There’s nothing like that feeling of elation when you first drive your brand-new car off the lot. However, in all of the excitement, do not forget to protect your vehicle with the right amount of auto insurance to protect your shiny new investment.

Before you buy your next car, this is what you need to know about protecting it with new auto insurance.

How to get cheap auto insurance for a new car?

Many car dealerships generally will not allow you to drive off the lot until you have proof of auto insurance for your new vehicle. That’s because, in nearly every state, auto insurance is required by law.

You likely will not be allowed to drive your new car home without insurance, so you will need to make sure that your new car is insured before you go to the dealer to pick it up.

If you already have insurance for an existing vehicle, however, this step could be as simple as making a quick phone call to your agent.

Many policies will automatically extend your current coverage to your new vehicle, at least for a few days. Some states, such as Texas, even require that insurers automatically extend the customer’s existing coverage to a new vehicle.

However, it’s important to note that there may still be limitations on the extent of the coverage.

Key Takeaways

  • Research the cost of car insurance on a particular type of vehicle before you buy it.
  • Your current auto insurance policy may have a grace period and extend coverage to your new car for up to 30 days.
  • The average cost of car insurance for a good driver with good credit is $146 per month or $1,758 per year.
  • Never drive a new car off the lot without making sure you have adequate insurance coverage first.

New car insurance coverage requirements

Whether your car is brand new or just new to you, if you've financed it you're going to be required by your lender to get a full coverage auto insurance policy. But what does that really mean?

Most insurers will know exactly what you mean if you say "full coverage" but what that really means is a combination of comprehensive and collision, property damage liability, bodily injury liability and anything else required by your state or lender.

Essentially, your lender will want to make sure that the vehicle is fully covered for any potential damage or destruction because until you've paid them back in full, they own the vehicle.

If you are not financing your new car, you're only technically required to have your state's minimum requirements. However, we strongly recommend you get more than state minimum liability coverage.

Unless you can afford to replace or repair your car if it is destroyed or damaged, you need some comprehensive and collision coverage, too. And you might even need more liability coverage than your state requires.

Average car insurance cost

If you've got good credit and good driving history, your car insurance rate will be, on average, $1,758 annually, or $146 per month, for a full coverage policy.

But of course, that will vary substantially depending on where you live, what you're driving and other factors.

How much is insurance for a new car?

Auto insurance for a new vehicle can cost substantially more than insurance on an older vehicle. After all, the value of your new car could be significantly more than that of a used vehicle.

Many auto insurance providers base auto insurance rates on several factors, such as the state in which you live, the kind of car you drive, your annual mileage, age and your credit score.

So, you should expect to pay more in insurance for a vehicle with a higher value and you should also expect to pay more in insurance if you've financed the new car and your lender requires full coverage.

Compare car insurance rates

You don't want to be in the middle of purchasing your new vehicle to discover you can't afford the insurance on it. To find the best car insurance rates, collect multiple car insurance quotes while you're shopping for your new car so you can compare auto insurance rates by car model.

To get you started, we've covered the lowest rates for new car insurance coverage, both full coverage and state minimum.

RankCar insurance providerFull coverage annual rateState minimum annual rate (liability only)
1Concord$872$290
2Progressive$895$315
3Geico$1,089$318
4USAA$1,111$358
5North Carolina Farm Bureau$1,141$332
6Safety Insurance$1,217$435
7Depositors Insurance$1,262$476
8Erie$1,268$414
9MMG$1,319$402
10Travelers$1,322$599

How can I lower my car insurance rates?

There are several ways to save money and receive the best car insurance rates.

  • You can opt for a higher deductible, which can lower your overall rates, but this will mean more money out-of-pocket if you experience a claim.
  • Enrolling in a defensive or safe driving course could also help you save money on your annual auto insurance premium.
  • Look for discounts. Insurance companies offer a variety of discounts you may qualify for to help reduce your auto insurance.
  • Consider usage-based insurance. If you are a low-mileage driver, you may benefit from a pay-per-mile policy. Additionally, if you're a safe driver with good driving habits, you may benefit from a program that monitors your driving and rewards you for it.
  • Be sure to collect and compare auto insurance quotes to ensure that you receive the cheapest car insurance rates for the best new car insurance.

Will my old car insurance cover a new car?

If you're already paying for a car insurance policy you may be wondering if you can just use it for your new car, even for a while.

Good news! Many insurance companies offer a new car grace period. However, ask your insurance agent about a grace period before you make your new car purchase.

New car insurance grace period

Many insurance companies offer up to a 30-day grace period for a new or new-to-you vehicle. This will give you a bit of time to finalize everything with the new car and new policy.

But even though you may have this grace period, we do not recommend waiting to do your car insurance shopping. This is something you should do before deciding on a new car.

Car insurance rates can vary greatly by vehicle type, make and model. You wouldn't want to buy a sweet new ride only later to find out you can't afford the insurance for it.

How long do you have to add a new car to your insurance policy?

You may have the grace period we mentioned, but you will need to have active auto insurance coverage before you can legally drive your new car. Once you decide what kind of car you want to buy, be sure to shop for auto insurance quotes to find the best coverage at the right price.

Your auto insurance provider should be able to provide instant proof of insurance so you can hit the road in your new wheels without delay.

What is gap insurance?

Gap insurance pays out the difference between what you still owe on the car and the amount your insurer will pay if the car is totaled while relatively new.

For example, let's say you bought a new car, financing it with a loan of $30,000. Two weeks later, the car is totaled in an accident and valued at just $25,000. Without gap insurance, your insurer only pays the car's current value, leaving you with a $5,000 bill. However, if you have gap insurance coverage, also known as “auto loan/lease insurance,” that bill won't be coming out of your pocket.

Frequently asked questions

Can I get an auto insurance quote before I buy a car?

Once you’ve chosen the car model, you’ll need to shop for an insurance company, especially if this is your first car. Insurers use different formulas for setting rates, so the price of a policy can vary by hundreds of dollars.

That means you could overpay for your coverage if you don’t shop for the lowest rate. You should get quotes from at least three insurers when shopping for a policy. Read Tips for how to buy car insurance online for more information on finding the most affordable car insurance.

If you want to drop your current carrier, learn how to switch insurance companies to ensure your coverage doesn’t lapse between the old and new policies. Insure.com also provides a list of the best car insurance companies as ranked by policyholders.

Which insurance companies sell new car insurance?

All major insurers that offer auto insurance will be able to offer insurance coverage on a new car. In fact, there are so many companies that offer insurance coverage on new vehicles that it can seem overwhelming trying to select one.

Shopping around and comparing auto insurance quotes can pay off, literally, by putting money back in your pocket each month. In addition to rates differing by the insurance company, the discounts they offer also vary.

How do you get car insurance without a car?

Begin by deciding how much coverage to buy. You should buy more coverage than your state minimum liability levels if you are buying a new car and have a lot of assets. To help you find the best coverage for your situation, consider how much car insurance to buy and try using the Auto Insurance Advisor tool.

Once you settle on the coverage amount and an insurance carrier, be sure you have the insurance policy go into effect on the same day you buy the car. Most insurance companies can email or fax proof of a policy on the spot at the dealership.

Can I drive a car without insurance if I just bought it?

Rules vary by the insurance company and according to state law, but in most areas, it is illegal to drive without car insurance - even if you just bought your car. The last thing you want to do is inadvertently drive home without any insurance, a crime that carries strict penalties.

How soon after buying a car do you need insurance?

Policies that extend coverage to new cars typically give you anywhere from seven to 30 days to buy a new policy and inform your car insurance company that you purchased a new vehicle. However, it is always a good idea to call your agent before picking up the car.

For one thing, you will want to make sure that the extended coverage includes collision and comprehensive. If it doesn't, your finance or leasing company will require that you add the physical damage coverage to your new car before you drive it home.

Will my old car insurance cover a new car?

While your existing auto insurance policy may very well automatically extend to your new car, the coverage may not be enough for a new vehicle. Some policies only extend coverage to a new vehicle if it is replacing the existing insured vehicle.

The insurer may also only extend the same coverage that was on your previous vehicle. Without adequate coverage, you could find your new car not covered by insurance should you get into an accident on the way home.

Do I need insurance if I’m leasing?

Keep in mind if you're leasing a vehicle, you may need to upgrade your coverage. Leasing companies require that you carry higher liability limits of $100,000/$300,000 for bodily injury and $50,000 for property damage. Typically, insurance companies can get you the coverage you need within 24 hours.

How do I transfer a title on a new car?

Title procedures vary by state and local governments, but most of the time if you have financed your new car, the title will be kept by the lender until you have paid the car off.

The lender will also be listed as a lienholder on the title. This ensures that if you were to try to sell the car, the lender would be paid off before the title could be transferred to the new owner.

If the new car is not financed, the seller will provide the title once you've paid them. Then you'll complete your registration and tags with the DMV. You will need to show proof of insurance to get tags and registration for the vehicle.