Car Insurance for a New Vehicle
You have many considerations to make when buying a new car. Insurance is just one of them.
Whether you switch to a new auto insurance provider or transfer your existing insurance to your new car, ensuring that you have the right car insurance is an essential part of the process of purchasing a new vehicle.
Getting a Quote Before You Buy
The type of vehicle you drive has an effect on your car insurance rates, so getting a quote for the type(s) of cars you are considering can be a wise choice.
First, if you’re choosing between multiple vehicle types, getting quotes can help you make your decision (e.g., if one type will be much costlier to insure, you may choose the other).
Second, whenever you’re buying a new car, you need to reevaluate your coverage:
- Your current provider may no longer be the most affordable provider for car insurance coverage you’ll need for your new vehicle.
- Also, other providers may have additional products and offerings that better suit your new needs.
Finally, it’s smart to periodically check for car insurance quotes. You may be paying more than you need to if you’ve stayed with the same company for years without looking around at prices and discounts offered in the market.
Before you buy your new car, get at least 3-4 car insurance quotes for the type of vehicle you’re looking to buy so you’ll know what to expect.
What You'll Need to Drive Your Car Off the Lot
Driving without car insurance coverage is illegal, so you’ll need to make sure you are covered before you drive your new car off the lot.
If you already have car insurance, you may need to adjust your coverage for your new vehicle. For example, you might be required to add comprehensive or collision coverage if you are taking out a loan on the car.
However, even if you need to adjust your insurance for your new car, your current policy may cover you for a short period of time after the purchase of a new vehicle.
Check your declarations page to be sure.
If you’re unsure whether you’ll be covered, provide the vehicle information to your car insurance company before you complete the purchase. Your agent should be able to let you know what you’ll need.
If you’ll be changing companies, make sure to find out exactly how long your current car insurance will extend, and make sure you have an exact start date for your new policy and end date for your old policy. For more information, please see our page on switching car insurance companies.
Notifying Your Insurance Company
If you are going to transfer your current car insurance from your old vehicle to your new one, or are planning to switch to a new provider altogether, it's your responsibility to alert your insurance company.
Do not assume you are covered if you do not make a call.
It is a good idea to call your car insurance company before you buy your new car, if possible. This will ensure you know exactly how you’ll need to move forward with your insurance before you even drive your car off the lot.
The Benefits of Gap Coverage
Once you drive a car off the lot, the actual cash value depreciates significantly. If you’re going to have a loan or lease on your new ride, you can protect yourself financially by opting for gap coverage.
Gap coverage takes into account the dangers of depreciation and covers the difference between your loan amount and the car's actual cash value if it was totaled in a crash.
This ensures you are not left with a large car loan bill and no car, if your vehicle is totaled in a serious accident.
If your current company does not offer gap coverage, you may wish to look around at other options in the market to make sure you have financial protection.
To learn more about this type of car insurance coverage, visit our Gap Coverage page.
Car Insurance Premiums
When you transfer car insurance to a new car from your existing car, don't be surprised if your insurance premiums change.
- They may increase if the vehicle is more costly to repair or represents a greater risk to the insurance company.
- Examples include sports cars and luxury vehicles.
- They may decrease if the vehicle is cheaper to repair or presents a lower risk.
- Examples include affordable cars and those with many safety features.
If you are looking to save money on insurance, hybrid vehicles may be a good choice. Several insurance providers are now offering lowered rates on hybrid vehicles in an attempt to encourage more people to "go green."
Whichever vehicle you’re considering, getting multiple car insurance quotes will give you a good idea of the rate ranges you can expect.
If you plan on keeping your current vehicle, adding a new car to your current policy may be a way to help you save money.
Most car insurance companies offer multivehicle discounts, which lower the cost of additional vehicles added to the policy. Talk to your current auto insurance agent about the availability of this discount type.
Remember, auto insurance is a crucial part of the puzzle when purchasing a new car. It is essential to do your due diligence to avoid any unwanted surprises – such as higher premiums – later.