UPDATED: Mar 13, 2020
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Getting a new car is an exciting time. Without proper insurance, however, you won’t be able to drive your new car off the lot. Today, we’re explaining everything you need to know about insuring a new car, including how to get car insurance for a new vehicle and how to find the best rates for your new insurance policy.
Request a Quote Before You Buy
If you’re upgrading to a newer vehicle, then your car insurance prices might change significantly. If your current vehicle is several years old and you’re upgrading to a brand new vehicle, then your car insurance prices might double.
The type of vehicle you drive has a significant effect on car insurance prices. Request quotes before you buy. You might be getting a great price on a high-end vehicle, only to find that you can’t afford the monthly car insurance premiums for that vehicle.
Comparing insurance today can also make it easier to choose between multiple vehicle types. Let’s say you’re struggling to decide between Car A and Car B. You like both vehicles, and the two are similar in a lot of ways. Car A, however, costs $200 per month to insure while Car B costs $125 per month. It can make your shopping process easier.
Getting a new vehicle can be thrilling. The interior of the vehicle smells brand new. Unlike when buying a second-hand car, you already know the history of your new vehicle. However, if car insurance prices are too high, then a brand new vehicle might not be worth it.
Ultimately, consider getting 3 to 4 insurance quotes before you buy a new vehicle. Remember: your current car insurance company might not be the best option.
Does My Current Car Insurance Cover My New Vehicle?
In most cases, your current car insurance plan will cover your new vehicle. With many car insurance companies, you’ll get a grace period that allows you to drive your new vehicle off the lot and to your home. Some car insurance policies even come with a 30 day grace period.
Don’t assume that your car insurance policy has a grace period for new vehicles!
Not all car insurance policies will automatically cover your new vehicle. To make sure you’re covered, contact your insurance company. Or, check your car insurance declarations page. There should be a section about new vehicles.
If you cannot prove you have an insurance policy at the dealership, then the dealership will refuse to let you drive off the lot.
You May Need to Upgrade Your Coverage
If you’re buying a new vehicle, then you may be required to upgrade your existing insurance coverage.
If you’re leasing or financing your new vehicle, then you may be required to add collision or comprehensive coverage to your car insurance policy, for example. When you lease or finance your vehicle, you’re not the full owner of the vehicle. The bank or financial institution is protecting its liability by requiring you to have proper insurance coverage.
Another thing you may need as a lessor or debtor is GAP insurance. The harsh reality is that your new car depreciates the moment you drive it off of the dealership lot. Because of this, there may be a gap in the amount your owe and the amount your vehicle is worth. GAP insurance will pay for the difference between what your vehicle is currently worth and the amount you still owe for it. If you don’t already have GAP insurance, then you may be required to upgrade your policy in order to drive your car off the lot.
Consider Changing Companies When Buying Insurance for a New Car
You might be satisfied with your current insurance company. However, it’s still a good idea to compare car insurance companies when you’re buying a new vehicle.
Different car insurance companies calculate premiums in different ways. Your current insurance company might charge particularly high rates for the make and model of your new vehicle.
That’s why it’s a good idea to compare car insurance quotes for new cars from different companies.
If you do make the switch to a new insurance company, then make sure you have adequate coverage from the day you drive off the lot. You want your new car insurance policy to begin the day you drive your vehicle off the lot.
Can I Transfer My Existing Car Insurance Policy to a New Vehicle?
The majority of car insurance policies will cover your new vehicle temporarily – say, for a 7 to 30 day period or for the drive from the dealership to your home.
Beyond this grace period, however, you’ll need to contact your car insurance company to transfer your insurance to the new vehicle. Your car insurance premium is based on the make, model, and value of your vehicle. You may pay significantly higher car insurance prices on your new vehicle because your insurance company is assuming higher risk.
Make sure you understand how your current policy works and whether or not it extends to your new car. You don’t want to risk going uninsured on your new vehicle.
Will Premiums Increase with a New Vehicle?
If you buy a new car, can you expect premiums to increase? Will you pay more for car insurance with a new vehicle?
It’s unlikely that your basic liability insurance will significantly increase. Basic liability insurance is the bare minimum insurance required to legally drive on the road. This insurance covers any damage you cause to other people or property. It includes bodily injury coverage, property damage coverage, and personal injury protection.
Your newer vehicle might have higher collision and comprehensive coverage, however. These types of car insurance policies are optional and cover damage to your own vehicle. A newer vehicle is typically worth more than an older vehicle, which is why premiums will likely increase with a new vehicle. It has higher actual market value.
Remember that anyone who is leasing or financing a vehicle will be required to have collision and comprehensive coverage. If you currently only have liability coverage, then adding collision and comprehensive coverage to your plan can significantly raise costs.
Studies have shown that the average car insurance prices for a new vehicle range from $1,200 to $1,500 per year for the most popular car models.
Don’t Have Car Insurance? You Need to Buy Car Insurance Before Acquiring your New Vehicle
Much of the information above assumes that you currently have car insurance.
However, if this is your first vehicle, or if you don’t currently own a vehicle, then you might not have car insurance coverage.
In that case, you need to compare car insurance quotes before you get to the dealership. You’ll need to acquire proof of insurance before getting your new vehicle. The car dealership will not let you buy a vehicle before you provide proof of insurance. You’ll also need proof of insurance during a private sale.
By researching car insurance coverage and rates today, you can get the best deal on car insurance for a new car – even if this is your first vehicle or if you’re a young driver.
Most Insurance Companies Can Email or Fax Proof of Insurance At the Dealership
Not everybody goes to the dealership prepared with a car insurance policy. Fortunately, most car insurance companies will email or fax proof of insurance at the dealership. You can call an insurance company (or call your own insurance company) from the dealership. Ask them to email or fax proof of insurance. Or, pay to upgrade your existing policy.
Most insurance companies are accommodating and will be happy to upgrade your policy to whatever you need.
If you work with a smaller car insurance provider, then make sure you’re aware of their hours: some car insurance companies are only open on weekdays. If you’re buying a vehicle on the weekend, then you may be unable to contact your car insurance provider.
Conclusion: You Always Need Insurance When Buying a New Car
If you’re buying a new car, then you need insurance for that new car. In fact, the dealership won’t let you drive off the lot without proof of insurance.
In some cases, your current car insurance policy will extend to cover your new vehicle. Many policies come with a grace period that lets you drive your vehicle home from the dealership, for example, before contacting your insurance company to upgrade your plan.
In other cases, you may need to buy different insurance for your new vehicle. In fact, this may be your best option: consider switching to a new car insurance company when upgrading to a new vehicle.