Updated September 13, 2021|7 min read
Buying a new car can be exciting — you get to take home a shiny new vehicle with that fresh new car smell and all the latest features. But there are also a lot of logistics to consider, like what kind of additional car insurance you need for your new ride.
Ready to shop car insurance?
When it comes to owning a new car, you’ll want to consider extra coverage in case your brand new car is totaled or stolen in the first couple years you own it. And if you’re leasing or buying a car with a car loan, then your lessor or lienholder may require you to get certain coverages. But how exactly do you add a new car to an existing car insurance policy? Or how do you buy car insurance before you know which specific new car you’re buying?
Thankfully, both of these questions have answers. Buying and insuring your new car is a similar process to buying car insurance for any other vehicle. There are just a few extra factors to consider when your car is new.
Buying car insurance for a new car is pretty much the same as buying for a used or older car, but you may want to consider extra coverage to protect your big investment
New car replacement is a policy add-on that pays you enough to replace your car with a comparable one if it's totaled in the first year of ownership
You can add your new car to an existing car insurance policy, or, if you don't already have insurance, you can buy a policy that starts the day you take home your new car
Before you can take a new car home, you need to make sure you have a car insurance policy in place. 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 still be allowed to test drive cars, as many dealers have “garage liability” insurance to protect the cars they sell from precisely this scenario, but you’ll need to purchase a car insurance policy before you can drive any of them home.
If you know what specific car you’re buying, you can ask the dealer for the car’s VIN, or vehicle identification number, which you’ll need to enter when you buy the policy. Then, all you need to do is set the start date of your new policy so it lines up with the day you’re picking up your new car. You’ll also have to bring proof of insurance to the dealership, or have your new insurance company fax or email proof so you can drive your car home.
If you don’t know the specific car you’re getting but you know the make and model, you can still shop around for insurance and choose a policy. Give all the necessary info except the VIN, and then when you go to buy the car, call or contact your insurer that day and finish purchasing the policy. That way you’ll be able to get insurance and get your car all at once.
➞ Learn more about how to buy car insurance before you buy a car
Before you figure out what type of coverage you need for your new car, it’s important to understand the basic components of a policy. Car insurance consists of different coverages that offer you different types of protection.
|Coverage Type||What It Does|
|Bodily injury liability||The part of your liability coverage that pays for medical bills if you've injured someone in an accident|
|Property damage liability||The other part of liability coverage, covers the cost of property damage you've caused in an accident|
|Personal injury protection||Covers medical expenses for you or your passengers after an accident|
|Uninsured/underinsured motorist||Covers the costs if you're in an accident caused by a driver with little or no car insurance|
|Comprehensive||Covers damage to your car that happens when you're not driving|
|Collision||Covers damage to your car after a car accident, no matter who was at fault|
Those basic coverages make up what’s usually referred to as full coverage car insurance. With a new car, because it’s a significant investment, it’s a good idea to invest in comprehensive and collision coverage, which pay for damage to the car itself. If you lease or buy your car with a loan, you may be required to include those coverages in your policy.
You may also be required to include gap insurance in your policy, and here’s why: If your car is totaled or stolen, your car insurance company will pay out the ACV, or actual cash value of your vehicle. But the ACV may not be enough for you to pay off the remaining balance on your loan or lease, meaning you could be stuck making payments on a car you no longer have. Gap insurance pays off the remaining balance on your loan or lease, so you’re off the hook for the cost.
Owners of a brand new car might also want to consider adding new car replacement coverage to their policy. This is a special kind of coverage add-on that’s usually only available if you’re the original owner of a car that’s less than a year or so old. New car replacement coverage guarantees that, if your new car is totaled, you’ll be paid out enough to replace your totaled car with a comparable one.
Your car insurance premiums are calculated based on a number of factors, including your driving history, age, ZIP code, credit score, and coverage amounts. The make, model and year of your car are just one factor that goes into determining your insurance rates.
However, a new car can be more expensive to insure than an older one simply because it’s more valuable. It may also have high-tech features that older cars don’t.
While some safety features and newer technology can lower your car insurance costs slightly by decreasing your odds of getting into a car accident, some tech features may actually raise your rates by making parts more expensive to fix or replace.
The cost of insuring a new car also depends on the coverage you choose. Some coverages are more expensive than others — for example, new car replacement coverage can cost around $120 extra per year to add to your policy.
➞ Learn more about the cost of car insurance
Newer cars can be more expensive to insure because the cost to replace them is higher. As cars get older, they depreciate in value, meaning your insurance would pay for less to replace an old car than a new one. As we mentioned above, your premiums are also determined by the coverages in your policy, how much of each coverage you have, and the make and model of your car, among other individual factors.
The more coverage you have or the higher your coverage limits, the more you’ll be paying on your premium. And certain types of cars cost more to insure than others; insurance for a new small sedan can cost hundreds of dollars more than for a small SUV.
If you already have car insurance, you can easily add your new car to the policy, by contacting your insurer online or over the phone and giving them details about your new vehicle. Adding the new car to your existing policy may 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.
If you’re headed to the dealership and have no idea what kind of car you want, you can still drive away with a new 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 your policy. Instead, during that time, whatever coverage you have for your other car automatically applies to your new car. If you have multiple cars, the strongest coverage may apply.
Depending on your 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 a 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.
Although you’ll likely see a premium hike when adding the new car to your existing policy, if it’s a 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.
➞ Learn more about adding a car to your car insurance policy
The best way to get cheap car insurance is to compare quotes at multiple companies for the coverage you want. You may be able to get a quote from the insurance company’s website, over the phone, or through a mobile app. And many companies allow you to customize your coverage amounts and deductibles so you can see how much you’ll be paying for different combinations of coverage.
According to a study by the American Automobile Association (AAA), the cheapest types of cars to insure are small SUVs, minivans, and medium SUVs, in that order. The cars that are the cheapest to insure tend to be the ones with the least costly claims, however your car insurance rates will probably have more to do with your age and driving history than the make and model of car you have.
Technically yes, there’s nothing stopping you from insuring the same vehicle under multiple policies. But you can’t make multiple claims for the same damage, so there’s likely no benefit to insuring your car with more than one policy.