How To Buy Car Insurance for a New Car

Buying a new car is an exciting experience for most drivers. However, before you can formally assume possession, you must first complete the necessary formalities, such as insuring your vehicle. Car insurance is a legal necessity in almost every state, and dealerships will request proof of insurance before handing you the keys.

If you bought your automobile with an auto loan, you'll need a full range of coverages to meet lender and state requirements, such as collision, comprehensive, liability, and (often) uninsured motorist. That’s one of the first steps to buying car insurance for a new car: Know what you need. But we break down all the details and how to get the best deal on car insurance below.

How To Buy Car Insurance for a New Car

Before you go to the auto dealership, you should plan out how you will insure your new vehicle. Otherwise, you may not receive the keys straight away. Here's a step-by-step guide to buying vehicle insurance for a new car. 

Reach Out to Your Insurance Company

If you already have auto insurance, notify your insurance carrier that you're acquiring a new vehicle and whether it will be financed. You can acquire an estimate for the vehicle online or over the phone from an agent, so you know how much your premium will alter. Make sure you have all of the information you need, such as the odometer reading, VIN, trim level, and safety features.

Some auto insurance contracts offer a grace period, during which new vehicles are automatically insured for a limited time. If your policy includes a grace period, you are not required to add the new car to your policy immediately once, but you should do so as soon as possible.

If you do not currently have auto insurance, take a few minutes to compare prices from several insurance companies. Compare premiums, but also look at the coverage limitations and discounts that each insurer provides.

Choose your coverage.

When adding your new vehicle to your car insurance policy, you must choose if you want or need certain coverages. Personal liability insurance and/or uninsured/underinsured motorist coverage are required at the very least. If you live in a no-fault state, personal injury protection (PIP) may be required.

However, the insurance kinds required by your state may not provide adequate coverage for a new car. You may want (and your lender will most likely need) collision and comprehensive insurance. You may also wish to include roadside assistance to cover the expense of minor repairs, such as flat tire replacement. Consider adding rental reimbursement if you rely on your vehicle and do not have a backup. 

If your vehicle is financed, guaranteed asset protection (gap) insurance is a wise investment. If your car is totaled and you have negative equity, gap insurance will cover the difference between its market value and the amount you owe. Some lenders may request it as well.

Get proof of insurance.

After you've added your new automobile to your insurance policy, chosen your coverages and deductibles, and finished the transaction, you'll need to obtain your proof of insurance documents.

Many insurance providers allow you to download your insurance ID cards and binder, which can be used as proof of auto insurance. You must present at least one of these documents to the dealership before receiving the keys. When you assume possession of the vehicle, keep a copy of your insurance ID cards in the car (or on your phone). 

Factors influencing cost

Car insurance prices are calculated using a variety of parameters, which can differ depending on the type of coverage. Here are some of the factors that can influence the cost of popular auto insurance coverage.

Personal Liability Insurance

Personal liability insurance covers bodily injury and property damage in the event that you cause an accident and harm or damage the other driver's car. Most drivers are obliged to carry this sort of insurance, however the rate varies depending on your specific scenario.

Car insurance companies consider a variety of factors when calculating personal liability insurance premiums, including your driving record, age, claim history, and credit score. If you have a history of at-fault incidents or have made several insurance claims in the past, you may face a higher rate.

Your location is another element that influences the cost of personal liability insurance. Some states have higher minimum coverage requirements than others, which could lead to higher premiums.

Uninsured/Underinsured Motorist Insurance

Some states require uninsured/underinsured motorist insurance. It covers hit-and-runs, incidents involving uninsured drivers, and collisions with drivers who do not have adequate insurance to cover your costs.

Despite the fact that auto insurance is required practically everywhere, some locations have a higher percentage of uninsured drivers. If your location has a large number of uninsured drivers, you may have to pay a higher premium for this sort of coverage.

In addition, the coverage limits you select will influence your rate. The higher your coverage limits, the higher your premium will be.

Collision/Comprehensive Insurance

A full-coverage vehicle insurance policy includes both collision and comprehensive coverage. Collision insurance covers the cost of repairing your vehicle following a collision, such as slamming into a traffic pole, guardrail, or being hit by another automobile. On the other hand, comprehensive insurance covers non-collision damage such as fires, floods, and theft.

Several rating criteria can influence the cost of collision and comprehensive insurance, including your claim history, driving record, the type of vehicle you drive, coverage limitations, and deductibles.

New Car Insurance Premiums by Company

Car insurance premiums differ depending on the firm you work with. Here are some sample insurance rates from some of the top vehicle insurance companies.

To obtain these vehicle insurance estimates, we used a sample profile of a 30-year-old single female living in Chicago, Illinois, with no previous accidents or traffic offenses. The car is a 2019 Honda CR-V LX, driven 12,000 miles per year, with the following coverages:

• $100,000/$300,000 for bodily injury liability coverage
• $50,000 for property damage liability coverage
• $100,000/$300,000 for uninsured motorist bodily injury coverage
• Collision coverage has a $1,000 deductible.
• Comprehensive insurance with a $1,000 deductible.

When comparing auto insurance companies, compare rates from many insurance providers. Every insurer weighs rating variables differently, thus pricing for the identical types of coverage and limitations may vary.

While price is crucial, you should also compare policies based on coverage options, discounts, and financial strength ratings. Few automobile insurance policies are made equal, with each having its own set of perks and limitations.

How To Save Money on Car Insurance for a New Car

If you're thinking, "Is insurance cheaper for new cars," the answer is typically no. Insuring a new automobile is usually more expensive than insuring a used vehicle or a car of lower worth. However, there are ways to save money on vehicle insurance. Here are some tips to save money on your policy:

• Look for discounts: It is typical for auto insurance companies to provide discounts. Every insurer provides unique savings, but discounts are frequently available for good students, claim-free drivers, combining policies, insuring more than one vehicle, and taking a defensive driving course.
• Get several quotes: Car insurance premiums vary depending on which insurer underwrites your policy. Obtaining multiple estimates for the same kind and level of coverage will assist you in determining the most cost-effective insurance for your needs.
• Choose greater deductibles: Some automobile insurance policies, such as collision and comprehensive coverage, frequently need a deductible when you file a claim. By selecting a bigger deductible, you can guarantee a lower monthly payment.
• Pay your premium in full: Many insurance companies give a minor discount if you pay your premium in full. You can also get savings for setting up automatic payments.
• Improve your credit score: In most states, insurance firms employed credit-based insurance scores. If you can increase your credit score, you may be able to acquire reduced vehicle insurance rates.