New Car Insurance: How To Get The Coverage You Need

Buying a new car can be a delightful experience. From the pristine exterior and interior, single digit odometer and that new car smell, driving a new car off the dealer’s lot is a wonderful feeling.

Buying new car insurance for a new vehicle may feel less fun, but it’s an essential step.

When to Buy New Car Insurance

There are specific situations when you want to buy new car insurance, such as:

• You move to a new state. At the very least you’ll need to tell your insurer that you have moved. In some cases your insurer might not operate in your new state and you’ll have to look for new car insurance. And in some cases your current insurer might not offer competitive rates in your new location.
• You buy a new vehicle. If you haven’t owned a car before or you’re adding a vehicle to your household, you’ll need to buy new car insurance for it. If you’re buying a new car but trading in a current vehicle, your existing auto insurance policy likely automatically covers the new vehicle for 30 days, giving you time to contact your insurer. Still, it’s best to let your insurer know right away.
• Your renewal rates have a significant increase. Car owners across the country are receiving renewal notices that have a large increase in rates. This may be the time to look for new car insurance. The best car insurance companies combine competitive rates with robust coverage options and good customer service.
• Your auto insurance policy is being non-renewed or canceled. If your insurance company is ending coverage, buying new car insurance before the end date is crucial.

New Car Insurance Grace Period

A new car insurance grace period is when your current insurance coverage is extended as temporary coverage to a new vehicle that is replacing another vehicle. This allows you to drive off the lot with your new car with car insurance coverage in place.

How long does a new car grace period last?

The length of the grace period varies by car insurance company, if offered at all. A 30-day grace period is typical but can be as short as seven days.

Check with your insurer about its grace period rules before buying a new car. It’s important to get car insurance on the new car before the end of the grace period so you don’t end up with a lapse in coverage.

What car insurance coverage is given during the grace period?

Insurance companies can vary on whether only a replacement car gets a grace period or it extends to an additional car being added to your household. A replacement vehicle generally receives the same coverage as the car it replaces and an additional car gets the same coverage as the car with the most coverage on your policy.

That means if you had only liability insurance previously on all your cars, that’s all you’ll get on the new vehicle during the grace period. If you need comprehensive and collision coverage, it’s best to alert your car insurance company immediately about the new car and make sure the correct coverage is in place.

How to Buy Insurance For a New Car

Buying car insurance for a new vehicle is like getting coverage for any vehicle. You’ll want to find a quote that can fit your budget and then lock in coverage with an application.

1. Get Multiple Quotes for the Vehicle

   It’s wise to compare car insurance quotes from multiple insurers. Costs can vary significantly from one company to the next for the exact same driver and vehicle. It’s best to know what coverage types you want before you get quotes, so that you’re comparing costs for the same coverage levels.

2. Apply for a Policy When You Know the Car You Want

   If you know what car you’re buying, contact your insurance agent and arrange for insurance to begin the day you pick up the car. Then you’ll have the coverage and insurance ID card that you need to drive away in the new car.

   Have the make, model and year of the vehicle you’re buying, as well as the vehicle identification number (VIN). Also know approximately how many miles you’ll be driving the car each year.

3. Cancel Your Old Car Insurance Policy

   If you have existing car insurance, you want to cancel your old coverage. Contact your insurance company or agent. They might request you cancel in writing.

   Provide the date you want to cancel. If you paid in advance, your insurance company should offer a pro-rated refund for the rest of the coverage period.

How Much Does New Car Insurance Cost?

Insurance for a new car costs an average of $2,150 a year for a good driver with full coverage car insurance.

Company	Average insurance cost per year	Average insurance cost per month
Allstate	$3,000	$250
American Family	$2,176	$181
Auto-Owners	$1,628	$136
Erie	$2,144	$179
Farmers	$2,381	$198
Geico	$1,716	$143
Nationwide	$2,041	$170
Progressive	$2,157	$180
Safe Auto	$2,647	$221
State Farm	$1,959	$163
Travelers	$1,852	$154
USAA*	$1,412	$118
Westfield	$1,759	$147

* USAA is only available to members of the military, veterans and their families.

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Insurance costs for a new car are an average of 37% higher than a 10-year-old model of the same vehicle, according to Forbes Advisor’s analysis of rates for 15 popular car models.

Related: Estimate Auto Insurance

Examples of New Car Insurance Costs

Vehicle	Average insurance cost per month
Honda CR-V	$143
Ford F-150	$147
Chevrolet Equinox	$148
Nissan Rogue	$155
Chevrolet Silverado	$155
Ford Explorer	$157
Toyota RAV4	$143
Toyota Camry	$164
Ram 1500	$164
Honda Civic	$165
Honda Accord	$165
Jeep Grand Cherokee Laredo	$165
Toyota Corolla	$168
GMC Sierra	$177
Nissan Altima	$181

Source: Quadrant Information Services. Rates are based on a 40-year-old female driver with a clean record. Rates include $100,000 in bodily injury liability coverage per person, $300,000 per accident and $100,000 in property damage liability, uninsured motorist coverage and any other coverage required in states. The average rates also include collision and comprehensive with a $500 deductible.

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State Minimum New Car Coverage Requirements

State minimum car insurance requirements are the same whether your car is new or used. A state minimum auto policy always includes liability insurance that pays if you cause injuries or damages to others in an auto accident. Depending on your state, you may be required to carry other coverages, such as uninsured motorist, personal injury protection or medical payments.

State	Average minimum coverage cost per year	State minimum liability requirements
Alabama	$497	25/50/25
Alaska	$381	50/100/25
Arizona	$604	25/50/15
Arkansas	$511	25/50/25
California	$758	15/30/5
Colorado	$483	25/50/15
Connecticut	$805	25/50/25
Delaware	$1,018	25/50/10
Florida	$1,310	10/20/10
Georgia	$743	25/50/25
Hawaii	$370	20/40/10
Idaho	$368	25/50/15
Illinois	$539	25/50/20
Indiana	$409	25/50/25
Iowa	$287	20/40/15
Kansas	$521	25/50/25
Kentucky	$751	25/50/25
Louisiana	$847	15/30/25
Maine	$413	50/100/25
Maryland	$955	30/60/15
Massachusetts	$491	20/40/5
Michigan	$1,491	50/100/10
Minnesota	$610	30/60/10
Mississippi	$487	25/50/25
Missouri	$618	25/50/25
Montana	$391	25/50/20
Nebraska	$415	25/50/25
Nevada	$858	25/50/20
New Hampshire	$402	25/50/25
New Jersey	$1,236	25/50/25
New Mexico	$369	25/50/10
New York	$1,172	25/50/10
North Carolina	$411	30/60/25
North Dakota	$397	25/50/25
Ohio	$435	25/50/25
Oklahoma	$509	25/50/25
Oregon	$723	25/50/20
Pennsylvania	$504	15/30/5
Rhode Island	$733	25/50/25
South Carolina	$778	25/50/25
South Dakota	$288	25/50/25
Tennessee	$475	25/50/25
Texas	$653	30/60/25
Utah	$592	25/65/15
Vermont	$277	25/50/10
Virginia	$530	30/60/20
Washington	$507	25/50/10
West Virginia	$500	25/50/25
Wisconsin	$397	25/50/10
Wyoming	$248	25/50/20

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Standard Types of Required New Car Insurance

The standard types of coverages you may include in your new car insurance policy include:

• Bodily injury liability insurance. Required by most states.
• Property damage liability insurance. Required by most states.
• Uninsured motorist bodily injury coverage. Required by 20 states.
• Underinsured motorist bodily injury coverage. Required in 12 states.
• Personal injury protection. Required by 15 states.
• Medical payments. Required or must be offered in 10 states
• Collision coverage. Required by lender.
• Comprehensive coverage. Required by lender.

No state requires you to carry coverage for damages your car may sustain. However, if you have a lease or loan on your new car, your lender will mandate you have collision and comprehensive insurance on your policy so you have coverage for the repairs or replacement of your new vehicle if it’s in an auto accident.

What Factors Affect New Car Insurance Costs?

The make and model of your new car is one rating factor that affects new car insurance costs, but there are many more that auto insurers use to determine the price you pay.

Common car insurance rating factors used to determine insurance costs include:

• The amount of coverage you choose.
• The amount of your car insurance deductible.
• The make and model of your car.
• Where you live.
• Your age and driving record.
• Your auto insurance claims history.
• Your credit-based insurance score (in most states).

Is Car Insurance for a New Car Required?

Every state except New Hampshire, South Carolina and Virginia requires car insurance. The minimum insurance required will depend on your state. On top of state laws, if you have a car loan or lease, your lender or leasing company will likely require comprehensive and collision coverage, which pays to repair or replace your car due to problems covered by your policy, such as a car accident or theft.

The main types of car insurance that you may be required to have are below.

Liability Car Insurance

Liability car insurance pays for property damage and injuries to others when you cause a car accident. It also covers the cost of a legal defense, court judgments and settlements. Liability insurance does not pay for your own injuries or vehicle damage.

Each state has its own minimum liability car insurance requirement. For example, car insurance in California requires at least 15/30/5 in liability insurance. That translates to:

• 15 = $15,000 of bodily injury liability coverage for one person per accident.
• 30 = $30,000 of bodily injury liability coverage for all people per accident.
• 5 = $5,000 of property damage coverage per accident.

It’s a good idea to buy more than your state’s minimum liability requirements. Minimum required amounts can be woefully inadequate. For example, if you cause a major accident that results in serious injuries to multiple people, $30,000 won’t get you very far, and you would be stuck with significant out of pocket costs.

A good rule of thumb is to buy enough liability car insurance to cover what you could lose in a lawsuit.

Collision and Comprehensive Insurance

If you have a car loan or lease, your lender or leasing company will likely require you to buy collision and comprehensive insurance. That’s so you don’t walk away from your loan or lease if your car is totaled or stolen.

Collision insurance pays for repairs to your vehicle if you get into a car accident, no matter who is at-fault for the accident. For instance, if you back up into a pole, collision insurance can pay for your repairs (minus your deductible).

Comprehensive insurance pays for car theft and repairs due to damage from problems such as falling objects, floods, collisions with an animal, vandalism, fire and hail.

Uninsured Motorist Coverage

Uninsured motorist coverage and underinsured motorist coverage pay for your medical costs if someone without liability car insurance (or without enough liability car insurance) crashes into you.

Uninsured motorist coverage is required in some states and optional in others. In general, this is a good coverage to have. One in eight drivers in the U.S. don’t have car insurance, according to the Insurance Research Council.

Personal Injury Protection

Personal injury protection (PIP) coverage pays medical bills and other expenses (such as lost wages and funeral expenses) for you and your passengers, no matter who is at fault for the car accident.

There are 12 states that require PIP under “no-fault insurance” laws, three other states that require PIP, and four states and Washington, D.C. where PIP is optional.

What Other Types of New Car Insurance Should I Consider?

When buying car insurance for a new vehicle, you may want to consider additional coverage types.

Gap Insurance

If your car is totaled due to a problem covered by your policy (like a flood or car accident), gap insurance covers the difference between what your car is worth and what you owe on a car loan. For example, if you have $25,000 outstanding on a loan but the value of your totaled car was only $22,000, this coverage pays the $3,000 “gap.”

New Car Replacement Insurance

If your new car is totaled due to a problem covered by your policy, new car replacement insurance pays for a brand new car of the same make or model. This can be a good option for cars that quickly depreciate in value.

Rental Reimbursement Insurance

Rental reimbursement insurance pays for a rental car or substitute transportation (such as subway or bus fare) if your car is being repaired for a problem covered by your policy (like a car accident).

Roadside Assistance Insurance

If your car is disabled, roadside assistance insurance pays for services, such as a tow truck, locksmith, jump-start for a dead battery and fuel delivery.

What Information Do I Need to Buy New Car Insurance?

When buying car insurance for a new car, you’ll want to have the following information:

• The vehicle identification number (VIN) for the new car.
• Driver’s license numbers and dates of birth for all drivers on the policy.
• The vehicle’s garaging address (usually your home address).
• The annual mileage you expect.
• Whether you’ll be using the car for personal or business purposes.
• The coverage types and limits you want in the policy.

How Can I Prepare to Buy Auto Insurance for a New Vehicle?

You need car insurance before you drive off the lot with your new car. Here’s how you can prepare:

• Know what types of coverage you need.
• Consider optional coverage types (such as gap coverage, new car reimbursement or roadside assistance).
• Compare car insurance quotes from multiple insurance companies.

How Can I Save Money When I Buy New Car Insurance?

Here are some ways you can save money when buying auto insurance for a new vehicle.

Get the Right Amount of New Car Insurance

It’s a good idea to know how much car insurance you need before you get quotes. For example, know how much liability car insurance is sufficient to cover your net worth, such as your home and savings. An insurance agent can help you decide on coverage limits and optional coverage types.

Compare Car Insurance Quotes

The best way to find a good deal on new car insurance is to compare car insurance quotes from multiple insurers. Don’t skip this crucial step. Car insurance rates can vary drastically among companies.

You can get free car insurance quotes:

• Online. Gather quotes from an insurer’s website or by using a website that provides quotes from multiple companies.
• By phone or in-person. Speak with a representative of an insurance company or contact an independent insurance agent who can get quotes from multiple companies.

Ask About Discounts

Some insurance companies offer new car insurance discounts, and you may also be eligible for other common car insurance discounts, such as good driver discounts, good student discounts, multi-policy discounts and pay-in-full discounts.

Maintain Good Credit

If you have a car loan, you’re likely already aware that your credit played a major role in the application process. Your credit can also have a major impact on your car insurance rates.

Drivers with poor credit pay an average of 76% more per year for car insurance compared to drivers with good credit, according to a Forbes Advisor analysis of car insurance rates for drivers with poor credit.

But not all insurance companies give credit the same weight when setting car insurance rates, which is why it’s so important to shop around.

The use of credit to help determine car insurance rates is banned in California, Hawaii, Massachusetts and Michigan.

Can I Buy New Car Insurance at the Dealership?

You may be able to buy new car insurance at the dealership, but your options will be limited and it’s typically not the best way to find a good price. For example, the dealership might only work with one or two insurance companies.

The best way to find cheap car insurance is to shop around before you arrive at the dealership. When you shop around ahead of time, you’ll be able to research your coverage needs and compare quotes among several insurers. This will save you both time and money in the long run.

If you already have car insurance, you can add the new vehicle to your policy. For example, Progressive car insurance has a 30-day grace period to add a new car to your policy after you buy it. But if you don’t currently have collision and comprehensive coverage, you will need to add them to your current policy if your lender or leasing company requires it.

Methodology

We used data from Quadrant Information Services, a provider of insurance data and analytics. Unless otherwise noted, rates are based on a driver with a clean record insuring a new Toyota RAV4. Full coverage rates include $100,000 in bodily injury liability coverage per person, $300,000 per accident and $100,000 in property damage liability, uninsured motorist coverage and any other coverage required in the state. The rates also include collision and comprehensive with a $500 deductible. Rates for minimum car insurance reflect the minimum amount of auto insurance required in each state.

New Car Insurance FAQ