How to get new car insurance
Car insurance is the least exciting aspect of buying a new vehicle. But if you just spent a fair amount on your new vehicle, you want to make sure it’s properly protected. Whether it’s brand new or new to you, let’s outline the best ways to get and save on auto insurance.
Table of contents: auto insurance for a new car
- What's the average cost of car insurance for a new vehicle?
- Car insurance for a new vehicle
- Additional coverage you should consider for a new car
- New car insurance — how to get quotes
- How to transfer insurance to a new car
- Getting car insurance for an additional vehicle
- Ways to save
The average cost of car insurance for a new vehicle
Using a methodology outlined here, we learned the average insurance cost of a new vehicle was $913 per six-month policy — 22% more expensive than insuring a five-year-old used car. On average, the cost of auto insurance drops by about 3.4% with each additional year your vehicle ages.
AVERAGE CAR INSURANCE RATES FOR A NEW CAR
| Insurance Provider | Average 6-Month Premium |
|---|---|
| Allstate | $1,214 |
| Farmers | $933 |
| GEICO | $698 |
| Liberty Mutual | $911 |
| Nationwide | $668 |
| Progressive | $936 |
| State Farm | $723 |
| USAA | $698 |
Because car insurance is so specific, you need to find a quote specific to you. Enter your ZIP code below to compare quotes from top car insurance companies across the nation.
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Car insurance coverage for a new vehicle
Given its relatively high value, a new vehicle warrants special insurance considerations. Below are some coverages you absolutely must have, should have, and might consider for your car insurance policy.
Must-have: collision coverage
If you're leasing or financing your vehicle, you must include collision coverage. It protects your vehicle if you collide with another car or a fixed object.
Must-have: comprehensive coverage
Like your collision coverage, comprehensive insurance is required if you’re leasing or financing a vehicle. It protects your vehicle from damage that occurs outside of a collision claim — weather, vandalism and theft, for example.
Must-have: uninsured motorist coverage — bodily injury and property damage
Depending on your state, uninsured motorist coverage is required by state law. If it's not, this coverage is highly recommended. Your uninsured motorist bodily injury coverage will cover your medical expenses in a not-at-fault accident. Your uninsured property damage coverage will cover your new car if it’s hit by a driver without insurance — for instance, a hit-and-run.
Should-have: gap insurance
Gap insurance is offered by many insurance companies or through car dealerships. Gap coverage accounts for the difference between the value of the vehicle and the value of the vehicle after depreciation.
Consider: new car replacement
The specifics of this coverage vary by insurance company. It covers the value of a new replacement vehicle if your car is totaled in a covered claim. If you’re dead set on driving a new vehicle, consider the price of this coverage with your provider.
Auto insurance for your first car: what you should know
If your new vehicle is new to you, we have some additional tips you should consider. If you buy your car from a dealership, they’ll most likely require you to show proof of insurance prior to driving the vehicle off the lot. This is especially true if you lease or finance the vehicle. Understanding what you’ll need to get insurance quickly is imperative if you don’t want to spend your entire day at the dealership (who does?). Let’s outline some simple tips to get you in the driver's seat and road-legal as soon as possible.
What you'll need to get a quote
In order to get the more accurate car insurance quote, you’ll need the following:
- Date of birth of all drivers using the vehicle
- Driver’s license numbers of all drivers using the vehicle
- Garaging address of the vehicle (most likely your home address)
- Insurance history of drivers using the vehicle
- Driving history of drivers using the vehicle
- Vehicle Identification Number (VIN) — this tells the insurer the vehicle’s vital information, including make and model
Helpful auto insurance hint:
Once you find the vehicle you want, you can get a car insurance quote prior to purchasing the vehicle by using the VIN. Many dealerships list the VIN on their website, allowing you to get an accurate estimate of your car insurance quote. Most insurance companies will then give you a quote number to retrieve the saved auto insurance quote.
Once you activate the auto insurance policy, your new insurance company will send you or the dealership your proof of insurance and you’ll be able to drive off the lot.
Find an insurance policy for your new car today.
How to transfer insurance to a new car
There’s potential for confusion when insuring a newly purchased car, but unless your driving situation changes dramatically it’s unlikely you will need to purchase an entirely new policy right away.
As long as your previous policy is in place when you drive off the lot, your new car purchase should be covered. Your previous policy will usually extend to the new vehicle for a short amount of time — known as a grace period — until you can have it added to the policy. It’s best to make sure that your company offers such a grace period beforehand.
The amount of time insurance companies allow before requiring a new car to be formally added to the policy varies, usually ranging from one week to 30 days. It's important to notify your insurance company or insurance agent as soon as possible to transfer your insurance to your new car.
During this time, your new vehicle will be insured up to the same limits for auto insurance coverage as your old one. If your old car only had minimum liability coverage, that would apply to the new vehicle. If you want full coverage, you would need to add it when you transferred the new car to your insurance policy.
The process of transferring insurance coverage to a new car is fairly straightforward and often only takes a single call to your insurer. You’ll need to provide certain details about the vehicle, but your coverage should be implemented the same day. Bear in mind that transferring insurance to a new car can cause your rates to change. For example, if you switch from a minivan to a sports car, you should expect an insurance rate increase.
How to get car insurance for a second vehicle
While the process of insuring your first vehicle and your second is largely the same, having an established policy does give you some leeway in terms of when you can add your second car. Depending on your policy, you could have a grace period of anywhere between seven and 30 days to list your additional vehicle on your policy. If this is a feature of your insurance policy, the coverage you carry on your other vehicles would extend to the new vehicle for a predetermined amount of time.
The only caveat here is if the dealership requires you to add the coverage immediately. If this is the case, you should follow the steps listed above for getting a quote.
How to save on insurance for a new car
After the sum cost of the vehicle, your car insurance is the second most expensive part of owning a vehicle. Let’s explore ways to save on car insurance.
Use your insurance coverage sparingly
If you don’t know much about car insurance, you might be more inclined to use it if you damage your vehicle, rather than just covering the cost yourself. Unfortunately, car insurance companies may financially penalize you if you file a claim, no matter if it’s your collision or liability coverage.*
Prior to filing an insurance claim, follow these steps:
- Get an estimate for the repairs at a local mechanic.
- Use our State of Insurance analysis to see how much an at-fault accident (what this would be considered as) would raise your premium in your state. Consider this increase each year for three years, as that’s how long most insurance companies would charge you. Include your collision deductible in this, if it applies.
- Choose the cheapest long-term option.
- Let’s look at this from a specific example. You back your vehicle into a pole, causing $1,500 worth of damage. This type of accident — with the amount of damage ranging between $1,000-$2,000 — would fall under a collision at-fault claim, which raised premiums by $686 per year in 2019. If we factor this rate increase over three years, that will equate to $2,058 in extra premium.
If you file a claim, you’re required to pay your collision deductible prior to receiving coverage. If you factor in a $500 deductible, this claim will cost you over $2,500 versus the $1,500 out-of-pocket one-time expense. In this case, it makes sense to not involve your insurance company.
Bear in mind, this does not take into consideration not-at-fault accidents such as comprehensive and uninsured motorist claims. Comprehensive claims, because they happen outside the control of the driver, are often rated on your car insurance premium as a not-at-fault accident. If, however, your insurance company rates your not-at-fault accidents as at-fault accidents, consider it as a good opportunity to explore other insurance options.
This solution only applies to instances pertaining to your vehicle. If the other party involved in an at-fault accident wants to go through your insurance company, which is common, you don't have a choice.
Choose the right insurance coverage
If your vehicle really is “new,” you do not have a lot of wiggle room in terms of what coverage you can have. Most of the time, if you have a lease or loan on the vehicle, having “full coverage” is a requirement of your lender agreement. By full coverage, we’re referring to comprehensive and collision insurance — physical coverages that aren’t required by law and only protect your own vehicle.
So, if your vehicle is paid off and an older model, you might not need this additional coverage. A general rule of thumb in the world of insurance is if your vehicle is worth less than $4,000, you probably don’t need physical coverage. You can determine the value of your vehicle by using Kelley Blue Book or NADA guide online.
If, however, your vehicle is worth more than $4,000 but you still want to save, consider increasing your deductible. If you raise your deductible on your collision or comprehensive coverage, you lower your premium.
Another benefit of this is it decreases your incentive to use your deductible rather than pay out-of-pocket. As we learned from the section above, using your collision coverage can have long-lasting effects on your insurance. By decreasing the dollar value of what you would receive in compensation, there is less of an incentive to file a claim.
Double-check for discounts
While most of these discounts are small (3-5% in savings), grouped together they can add up to make your premium more affordable.
- Multi-policy discount
- Good driver discount
- Paperless discount
- Payment by bank account
- Paid in full discount (for paying your premium in one payment)
- Multi-vehicle discount
- Anti-theft or safety features
Learn more about popular car insurance discounts.
Compare rates
After it’s all said and done, you might just be paying too much because your current car insurance company is too expensive. Your best bet is looking at as many car insurance companies as possible to see if you could get a better rate elsewhere. Use our comparison tool to see if you can get a better rate. Enter your ZIP code below to get started.
