Buying a new car can be an exciting experience. But it’s also important to think about getting car insurance for your new vehicle so you’ll be covered as soon as you take 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 go need to change the coverage of your current vehicle for the new one. In most cases, this should be a fairly simple process of contacting your agent or contacting your insurance company online or by phone. You will need details of the vehicle you are buying, including the year, make and model, and the vehicle identification number (VIN). Depending on the type of vehicle you buy, your insurance premiums may go up or down from what you are currently paying.
If you are financing the car, you will need additional coverage which may not be necessary if you are paying cash. Depending on your lender, you may need to purchase gap insurance in the event that your new car is damaged or badly damaged. It offsets the difference between what you owe on your lease or loan and the book value of the vehicle. You may also need to purchase collision or comprehensive coverage to pay for repairs or replacement of the vehicle after a covered claim, such as a fender fold or 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 its costs. This is especially true if you haven’t done it in a while. Experts recommend getting competitive quotes once a year, just to make sure you get the best possible coverage for your budget.
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What if you don’t have auto insurance?
If this is your first car or you don’t yet have a car insurance policy in place, you’ll need to research the best company and coverage for your needs and budget. Here is what you will need to do:
- Determine the types of auto insurance you need to have (for example, liability, personal injury protection, property and casualty and collision, etc.).
- Prepare your personal information, including your driver’s license and social security numbers, address, etc.
- Include the type of vehicle you plan to purchase, 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 buying a car from the dealership, because you’ll need coverage as soon as you buy the vehicle. You’ll also want to give agents time to get back to you with quotes, choose a company and policy, and figure out your cost of insurance as part of your overall budget for your new car.
If you have already purchased auto insurance and still have a copy of the policy, this is a good place to start. An older policy will at least give you an idea of what you’ve paid for 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, as well as your age, driving record, credit score, and other factors. The 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
- At national scale: $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 auto insurance. Coverage requirements vary by state, but mandatory bodily injury and property damage liability coverage is standard. Here are some of the types of coverage you’ll need when buying a new car, depending on the state you live in:
- Liability insurance: This coverage helps you pay for injuries sustained by people who are not in your vehicle or property damage caused by an accident for which you are responsible. Liability insurance minimums vary by state, so you’ll need at least the minimum required coverage.
- Personal Injury Protection (PIP): Sometimes called “no-fault” insurance, this coverage helps pay for medical expenses and lost wages if you or your passengers are injured in an accident. 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 damage waiver. Although not required by law, your lender will likely require collision insurance in order to obtain financing for a leased or purchased vehicle.
- Back to back insurance : Damage to the vehicle caused by hail, fire or anything other than a collision is covered by comprehensive insurance. Again, this is not required by law, but will likely be required to obtain car financing.
- Coverage for uninsured and underinsured motorists: Required in many states, this provides coverage to pay for injuries and property damage caused by another driver with insufficient or no coverage.
Almost all states require proof of at least minimal liability coverage before a vehicle can be legally driven on public roads. If you are financing a purchase or lease, your lender will also require additional coverage, including comprehensive or collision damage waiver.
Even if you don’t own or plan to buy a car, you may want to purchase insurance. A non-owner car insurance policy is an option for people 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 expense coverage and uninsured/underinsured motorist protection.
Proof of insurance is not necessarily required to buy a car, but the dealership will need to see proof of insurance if you plan to test drive a vehicle. They will also need to confirm that you have coverage on your new purchase before removing it from the sale lot.
With any major insurance company, you should be able to purchase coverage the same day you purchase a vehicle. This can be done either through an insurance agent, through an insurance company’s website, or through the customer service number. The whole process can often be accomplished in 30 minutes or less, especially if you are simply updating an existing policy with a new vehicle.
Most insurance companies give a short grace period if you miss a payment, but there is no car insurance grace period that allows you to drive a new car without insurance. Coverage is mandatory upon purchase of the vehicle. Check with your current insurer to find out what is required when adding a new vehicle to your policy and when you must do so.
Gap insurance covers the difference between the amount you owe on an auto loan or lease balance and the actual value of the vehicle in the event your car is totaled. If you finance or lease your vehicle, you may need to purchase gap insurance.
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For more information on car insurance, see the following guides:
360 Associate Reviews
For more information on other types of insurance, see the following guides:
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