Insuring a Brand New Car

Wondering how to obtain car insurance for a new vehicle? Keep reading to learn the requirements and considerations you'll need to keep in mind when purchasing auto insurance for a new car.

The Basics of Insuring a New Car

Buying a new car can be a very exciting experience. It can also be a time to review your existing insurance policy or browse new policies to see how adding a new vehicle to the mix will impact your budget.

It's important to know about the process of insuring a new car to avoid any delays when it's time to drive your vehicle off the lot. Dealerships will not let you drive away unless you can show proof of carrying the proper car insurance. Before buying the car, provide your potential insurance provider with the vehicle's VIN so they can give you an accurate quote and summary of your coverage.

In addition, banks and other lenders will require proof of coverage before you purchase your vehicle.

Building Your Policy

It's important to know that auto insurance isn't one-size-fits-all. There are several types of coverage you can build into your policy when buying a new car. All buyers should research how the following types of coverage will impact their rates:

  • Liability insurance.
  • Collision coverage.
  • Comprehensive coverage.
  • Personal injury protection.
  • Uninsured or underinsured motorist protection.
  • Gap insurance.

Ask yourself how much insurance you actually need; the car insurance you choose should be based on a mix of personal preferences, state laws, and requirements from your lender.

New Car, New Insurance Provider?

Most car insurance policies will cover a new vehicle for a few days if you already have a policy covering other vehicles. Simply contact your insurance agency and ask them to temporarily transfer coverage to your new vehicle.

However, there's no rule saying you have to permanently transfer a new vehicle to your existing policy. In fact, buying a new car could serve as the perfect reason to search for a new car insurance company, which may offer perks your current provider lacks.

When reviewing policies, you may need additional collision and comprehensive coverage with a newer vehicle. You'll probably be required to have extra coverage as well if you are using a lender to finance the purchase of your new vehicle.

Does Insuring a New Car Cost More?

The short answer—yes. New cars are pricier to insure because they are worth more and can often cost more to repair.

It's important to determine the monthly costs of owning a new vehicle by factoring in your insurance rates. This is especially true if you're making the shift from owning an older car to a brand new vehicle requiring monthly payments. Obtaining extra coverage to satisfy the requirements of banks and lenders usually means paying a higher amount for an auto insurance policy.

However, purchasing a new car may also earn you discounts on insurance rates if the model comes with increased safety features. Be sure to ask your auto insurance provider about the discounts your new car may qualify for.