How to insure your brand-new car

Is your new car already insured?

Your new car will likely be automitically covered if you already have an active auto insurance policy. Most insurers provide a short grace period for newly purchased vehicles, but the rules vary by company and state. The coverage that carries over usually matches the coverage on your current car.

If you had only liability coverage on the trade-in, you'll have only liability coverage on the new ride. That means if your old car was paid off and your new one isn't, you'll need to add the collision and comprehensive insurance lenders require before leaving the dealership.

What information do you need to insure a new car?

To insure a new car, you need the VIN, details about the car and any financing company, driver details and personal information. Before you call or go online to compare quotes or add a vehicle to your policy, gather all of the needed information.

Information needed	Why it matters
Vehicle identification number (VIN)	Identifies the exact make and model, trim, engine, and safety features
Purchase or lease date	Helps set the policy's effective date
Make, model, and year	Helps the insurer estimate repair and replacement costs
Garaging address	Rates are partly based on where the car is kept
Lender or leasing company information	Must be added to the policy as a loss payee
Driver information	The insurer needs to know who will regularly drive the car
Coverage limits and deductibles	Determines your protection and what you pay when you file a claim
Current insurance details	Proves continuous insurance coverage

Buying insurance while at the dealership

If you do not already have car insurance, you need to buy coverage before leaving the dealership. Dealers require proof of insurance before you drive away, especially if the vehicle is financed or leased. Compare quotes before signing, so insurance costs do not surprise you.

If you are not currently insured, you'll probably find that some companies are reluctant to cover you, and the quotes you get from the companies that will cover you can differ by hundreds, if not thousands, of dollars a year.

You will need to put a down payment on your new insurance coverage.

Even if you are insured, a new car is a great time to revisit your current coverage amounts or compare quotes again. You don't want all the savings you just negotiated in the finance office to go up in smoke when you buy insurance.

What coverage should I buy?

The right coverage depends on whether you finance, lease, or own the car outright. A lender or leasing company will require comprehensive and collision coverage. If you are paying in full for the vehicle, you can choose state-minimum liability, but it will not cover repairs or replacement of your new car.

You should also be certain that you have sufficient liability coverage to protect your assets from personal injury or property damage claims that may arise from an auto accident. If you own a house or have any savings, it's unlikely that minimum liability coverage will be enough. Use our auto insurance coverage calculator to get an idea about what level of liability coverage to buy.

And if you didn't put at least 20% down on the car or are financing for more than 60 months, consider gap insurance.

If you're leasing the vehicle, be sure to check your lease contract for any minimum coverage limits. Most leases require that you carry a minimum liability coverage limit, or else you'll be in violation of the lease, and many require higher liability limits than state minimums. Leasing companies may limit how high you can raise your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim. as well.

If buying the car outright, you can go as low as state minimum requirements, and you do not need to buy physical damage coverage, such as collision, if you decide it's not worth the cost.

What does your car insurance policy cover?

A car insurance policy can include several types of protection, such as liability coverage, medical payments coverage, uninsured motorist coverage, comprehensive coverageComprehensive coverage helps pay for damage to your car caused by events other than a collision, such as theft, fire, vandalism, or natural disasters. It is subject to a deductible., and collision coverage. Liability coverage pays for damages or injuries you cause to others. Comprehensive and collision coverage protect your own vehicle and are required by lenders for financed or leased cars.

Common types of auto insurance coverage include:

Liability coverage: Pays for injuries and property damage you cause to others in an auto accident, up to your policy limits. Since liability claims can be costly, this is one area where you do not want to be underinsured. Required by law in all states except New Hampshire.
Personal injury protection: Pays your medical expenses after an accident regardless of fault, and covers lost wages and funeral expenses as well. Required in all no-fault states.
Medical payments coverage: Pays medical expenses for you and your passengers after an accident, regardless of who is at fault. This coverage is required in some states and optional in others.
Uninsured/underinsured motorist coverage: Helps pay for losses caused by a driver who has no insurance or insufficient coverage to cover the damage. Required by law in some states.
Collision coverage: Pays to repair or replace your car after a crash with another vehicle or object, minus your deductible. Required if you have a loan or lease.
Comprehensive coverage: Pays for damage to your car from non-collision events, such as theft, fire, vandalism, hail, or falling objects, minus your deductible. Required if you have a loan or lease.

FAQ: Insuring a brand-new car

What happens if I forget to update my policy after buying a new car?

If you don’t submit your policy within the insurer’s required timeframe, your coverage may be limited or denied, depending on your insurer’s terms. It’s crucial to inform your insurer as soon as possible to prevent potential issues with claims.

Are there discounts available for insuring a new car?

Yes. Some insurers offer discounts for safety features, anti-theft devices or bundling policies. Newer vehicles with advanced safety technology may qualify for lower premiums.

Do electric or hybrid cars cost more to insure?

Yes, electric and hybrid vehicles often cost more to insure because their repairs are often more expensive and they use specialized parts. However, you may find discounts and incentives that can help reduce these costs.

Can I change my coverage after buying the car?

Yes. You can change your coverage limits, deductibles, or add optional protections whenever you want. It's a good idea to review your policy after you buy it to make sure it fits your needs and budget.