May 16, 2022

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Buying Car Insurance for Your New Car | Auto Insurance

Buying a new car can be an exciting experience. But it’s also important to think about buying car insurance for your new vehicle so you’re covered as soon as you drive it off the lot.

If you’re shopping for your first car, the process of getting insurance coverage is a little different than if you’re transferring a policy from your current car to a new one.

If you already have car insurance, you’ll need to switch coverage from your current vehicle to the new one. In most cases, this should be a fairly straightforward process that involves contacting your agent or reaching out to your insurance company either online or by phone. You’ll need the details of the vehicle you’re purchasing, including the year, make, and model, along with the Vehicle Identification Number (VIN). Depending on what kind of vehicle you’re buying, your insurance premiums may increase or decrease compared to what you pay currently.

If you’re financing the car, you’re going to need additional coverage that may not be necessary if you pay cash. Depending on your lender, you may need to carry gap insurance in the event that your new car is totaled or severely damaged. It makes up the difference between what you owe on your lease or loan and what the vehicle’s book value is. You may also be required to carry collision or comprehensive coverage to pay for repairs or vehicle replacement after a covered claim, such as a fender bender or a hailstorm.

Buying a new car is a great time to shop around for insurance coverage, even if you’re happy with your current policy and costs. That’s especially true if you haven’t done so in a while. Experts recommend getting competitive quotes once a year, just to make sure you’re getting the best coverage you can for your budget.

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What If You Don’t Have Car Insurance?

If this is your first car or you don’t already have a car insurance policy in place, you’ll need to shop around for the best company and coverage for your needs and budget. Here’s what you’ll need to do:

  • Determine what types of car insurance you are required to have (e.g., liability, personal injury protection, comprehensive and collision, etc.).
  • Have your personal info ready, including your driver’s license and Social Security numbers, address, and so on.
  • Include the kind of vehicle you’re planning to buy, including make, model, year, and Vehicle Identification Number (VIN), if you have one.
  • Get quotes from at least three insurance companies.
  • Compare policy premiums, coverage amounts, and limits.
  • Make an informed choice and purchase your new insurance policy.

It’s important to start this process at the same time you start shopping for a car at the dealer because you’ll need coverage as soon as you buy the vehicle. You’ll also want to allow time for agents to get back to you with quotes, to pick a company and policy, and to determine your insurance cost as part of your overall budget for your new car.
If you’ve had car insurance in the past and still have a copy of the policy, that’s a good place to start. An older policy will at least give you an idea of what you paid in the past, and what types of coverage you had. If nothing else, you’ll have contact information to get started.

Car insurance costs vary widely, depending on the make, year, and model of the vehicle along with your age, driving record, credit rating, and other factors. Which insurance company you choose can also have a big impact on rates. Our studies have shown that some insurance companies have more affordable rates than others, across a wide range of demographic groups.

The Cheapest Car Insurance Companies in 2022

  • USAA: $1,000
  • Geico: $1,148
  • State Farm: $1,267
  • Nationwide: $1,327
  • Travelers: $1,371
  • American Family: $1,371
  • Progressive: $1,533
  • Farmers: $1,917
  • Allstate: $2,047

All states except New Hampshire and Virginia require some type of car insurance. Coverage requirements vary by state, but mandatory liability coverage for bodily injury and property damage is the norm. Here are some of the types of coverage you will need when purchasing a new car, depending on what state you live in:

  • Liability insurance: This provides coverage to help pay for injuries to individuals not in your vehicle or property damage caused by a crash when you are at fault. Liability insurance minimums vary by state, so you’ll need at least the minimum coverage required. 
  • Personal injury protection (PIP): Sometimes referred to as “no-fault” insurance, this coverage helps pay for medical expenses and lost wages if you or your passengers are injured in a crash. This coverage is required in states with no-fault insurance. 
  • Collision insurance: The cost of parts and labor to repair your vehicle is covered by collision insurance. While not required by law, your lender will likely require collision insurance in order to secure financing for a leased or purchased vehicle. 
  • Comprehensive insurance: Vehicle damage caused by hail, fire, or something else other than a collision is covered by comprehensive insurance. Again, this is not required by law, but will likely be necessary to get vehicle financing. 
  • Uninsured and underinsured motorist coverage: Required in many states, this provides coverage to pay for injuries and property damage caused by another driver with insufficient coverage or none at all.

Almost all states require proof of at least minimum liability coverage before any vehicle can be legally driven on public roadways. If you’re financing a purchase or lease, your lender will also require additional coverage, including comprehensive or collision insurance.

Even if you don’t own or plan on purchasing a car, you may still want to buy insurance. A non-owner car insurance policy is an option for persons who often use a car-sharing service, borrow a friend’s vehicle, or travel frequently and rent a car when they do. It provides liability protection and, in some cases, personal injury protection (PIP), as well as medical payment coverage, and uninsured/underinsured motorist protection.

Proof of insurance is not necessarily required to purchase a car, but the dealership will need to see proof of insurance if you plan to test drive a vehicle. They’ll also need to confirm that you’ve got coverage on your new purchase before you drive it off the sales lot.

With any major insurance company, you should be able to buy coverage the same day you purchase a vehicle. This can be done either through an insurance agent or an insurance company website or customer service number. The entire process can often be accomplished in 30 minutes or less, particularly if you’re simply updating an existing policy with a new vehicle.

Most insurance companies allow a short grace period if you miss a payment, but there is no car insurance grace period allowing you to drive a new car without insurance. Coverage is required as soon as you purchase the vehicle. Check with your current insurer to find out what’s required when adding a new vehicle to your policy and how soon you must do so.

Gap insurance covers the difference between how much you owe on the balance of a car loan or lease and what the vehicle is actually worth in the event that your car is totaled. If you finance or lease your vehicle, you may be required to carry gap insurance.

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For more information about auto insurance, see the following guides:

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For more information on other types of insurance, see the following guides:

At U.S. News & World Report, we rank the Best Hospitals, Best Colleges, and Best Cars to guide readers through some of life’s most complicated decisions. Our 360 Reviews team draws on this same unbiased approach to rate insurance companies and agencies. The team doesn’t keep samples, gifts, or loans of products or services we review. In addition, we maintain a separate business team that has no influence over our methodology or recommendations.

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