Buying Car Insurance for Your New Car

You’ll get the cheapest new car insurance rates if you shop around for policies before you get to the dealership. Driver insurance costs vary more widely by company, depending on the vehicle you drive, and you may want to get more extensive coverage to protect your new investment.

Suppose you already have an auto insurance policy. In that case, your company may provide a new car insurance grace period, under which the new vehicle receives automatic coverage to facilitate your purchase and begin the transition toward a new policy.

You are legally required to carry minimum liability insurance, but you may also need comprehensive and collision coverage if you’re financing or leasing a new vehicle. Driving without insurance is illegal, and you face jail time and license suspension if you don’t buy auto insurance for a new car. 

Keep reading to find out everything you need to know about buying car insurance for your new car, including the kind of coverage you need and the most expensive new cars to insure.

Do you need insurance after buying a car?

Yes, you must buy car insurance before buying a new car. The good news is you’re automatically covered if you already have a policy. Your insurance will cover a new car for a short time, so you can finalize the transaction before updating your coverage.

Your new car must have the minimum car insurance required by your state to drive off the lot. Liability car insurance is usually the minimum requirement that must be in place to protect you financially against any property damage and personal injury you cause in an accident. 

The loan or lease business with which you are financing will also require you to have collision car insurance and comprehensive car insurance coverages. Combined with minimum liability, these three policies create full coverage insurance that safeguards the investment in the new car by covering the cost of any damage to the vehicle.

Read more: How long after buying a car do you need to get insurance coverage?

Are you able to buy new car insurance at the dealership? 

Chances are you will be able to do so, but the likelihood of you overpaying will increase, and your options will be limited. Dealerships tend to only work with a few different companies rather than the entire market, so you may want to find coverage before going to the dealership. (For more information, read our “Compare Car Insurance for Dealerships: Rates, Discounts, & Requirements”).

The good news is that if you already have insurance, you’ll be able to add your new vehicle to your existing policy. 

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Which car insurance companies offer new car grace periods for payments?

Many major auto insurance companies offer policyholders a grace period for buying new car insurance where your existing policy will cover the new vehicle.

During that time, drivers are expected to update their policies with the new vehicle information. Then, the insurance company will assess new rates for the vehicle, and you are expected to start making new payments immediately per your regular payment schedule. 

If there is a grace period, policyholders may also have additional time to pay their insurance premiums without incurring a late fee or lapse in coverage. An insurance grace period is a time between the premium due date and the time the insurance company cancels the coverage. 

Policyholders typically have up to 30 days to update their policy or make a late payment, but internal company policies vary.

For details about your policy, check with your insurer. Even though most insurance companies charge late fees, it is still less expensive than the fines and license suspension that come with a complete loss of auto insurance coverage.

For example, an uninsured driver typically pays $200 more for insurance than someone who has maintained a policy for at least five years. Insurance coverage gaps are one of the many factors that companies consider when calculating rates. Your status as a high-risk driver may change due to a lapse, which could result in higher insurance rates. 

What do you need to buy new car insurance?

You’ll need to know a few things about the prospective new car to get the most accurate car insurance quotes. 

Have the following ready when you compare new car insurance quotes:

• The vehicle’s license plate number (VIN) 
• Year, make, model 
• Trim package (leather seats, navigation, etc.) 
• Mileage

When you check rates with multiple insurance companies, having this information handy will help you get the most affordable quotes.

Let’s take a closer look at the types of car insurance you need for a new car. This will help you get more precise quotes for the coverage required in your state.

Liability Coverage is Usually Required for Your New Car

Every state except New Hampshire and Virginia requires drivers to carry liability insurance. This insurance coverage assists in covering any harm you might cause to another driver, their vehicle or property, and their passengers.

Liability protection under a car insurance policy has three parts — per-person bodily injury protection, per-accident bodily injury coverage, and coverage for property damage per incident. These restrictions are typically stated as a string of numbers, like 15/30/10. 

For example, imagine you collide with a van transporting several people. With those fictitious limits, your liability insurance would only cover up to $15,000 per person but no more than $30,000.

So, if you injure more than two people, you risk paying for their medical bills out of pocket as the minimum limits of your policy don’t extend beyond $30,000. Additionally, you would only be protected from property damage up to $10,000. 

When You Need Comprehensive and Collision Insurance for New Cars

Comprehensive and collision insurance, also known as “physical damage coverage,” aids in the repair of your vehicle following a covered loss. You will be responsible for paying a deductible before coverage starts, but you can set it to match your budget, anywhere between $500 and $2,000.

Comprehensive insurance pays for damage to your car caused by theft, vandalism, fire, or collision with an animal. Comprehensive coverage also applies when your car sustains damage from weather-related incidents like hail.

Alternatively, collision coverage applies in auto accidents or when your vehicle is damaged moving, parked, or struck by another vehicle, including stray shopping carts. Learn more about the difference between comprehensive and collision insurance.

Your lending institution will require you to carry comprehensive and collision insurance if you have an auto lease or loan. Your lender will also insist that you keep this coverage as long as you have any outstanding debt on your car or your lease is in effect if you still owe money. 

When You Need Personal Injury Protection (PIP) and Uninsured Motorist (UM/UIM) Coverage for Your New Car

If you live in a no-fault insurance state, you will be required to carry minimum amounts of uninsured/underinsured motorist coverage (UM/UIM) and personal injury protection (PIP) coverage.

UM/UIM pays for damages if you’re hit by another driver who doesn’t have insurance or with policy limits too low to cover the extent of your injuries. 

Likewise, PIP pays for injuries and other costs associated with bodily injury after a covered event, including lost wages. PIP does not cover property damage but will pay for funeral and burial costs if you or your passengers are killed in an accident. 

No-fault car insurance helps cover property damage, medical costs, lost wages, essential services, and funeral and burial costs after an accident, no matter who is at fault. It’s required in 12 states, and you likely carry this coverage already if you have minimum liability insurance. 

Additional Car Insurance Options for New Cars

State laws and lenders determine how much car insurance you need, but you can opt for policy add-ons to provide additional coverage. New cars cost more to repair and replace, so buying enough auto insurance is important.

Take a look at the additional new car insurance you might want:

• Gap insurance. New cars depreciate as soon as they leave the dealership, but gap coverage pays the difference between what the vehicle is worth and what you still owe on the loan if it is totaled in an accident.
• New car replacement. New car replacement insurance pays for a brand-new vehicle of the same make or model (usually within the same model year) if your new car is totaled in a covered event.
• Rental car reimbursement. If your vehicle needs to be repaired, rental reimbursement insurance will pay for a rental car or alternative transportation while you wait.
• Roadside assistance. Roadside assistance insurance covers services including a tow truck, locksmith, jump start for a dead battery, and fuel delivery if your car breaks down.

These insurance add-ons will raise your monthly rates but can protect you from long-term financial hardships if you total a brand-new car.

How much does new car insurance cost?

The cost of an auto insurance policy usually varies by driver and vehicle make and model. This is because insurance companies use your claims and driving history, among other factors, when deciding how risky your new car may be to insure.

Read more: What is the difference between car make vs. model?

A 45-year-old driver with a clean record can expect to pay around $120/month for full coverage. The cost of new car insurance may be substantially higher for drivers under the age of 20, and prices tend to decrease as driver age increases.

This table compares average car insurance rates by age and gender:

Car Insurance Monthly Rates by Age, Gender, and Coverage Level

Citations and at-fault accidents also heavily influence how much any driver will pay for automobile insurance and credit score in states where this data is legally permissible for underwriting a car insurance policy.

Which cars are the most and least expensive to insure? 

Average car insurance rates are based on the type of vehicle you drive. Sports, luxury, and exotic vehicles tend to be much pricier by MSRP, which means higher average annual car insurance rates. 

Considering that sports cars are often the choice of younger drivers, it’s no surprise that teen drivers often pay even more for sports car auto insurance. However, hybrid and electric vehicles (EVs) also raise insurance rates because they’re expensive to repair.

The most expensive new cars to insure will be the following: 

• Lexus ES 300H
• Nissan Altima 2.0 S
• Tesla Model S Performance
• Tesla Model 3 Standard Plus

If you’re in the market for a Tesla, learn more about electric car insurance to find ways to reduce your EV insurance rates. But no matter the type of vehicle you drive, you can always save money by installing anti-theft devices and other safety features.

The following are going to be the least expensive new cars to insure: 

• Chevrolet Blazer 2LT
• Chevrolet Silverado 1500 WT
• Jeep Cherokee Limited
• Toyota Tundra SR
• Volkswagen Jetta SE

Young and high-risk drivers should consider these new cars for insurance, as they’ll earn lower average rates by driving a safer, more reliable vehicle.

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How to Save Money on New Car Insurance

As mentioned above, you can save money on your car insurance when you install anti-theft or other safety devices in your vehicle, but you can also look into several other ways to save.

Follow these tips to get the most affordable car insurance for your new car:

• Ask for discounts. You can obtain car insurance discounts if you’re a good student or a safe driver.
• Keep your credit score high. Drivers with poor credit historically pay more for car insurance, so it’s a good idea to improve your score if it’s on the low side.
• Comparison shop. This includes getting multiple insurance quotes from various companies, so you don’t overpay for car insurance.
• Make sure you get the right policy. Knowing how much insurance you need for your new car will prevent you from paying for coverage you may not need.

It’s always a great idea to look into money-saving techniques at least once a year to stay up-to-date with the market.

The Bottom Line on New Car Insurance

When you shop for new car insurance, it’s a good idea to know ahead of time what you might be paying for coverage and the type of policy you’ll want for your vehicle. 

It’s in the best interest of your new vehicle that you know what types of coverage you should have in order to keep it safe both off and on the road. You’ll need minimum liability insurance to drive legally in most states, but you’ll also have to carry comprehensive and collision coverage if you’re financing or leasing your new car. 

Comparison shopping is an excellent way to get the best price on the policy you need. You can compare multiple rates from different companies for different types of policies. 

Start now with our comparison tool below. Enter your ZIP code to compare car insurance quotes for your new car.

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