Last Updated: July 8, 2022

The Best Approach For Buying New Car Insurance: An Expert Guide To Cut Expenses

TLTR: This article discusses new car insurance. The costs, tips to save money, car brands that are cheaper to insure, and state laws. Some frequently asked questions are also answered.  

There’s nothing like a new car, is there? The pristine way it looks and the worry-free way it runs…even that unmistakable new-car smell—all of it adds up to unadulterated joy on wheels. Unfortunately, the insurance may run you more than if you’d bought a used vehicle. But never fear, we’re here to clue you in on some ways to keep your insurance costs down. 

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Buying New Car Insurance Is More Expensive

According to Statista, about 1.2 million cars were purchased in May 2021 alone. Despite the high number of car sales in the U.S., new car insurance can be relatively expensive compared to policies for older cars. One reason is that new cars, especially more expensive models, are more desirable, and therefore are more likely to be targeted by thieves or vandals who may strip them for parts. Some car insurance policies also cover the depreciated value with an additional endorsement such as gap insurance.

New cars have a lower resale value and thus need full coverage to protect against theft and other losses. Additionally, they are more expensive to repair as well. For example, if you buy the latest model of a Jeep Cherokee, then it will be more expensive to repair it when in comparison to an older model.

New cars are often more expensive to repair, as well.  

That said, it’s important to note that not all new cars are expensive to insure. Many cars have different premium costs. According to Nerd Wallet, the five least expensive new cars to insure are: 

  • Subaru Outback 
  • Jeep Wrangler 
  • Honda CR-V 
  • Subaru Forester 
  • Ford Escape 

Conversely, a list from Forbes shows that the most expensive cars to insure are:  

  • Lexus NX 300h 
  • Dodge Ram 1500
  • Rebel Lexus RX 350 
  • Nissan Altima 2.0  
  • Tesla Model 3 Standard Plus
how-to-buy-a-new-car-insurance-with-less-expense

Insurance Grace Period For When You Buy A New Car

New cars don’t necessarily mean new car insurance. You can usually just add your new car to an existing policy. And you usually get a short grace period with most insurers. For example, Progressive gives drivers 30 days after adding their new vehicle before they’re required to update their coverage, while other companies give less than week-long grace periods. 

Make sure that your policy is updated before the end of your grace period, however long that may be. A lapse in coverage can cost you more money later on. 

Another option is to purchase a short-term insurance policy, also called a “seven-day” or “30-day” policy. These are intended to give you the time you might need in order to buy new car insurance and save money. The down side is that these types of coverage often end up being more expensive than traditional rates. 

what-is-the-cost-of-car-insurance-for-new-cars

Car Insurance For New Cars; State Wise

You probably know that car insurance is mandatory almost everywhere in the U.S. in some form or another. Here is a breakdown of policies required by each state.  

States that only require bodily injury liability and property damage liability: 

  • Alabama 
  • Alaska 
  • Arizona 
  • Arkansas 
  • Colorado 
  • Delaware 
  • Florida 
  • Georgia 
  • Idaho 
  • Indiana 
  • Iowa 
  • Louisiana 
  • Maryland 
  • Mississippi 
  • Montana 
  • Nevada 
  • New Mexico 
  • Ohio 
  • Oklahoma 
  • Pennsylvania 
  • Rhode Island 
  • Tennessee 
  • Texas 
  • Utah 
  • Virginia 
  • Washington 
  • Wyoming 

Note: Virginia allows drivers to opt out of purchasing auto insurance by paying a fee.   

States that require bodily injury liability, property damage liability, and uninsured or underinsured motorist protection: 

  • Connecticut  
  • Illinois  
  • Maine  
  • Missouri  
  • Nebraska  
  • New Jersey  
  • North Carolina  
  • South Carolina  
  • South Dakota  
  • Vermont  
  • Washington, D.C.  
  • West Virginia  
  • Wisconsin

States that require bodily injury liability, property damage liability, and personal injury protection:  

  • Hawaii  
  • Kentucky  
  • Michigan

States that require all the above policies: 

  • Kansas 
  • Massachusetts 
  • Minnesota 
  • North Dakota 
  • Oregon 
  • New Hampshire 
  • New York 

Note: New Hampshire allows its residents to opt out of auto insurance, but they must take financial responsibility for anyone they injure while driving. 

All the information you need about meeting the minimum requirements of your state can be found on the state’s insurance commissioner’s website.

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Cost of Car Insurance for New Cars

According to Bankrate, the national average cost of full coverage car insurance in 2021 is $1,674. This cost is likely to increase by 5% to 7% if you get insurance for a new car.  

Keep in mind that there are many cars these days that have built-in technology for avoiding collision and anti-theft systems. If your new car has these features or other smart features, then your premium cost can be considerably lower.  

Note: Some car insurance companies may charge you extra for having the above-mentioned features as they are more expensive to replace. Be sure to check with your insurance agent.

Factors That Determine the Cost of Premium for New Car Insurance

There are many factors considered by your insurance provider when calculating the cost of premiums for your new car insurance. Some of these factors are:  

  • Model Year of The Car 
  • Make of The Car 
  • Amount of Coverage Included 
  • Driver’s History 
  • Your Demographic Details  
  • State You Are In 
  • Claim History 

Note: You may want to ask your insurance agent or insurance company the breakdown and the basis on which they calculate your new car insurance premiums. 

what-are-the-Factors-That-Determine the Cost of Premium for New-Car-Insurance

Coverages You Should Include In Your Insurance for A New Car

A new car should have all-round coverage. There are many endorsements you should consider having in your policy. Some of the most important ones are:  

  • Hazard Insurance 
  • Property Damage Liability 
  • Collision Coverage 
  • Personal Injury Protection 
  • Uninsured Motorist Insurance 
  • Gap Insurance 
  • Bodily Injury Liability 
  • Comprehensive Coverage 

Tips On Saving Money On Your New Car Insurance Policy

  • Shop around for the cheapest possible quote 
  • Consider bundling your home and auto policies together 
  • If you are eligible, get a good student discount 
  • Ask about discounts for multiple vehicles or safety features such as anti-theft devices  
  • Consider removing endorsements that you don’t need in your policy 
  • Ask about multi-car discount deals 
  • Be a safe driver, invest in a defensive driving course 
  • Increase the amount you pay for deductibles 
  • Consider buying a cheaper car 

Conclusion

If this is your first time purchasing a car and you don’t have insurance yet, then you must buy cheap full coverage insurance before you buy your car. New car insurance for new drivers is quite important. You must also buy your coverage beforehand if you are planning to change your insurer from your current company to us.    

The rates of insurance are different for various cars. If you want to save money, it would be best to research the cost of your car and compare with other models before making a purchase decision. As affordable and customizable as policies are, no one can provide you with back-dated insurance. However, if an unfortunate event does come your way, we can help you with your car insurance claim process in a fast and efficient manner. 

Get in touch with our experts. Find an agent today.

Frequently Asked Questions (FAQs)

Why A No-fault Policy May Be Right for You?

A car insurance policy with a no-fault clause can allow you to sue the other driver in case of an accident. This may be good when the other driver does not have enough auto insurance coverage or is applying for bankruptcy and doesn’t want to risk ruining their credit report by filing a lawsuit.

Do I Need Insurance To Buy A New Car?

Well, you can buy a new car without insurance. However, in most states, the car company/dealership will ask to see your insurance contract in order to let you drive the car home. This is because of the strict federal laws regarding car insurance.

What Happens If I Don't Have Any Car Insurance at All?

It’s also important to remember exactly why you need coverage for your vehicle. A new car insurance policy will shield you from substantial financial losses incurred in accidents.

According to The Guardian, about 42,060 people died in the U.S. in car accidents in 2020. While insurance coverage, of course, can’t prevent death, it offers important financial protection. In a report published by the Insurance Information Institute, the average auto liability claim for property damage was $3,841; the average auto liability claim for bodily injury was $15,785.

Do I Have To Get Gap Insurance?

We highly recommend getting gap insurance if you owe the car dealership more than your vehicle is worth. This may seem implausible, but cars depreciate up to 60% in monetary value within the first five years of purchase. If you bought your vehicle on some form of a loan, then with interest, you may owe more than your car is worth.

In an unfortunate event that your car gets totaled, having gap insurance in your coverage can really save you from a lot of financial issues.

Will My Dealership Transfer My Insurance To My New Car?

In most cases, they won’t. Even if a dealership tells you that it will do your insurance-related paperwork for you, it’s always better to do it yourself. In a situation that you are purchasing a new car and the dealership asks for your insurance card, know that it’s just a part of a protocol. They don’t automatically know or are liable for you driving off a brand new car off their lot.

What Is Covered In Comprehensive Car Insurance?

Comprehensive car insurance is often referred to as “other than collision” coverage. The policy basically covers everything from fire, theft, vandalism to even animal-related damages or objects like trees falling on your car. The policy is crucial if you are lending your car for a lease or planning to lease a vehicle.

Do I Need A Separate Policy For A Commercially Used Car?

It would be best to purchase a separate policy for a commercially used car. Mostly, the coverages included in a regular car insurance policy are only for private usage and won’t cover the risks or financial issues you may have for using the car in a commercial way. Additionally, insurance companies won’t let you use private car insurance for a commercial car.

You can do some research online or ask around to have the best commercial auto insurance for your vehicle used for work.

Why Is Car Insurance More Expensive For New Drivers?

Car insurance for new drivers is generally a little bit more expensive than it is for experienced drivers. If the new driver is also someone below the age of 25, then their premium rates are going to be significantly higher. This is because they are relatively riskier based on their driving records than the older ones. Newer drivers have less experience, and thus there is a greater chance of an accident happening while they drive, resulting in higher claim rates compared to older.

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