How to buy car insurance for your new car - Forbes Advisor

How to buy car insurance for your new car – Forbes Advisor

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Buying a new car can be an enjoyable experience. From the pristine exterior and interior, single-digit odometer and new car smell, driving a new car away from the dealer’s place is a great feeling.

But buying new car insurance can seem like a daunting task. You want to make sure you buy the right coverage without overpaying. Here’s how to do it.

Is car insurance for a new car required?

Every state except New Hampshire and Virginia requires auto insurance. The minimum insurance required will depend on your state. On top of state laws, if you have a car loan or lease, the lender or rental company may require additional coverage.

Here are the types of coverage you may be required to get.

Car liability insurance

Liability insurance pays for property damage and bodily injury when you cause a car accident. It also covers the cost of legal defense, court rulings, and settlements. Your state will likely have a minimum auto insurance requirement. For example, to purchase auto insurance in California, you need to purchase at least 15/30/5 in liability coverage.

Here’s what those numbers mean.

  • 15 = $15,000 to cover bodily injury/death to one person per accident.
  • 30 = $30,000 to cover bodily injury/death to more than one person per accident.
  • 5 = $5,000 for property damage coverage for each accident.

It is a good idea to buy more than the minimum liability requirements in your state. That’s because these amounts are woefully insufficient. For example, if you cause a major accident that results in serious injuries to multiple people, $30,000 won’t get you far, which means you may be stuck with big out-of-pocket expenses.

A good rule of thumb is to buy enough auto liability insurance to cover what you may lose in a lawsuit.

Related: The main types of car insurance

Collision and comprehensive insurance

If you have a car loan or lease, the lender or rental company will likely require you to carry comprehensive collision insurance with you. This is so that you do not abandon your financial obligations if your car is assembled or stolen.

Collision insurance pays for repairs to your vehicle if you are in a car accident, regardless of who is at fault in the accident. For example, if you reference a column, collision insurance can pay for your repairs (minus your deductible).

Comprehensive insurance pays for repairs to problems such as falls, floods, animal collisions, vehicle theft, vandalism, fire and hail.

Cover for uninsured drivers

Uninsured Driver Cover and Uninsured Driver Cover pay your medical costs if you are hit by someone who does not have liability insurance on the car (or without adequate liability insurance on the car).

Uninsured driver coverage is required in some states and optional in others. In general, this is a good coverage. According to the Insurance Research Council, one in eight drivers in the United States does not have car insurance.

Protection from personal injury

Personal Injury Protection (PIP) coverage pays medical bills and other expenses (such as lost wages and funeral expenses) for you and your passengers, regardless of who was at fault in a car accident.

There are 12 states that require PIP under “error insurance” laws, three more states that require PIP, and four states and the District of Columbia where PIP is optional.

What other types of new car insurance should I consider?

When buying new car insurance, you may want to consider some types of additional coverage.

gap lock

If your car total is calculated due to a problem covered by your insurance policy (such as a flood or car accident), gap insurance covers the difference between the value of your car and what you owe on the loan. For example, if you had $25,000 owed on your loan but the total value of your car was only $22,000, this coverage pays a “gap” of $3,000.

New car replacement insurance

If your new car is charged because of an issue covered by your policy, new car replacement insurance pays for a completely new car of the same make or model. This is a good option for cars that depreciate quickly.

Rent payment insurance

Rental insurance pays for a rental car or alternative mode of transportation (such as a subway or bus fare) if your car is being repaired due to an issue covered by your policy (such as a car accident).

Roadside Assistance

If your vehicle is malfunctioning, roadside assistance insurance pays for services, such as a tow truck, locksmith, dead battery quick start and fuel delivery.

What information do I need to purchase new car insurance?

When buying car insurance for a new car, you will need the following information:

  • Vehicle identification number (VIN) for a new vehicle
  • Driver’s license numbers for all drivers in politics
  • Date of birth for all drivers on the policy
  • Garage address (usually your home address)

How can I prepare to buy new car insurance?

You need car insurance before you drive your new car. Here’s how you can prepare:

  • Compare car insurance quotes from different insurance companies.
  • Understand the types of coverage you need.
  • Decide how much coverage you want.
  • Consider optional types of coverage (such as gap coverage, new car reimbursement, or roadside assistance).

How much is car insurance for a new car?

Your car insurance rates for a new car depend on several factors, such as:

Most expensive and least expensive new car insurance

Here are the five least expensive cars to insure, based on Forbes Advisor’s analysis of 2021’s best-selling models.

Here are the five most expensive new cars to insure, based on Forbes Advisor’s analysis of the 2021 best-selling models.

Related: Most expensive and least expensive cars to insure

How can I save money when buying new car insurance?

Here are some of the ways you can save money when buying auto insurance for a new car.

Compare car insurance quotes

The best way to find a good deal for new car insurance is to compare car insurance quotes from several insurance companies. Don’t miss this crucial step. That’s because auto insurance rates can vary greatly from company to company.

You can get free quotes for car insurance:

  • Connected. Collect quotes from the insurance company’s website or using a website that provides quotes from multiple companies.
  • By phone or in person. Speak with an insurance company representative or contact an independent insurance agent who can get quotes from several companies.

Get the right amount of new car insurance

It is a good idea to know how much car insurance you need before you go to the dealership. For example, you should know how much auto liability insurance is enough to cover your net worth, such as your home and savings account. An insurance agent can help you determine coverage limits and types of optional coverage.

Ask about discounts

Lots of insurance companies are introducing new car insurance discounts, and you may also qualify for other common car insurance discounts, such as good driver discounts, good student discounts, multi-policy discounts, and fully paid discounts.

Keep a good balance

If you have a car loan, you probably already realize that your credit played a major role in the application process. But your credit can also have a big impact on your car insurance rates.

Drivers with poor credit pay an average of 76% more annually for car insurance than drivers with good credit, according to Forbes Advisor’s analysis of car insurance rates for drivers with poor credit.

But not all companies give credit the same weight when setting car insurance rates, which is why shopping is so important.

The use of credit to set auto insurance rates is prohibited in the states of California, Hawaii, Massachusetts, and Michigan.

Can I buy new car insurance from the agency?

You may be able to buy new car insurance at the dealership, but your options will be limited and it’s usually not the best way to find a good price. For example, an agent may only work with one or two insurance companies.

The best way to find cheap car insurance is to shop Before reach the agency. When you shop early, you’ll be able to research your coverage needs and compare rates between several insurance companies. This will save you time and money in the long run.

If you already have car insurance, you can add the new car to your policy. For example, progressive auto insurance has a 30-day grace period to add a new car to your policy after you purchase it. But if you do not currently have collision and comprehensive coverage, you will need to add it to your existing policy if the lender or rental company requires it.

Best car insurance companies 2022

With so many options for car insurance companies, it can be hard to know where to start finding the right car insurance. We’ve evaluated insurance companies to find the best car insurance companies, so you don’t have to.

methodology

To find the cheapest and most expensive new cars to insure on, we used quotes from Quadruple Information Services, a company that provides insurance data and analytics.

Prices are based on a 30-year-old female driver with a good driving record and $100,000 in personal injury liability coverage, $300,000 per accident and $100,000 in property damage liability, coverage for uninsured drivers and any other coverage required in the state. The price also includes a collision and all inclusive with a $500 discount.

Frequently asked questions about new car insurance

Do I need car insurance before I buy a new car?

You will need car insurance so you can drive a new car from the dealer’s place and take it home. Auto insurance is required in all states except New Hampshire and Virginia.

If you have a car loan or lease, the lender or rental company will also likely require you to carry comprehensive collision insurance with you.

Can I buy a car and have new car insurance on the same day?

You can usually buy car insurance and a new car on the same day. In fact, you can often buy a new auto insurance policy in less than an hour. Once you submit your payment, you can usually download or print proof of your insurance card on your mobile device.

But if you want to find good coverage at a reasonable price, we recommend doing your research and shopping early. Here’s more on how to buy car insurance in five easy steps.

Do I need full coverage car insurance for a new vehicle?

Although there is no special type of policy actually called “full coverage car insurance,” the term usually refers to a policy consisting of auto liability insurance, collision insurance, and comprehensive insurance. Depending on your state’s laws and if you have a car loan or lease, you may need all three of these types of coverage for your new car.

But don’t let the term “full coverage” fool you. These three types of coverage may not be sufficient for needs alone. For example, you may want to add coverage for uninsured motorists (in states where it is optional). And you may want other types of coverage such as gap insurance and rent repayment insurance. It is a good idea to speak with your insurance agent to help you decide how much car insurance you need.


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