Car insurance for new cars

Until you buy car insurance, you won’t be able to legally drive your new car if you live in one of the 48 states that requires you to have car insurance.

Zack Sigel 1600

Zack Sigel

Published July 12, 2018

When you first buy a car, until you buy car insurance, you won’t be able to drive it legally if you live in one of the 48 states that requires you to have car insurance. That’s because if you cause an accident, the law wants to make sure you have the resources to make the other party whole. Car insurance also reimburses you if you have coverage for damage to or the loss of your own car.

For that reason, you’ll want to make sure you have car insurance whenever you buy a new car. If you already have car insurance for other cars you own, you’ll be able to add your new car to the policy. But if this is your first car, you’ll have to purchase a new policy.

Buying car insurance for a new car is most cost-effective when you shop around and get enough coverage to fit your needs. Policygenius can make the process quick and easy by showing you rates from several different insurance companies.

Read on to learn more about buying car insurance for a new car:

Shopping for new-car insurance

Car insurance is comprised of different coverages that insure you for various situations. Whether you currently have auto insurance or are shopping for a new policy, it’s important to know how much coverage you need in each area. Your initial quote will be based on these components of car insurance.

  • Liability insurance protects you when you injure a person or damage his or her property. Almost every state requires you to purchase a minimum amount of liability insurance coverage.
  • Personal injury protection (PIP) protects you when you or a passenger in your car is injured.
  • Collision insurance protects you when your car is damaged in a collision.
  • Comprehensive insurance protects you when your car is damaged, destroyed, or stolen as a result of something unrelated to driving, like some weather situations or vandalism.
  • Gap insurance protects you when your car is stolen or completely destroyed but due to depreciation there’s a gap between how much you owe and how much the car is worth.

You’ll need more coverage if you can’t afford to pay for someone’s medical bills or to replace their property out of pocket. When you’re shopping around for car insurance, you’ll be quoted premium rates from different companies, but the more coverage you need, the higher your premium will be. When choosing how much coverage you need, consider financial liabilities like lawsuits or replacing a whole car, both of which can cost you tens of thousands of dollars without enough insurance.

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Your deductible, the amount you have to cover out of pocket on any claim before the insurer picks up the rest of the cost, will also influence your premium rates. Deductibles for each component of car insurance commonly range between $500 and $1,000, but they reduce the financial obligation of the insurer, so choosing a higher deductible will result in lower premiums for you.

Your driving history, including traffic violations, as well as your age, gender, and location, will be used to determine your final premium. You may be able to get discounts for being a safe driver, for taking a driver’s education course, or for installing safety and security features on your car.

When you sign the car insurance policy, you’ll need to provide some of the following info:

  • Make, model, and year of the vehicle
  • Your driver’s license number
  • Vehicle Identification Number (VIN)

Coverage for your new car when you already have car insurance

If you already have car insurance, you can add your new car to the policy. New cars may be more expensive to insure than used cars because you’re insuring the value of its undepreciated value. Adding the new car to your existing policy will increase your premiums, but unless you live in one of the two states that doesn’t require car insurance, then you have no choice but to do so.

But if you’re just headed to the dealership and have no idea what kind of car you want, you can still drive away with the car even if you haven’t yet added it to your auto insurance policy. That’s because many car insurance policies have a provision for new-car insurance that grants you a grace period between the time you buy the car and the time you add the new car to the policy. Instead, during that time, whatever coverage you have for your other car applies to your new car. If you have multiple cars, the strongest coverage may apply.

Depending on the insurer, as well as state and local laws, that grace period may be as little as 24 hours and as long as one month. But make sure to consult your car insurance policy or speak with your insurer’s representative to confirm. If your auto insurance policy doesn’t have this provision for new cars, you won’t be able to drive the new car off the lot.

You may have to modify your coverage if your current car insurance policy doesn’t include coverage in all the components. For one, if you leased your new car or paid for it with an auto loan, the leaseholder or lienholder will require you to purchase comprehensive and collision insurance to protect their asset. In some cases, you’ll be required to purchase gap insurance as well.

But although you’ll see a premium hike when adding the new car to your existing policy, if the car is your second car you’ll qualify for a multiple-vehicle discount provided your insurance company offers one. Additionally, adding a new car is a great opportunity to review the coverage you already have. For example, you may qualify for a better rate if your credit score has gone up.

Coverage for your new car when you’re buying car insurance for the first time

If you don’t have any car insurance going into the car dealership, you won’t be able to leave with a car. You should be allowed to test-drive the car, as many dealers have “garage liability” insurance to protect the cars they sell from precisely this scenario.

You’ll need to shop around for car insurance and purchase a policy before you show up at the dealership. (And, as with simply adding a new car to your existing policy, you’ll need to purchase comp, collision, and probably gap coverage if you’re leasing or buying with a loan.) Looking at your auto insurance quotes can help you make a decision about what kind of car you can afford to get. For example, a Lamborghini might be prohibitively expensive to insure if a car insurance company offers coverage for it at all. Exotic and performance vehicles, classic and collector cars, and higher-end cars like BMWs are all covered differently depending on the insurer.

Once you know what kind of car you want, purchase your insurance policy and bring it with you to the dealership along with your driver’s license when you’re ready to buy. The insurer may also be able to fax or email a copy of the policy or some other form of proof to the dealer.

New cars generally have a higher value than used cars because they haven’t depreciated yet, which makes them more expensive to insure. But because new cars benefit from advances in technology, they may come with safety and security features that could net you a premium discount. There may be even further discounts available if you bundle the new car insurance policy with your homeowners or renters insurance policy, depending on the terms offered by your insurer.

Keep in mind that if you’re a new driver, you’ll pay still higher rates because you’re still considered inexperienced by the carrier. As you get more experienced, your rates will start to decrease.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.