Insurance for a new car


Do you know how to insure your new car?

The fact is that your existing insurance policy will cover your new automobile the moment you drive it off the lot, usually at the same level of coverage as your old one. However, if you do not have liability or physical damage insurance, you may find yourself stranded at the dealership, or worse, in violation of the law.


When purchasing a new automobile, how does insurance work?

You are not required to move your insurance to your new automobile immediately, but it should be a quick follow. Most insurers provide a grace period for renewing your policy with your new car, your dealer will usually just want evidence of insurance before handing over the keys. Even if you don't have auto insurance, you can start one before purchasing a vehicle provided you know the VIN.


How much does vehicle insurance cost for a new car?

Getting a new automobile usually raises your rate because it is worth more than your old one. However, the actual cost differential will vary considerably depending on the:

  • The model year

  • Model and make

  • The amount of insurance purchased


If you're starting a new policy, keep in mind that other factors may affect your rate. Even if your rate rises, you may still be eligible for a few discounts, such as the smart car discount discount or discounts for new safety features.


Should I seek an insurance quotation before purchasing a new car?

Yes, you want to know ahead of time how your new purchase will influence your insurance rate. Getting a few quotes will also give you a head start on finding the right protection and best savings. 


Is my car covered by the dealer's insurance?

No. Test drives are often covered by dealer insurance, but they do not protect you if you purchase the vehicle.


Insurance requirements when buying a new automobile


Vehicle that was financed
  • Coverages that are required: The financer will typically want comprehensive and collision coverage. If you are at fault in an accident, your state will also require a minimum level of liability coverage to compensate for any injuries or losses you cause.

  • Other coverage possibilities include loan/lease repayment coverage, commonly known as gap insurance. If your vehicle is totaled, loan/lease payback coverage will reimburse the difference between what you owe on the vehicle and its actual worth.


Vehicle leased
  • Comprehensive and collision coverages are typically required by the leasing company, and you may not be able to pick a deductible greater than $1,000. You'll also need more liability coverage, which is generally $100,000 per person and $300,000 per accident.

  • Other coverage choices include loan/lease repayment coverage in the event that you total your vehicle before the lease expires. Gap insurance may already be included in certain leasing agreements, so double-check before adding it to your vehicle policy.


Full ownership of a vehicle (no lender or lienholder)

  • Coverages required: You simply need what your state needs, which is generally a modest level of liability coverage. But remember, more coverage provides additional protection.

  • Consider adding comprehensive and collision coverage to your paid-off car. If you don't have physical damage coverage and your new automobile is stolen, vandalized, or destroyed in an accident, your insurance will not compensate you.


Which new automobiles have the lowest insurance costs?

The cheapest automobiles to insure are generally those with fewer and less expensive claims. Claims are usually referred to as losses in the insurance industry, and the amount of losses a specific automobile has might give you an indication of how much it will cost to insure.


How long do I have to wait before adding a new automobile to my insurance policy?

When you acquire a new automobile, your insurance company will provide you a grace period of seven to thirty days to update your coverage with your new vehicle. But you can add the new vehicle immediately and it's always good to cross one thing off the list and start enjoying the vehicle. 


Can you provide the dealership with instant proof?

Yes! Most insurance companies are available during normal business hours to deliver proof of insurance to the dealership so you may drive off the lot in your new automobile. It is critical to have evidence of insurance since most dealerships will not allow you drive away without it (often, your current insurance will be good enough).


What if I don't know who my lienholder is?

Inquire with your dealership's salesman. They'll nearly always have the information you're looking for. If not, don't worry—we won't need it to begin covering right away. However, within two to three days of acquiring the insurance or adding the new automobile to your current one, you must submit the lienholder's name and address.


Do you provide new car replacement if I total my automobile immediately?

You will be covered for the vehicle's fair market value under your collision coverage. If you owe more than the car is worth, you should consider purchasing gap insurance (also known as loan/lease payback coverage), which will assist pay the difference between the automobile's value and what you owe on your loan. A few insurers have a new car replacement program, it's similar to gap insurance (and may be more about a marketable name).


Advice on Purchasing Auto Insurance for a New Vehicle

  • Understand your VIN: Having your Vehicle Identification Number ready will expedite the quote process, and you will be unable to purchase an insurance without it.

  • Tell us how you use it: If you use your car for ridesharing or business tasks, you may require additional coverage.

  • Regular drivers should be added: If family members will be driving your new automobile on a regular basis, ensure sure they are included on your coverage.