Therefore, even if you do nothing but own your new car, the insurance rates can go down over time. Here are some other ways that you can lower your car insurance rates too.

  • Pay in bulk. By paying your 6- or 12-month quote in full, you can potentially negotiate a discount. Insurance companies benefit from the advance payment, and you also get to “set and forget” payments for a while. Always ask about this option before agreeing to a new car insurance policy.

  • Bundle your insurance policies. Many auto insurance companies also offer other types of coverage, such as homeowners, boat, RV, or renter’s insurance. When you choose to buy multiple policies from the same company, you may get a discount for keeping your business with one entity. This discount is similar to how customers can get a lower rate on cable and internet when choosing a bundled deal.

  • Good Driver Discount. Having a good driving record can grant you rewards in the form of lower rates. The less risky you are to insure, the better it is for insurance companies. By staying out of incidents, you are considered affordable to cover and can benefit from this valuable discount.

  • Anti-Theft Device When you have security measures in place that make your vehicle harder to steal, insurance companies typically reward it. This higher confidence means lower rates. Anti-theft devices that insurance companies acknowledge generally apply to these items:
    • Car alarms (active or passive)
    • GPS trackers
    • A vehicle disabling device

  • Choose higher deductibles. If you don’t mind paying more for any repairs, you can save on monthly premiums by opting for higher deductibles. When you choose to be responsible for more repairs, it costs less for the insurance company to cover you. Even raising your deductible by just $1,000 can reduce your rates noticeably.

  • Become a part-time driver. By lowering your daily miles through carpooling or becoming a part-time driver through non-owner auto insurance, you can pay a lower monthly premium. If you plan to have the new car in your name, tell your agent that you plan to use it to carpool so that your cumulative daily miles will be lower than if you drive alone daily.

  • Improve your credit. Bad credit can significantly affect your car insurance rate. For example, a person with good credit can pay $133 on average, but a person with all the same credentials but with bad credit can pay up to $234 per month. Work with a financial advisor on improving your score. When the numbers improve, call your agent to get a better quote to reward all your hard work.

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.

Ready to Get a Quick Quote?