Les Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Written By Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Deputy Editor, Insurance Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
| Lead Editor, Insurance
Updated: Oct 18, 2023, 7:46am
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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Buying a new car can be a delightful experience. From the pristine exterior and interior, single digit odometer and that new car smell, driving a new car off the dealer’s lot is a wonderful feeling.
Buying new car insurance for a new vehicle may feel less fun, but it’s an essential step.
There are specific situations when you want to buy new car insurance, such as:
A new car insurance grace period is when your current insurance coverage is extended as temporary coverage to a new vehicle that is replacing another vehicle. This allows you to drive off the lot with your new car with car insurance coverage in place.
Before the grace period is up, notify your car insurance company about your new vehicle to get it officially added to your policy.
How long does a new car grace period last?
The length of the grace period varies by car insurance company, if offered at all. A 30-day grace period is typical but can be as short as seven days.
Check with your insurer about its grace period rules before buying a new car. It’s important to get car insurance on the new car before the end of the grace period so you don’t end up with a lapse in coverage.
What car insurance coverage is given during the grace period?
Insurance companies can vary on whether only a replacement car gets a grace period or it extends to an additional car being added to your household. A replacement vehicle generally receives the same coverage as the car it replaces and an additional car gets the same coverage as the car with the most coverage on your policy.
A replacement vehicle generally receives the same coverage as the car it replaces.That means if you had only liability insurance previously on all your cars, that’s all you’ll get on the new vehicle during the grace period. If you need comprehensive and collision coverage, it’s best to alert your car insurance company immediately about the new car and make sure the correct coverage is in place.
Buying car insurance for a new vehicle is like getting coverage for any vehicle. You’ll want to find a quote that can fit your budget and then lock in coverage with an application.
Insurance for a new car costs an average of $2,150 a year for a good driver with full coverage car insurance.
* USAA is only available to members of the military, veterans and their families. See More See LessInsurance costs for a new car are an average of 37% higher than a 10-year-old model of the same vehicle, according to Forbes Advisor’s analysis of rates for 15 popular car models.
Source: Quadrant Information Services. Rates are based on a 40-year-old female driver with a clean record. Rates include $100,000 in bodily injury liability coverage per person, $300,000 per accident and $100,000 in property damage liability, uninsured motorist coverage and any other coverage required in states. The average rates also include collision and comprehensive with a $500 deductible.
See More See LessState minimum car insurance requirements are the same whether your car is new or used. A state minimum auto policy always includes liability insurance that pays if you cause injuries or damages to others in an auto accident. Depending on your state, you may be required to carry other coverages, such as uninsured motorist, personal injury protection or medical payments.
See More See LessThe standard types of coverages you may include in your new car insurance policy include:
No state requires you to carry coverage for damages your car may sustain. However, if you have a lease or loan on your new car, your lender will mandate you have collision and comprehensive insurance on your policy so you have coverage for the repairs or replacement of your new vehicle if it’s in an auto accident.
The make and model of your new car is one rating factor that affects new car insurance costs, but there are many more that auto insurers use to determine the price you pay.
Common car insurance rating factors used to determine insurance costs include:
Every state except New Hampshire, South Carolina and Virginia requires car insurance. The minimum insurance required will depend on your state. On top of state laws, if you have a car loan or lease, your lender or leasing company will likely require comprehensive and collision coverage, which pays to repair or replace your car due to problems covered by your policy, such as a car accident or theft.
The main types of car insurance that you may be required to have are below.
Liability car insurance pays for property damage and injuries to others when you cause a car accident. It also covers the cost of a legal defense, court judgments and settlements. Liability insurance does not pay for your own injuries or vehicle damage.
Each state has its own minimum liability car insurance requirement. For example, car insurance in California requires at least 15/30/5 in liability insurance. That translates to:
It’s a good idea to buy more than your state’s minimum liability requirements. Minimum required amounts can be woefully inadequate. For example, if you cause a major accident that results in serious injuries to multiple people, $30,000 won’t get you very far, and you would be stuck with significant out of pocket costs.
A good rule of thumb is to buy enough liability car insurance to cover what you could lose in a lawsuit.
If you have a car loan or lease, your lender or leasing company will likely require you to buy collision and comprehensive insurance. That’s so you don’t walk away from your loan or lease if your car is totaled or stolen.
Collision insurance pays for repairs to your vehicle if you get into a car accident, no matter who is at-fault for the accident. For instance, if you back up into a pole, collision insurance can pay for your repairs (minus your deductible).
Comprehensive insurance pays for car theft and repairs due to damage from problems such as falling objects, floods, collisions with an animal, vandalism, fire and hail.
Uninsured motorist coverage and underinsured motorist coverage pay for your medical costs if someone without liability car insurance (or without enough liability car insurance) crashes into you.
Uninsured motorist coverage is required in some states and optional in others. In general, this is a good coverage to have. One in eight drivers in the U.S. don’t have car insurance, according to the Insurance Research Council.
Personal injury protection (PIP) coverage pays medical bills and other expenses (such as lost wages and funeral expenses) for you and your passengers, no matter who is at fault for the car accident.
There are 12 states that require PIP under “no-fault insurance” laws, three other states that require PIP, and four states and Washington, D.C. where PIP is optional.
When buying car insurance for a new vehicle, you may want to consider additional coverage types.
If your car is totaled due to a problem covered by your policy (like a flood or car accident), gap insurance covers the difference between what your car is worth and what you owe on a car loan. For example, if you have $25,000 outstanding on a loan but the value of your totaled car was only $22,000, this coverage pays the $3,000 “gap.”
If your new car is totaled due to a problem covered by your policy, new car replacement insurance pays for a brand new car of the same make or model. This can be a good option for cars that quickly depreciate in value.
Rental reimbursement insurance pays for a rental car or substitute transportation (such as subway or bus fare) if your car is being repaired for a problem covered by your policy (like a car accident).
If your car is disabled, roadside assistance insurance pays for services, such as a tow truck, locksmith, jump-start for a dead battery and fuel delivery.
When buying car insurance for a new car, you’ll want to have the following information:
You need car insurance before you drive off the lot with your new car. Here’s how you can prepare:
Here are some ways you can save money when buying auto insurance for a new vehicle.
It’s a good idea to know how much car insurance you need before you get quotes. For example, know how much liability car insurance is sufficient to cover your net worth, such as your home and savings. An insurance agent can help you decide on coverage limits and optional coverage types.
The best way to find a good deal on new car insurance is to compare car insurance quotes from multiple insurers. Don’t skip this crucial step. Car insurance rates can vary drastically among companies.
You can get free car insurance quotes:
Some insurance companies offer new car insurance discounts, and you may also be eligible for other common car insurance discounts, such as good driver discounts, good student discounts, multi-policy discounts and pay-in-full discounts.
If you have a car loan, you’re likely already aware that your credit played a major role in the application process. Your credit can also have a major impact on your car insurance rates.
Drivers with poor credit pay an average of 76% more per year for car insurance compared to drivers with good credit, according to a Forbes Advisor analysis of car insurance rates for drivers with poor credit.
But not all insurance companies give credit the same weight when setting car insurance rates, which is why it’s so important to shop around.
The use of credit to help determine car insurance rates is banned in California, Hawaii, Massachusetts and Michigan.
Not all insurance companies give credit the same weight when setting car insurance prices.You may be able to buy new car insurance at the dealership, but your options will be limited and it’s typically not the best way to find a good price. For example, the dealership might only work with one or two insurance companies.
The best way to find cheap car insurance is to shop around before you arrive at the dealership. When you shop around ahead of time, you’ll be able to research your coverage needs and compare quotes among several insurers. This will save you both time and money in the long run.
If you already have car insurance, you can add the new vehicle to your policy. For example, Progressive car insurance has a 30-day grace period to add a new car to your policy after you buy it. But if you don’t currently have collision and comprehensive coverage, you will need to add them to your current policy if your lender or leasing company requires it.
We used data from Quadrant Information Services, a provider of insurance data and analytics. Unless otherwise noted, rates are based on a driver with a clean record insuring a new Toyota RAV4. Full coverage rates include $100,000 in bodily injury liability coverage per person, $300,000 per accident and $100,000 in property damage liability, uninsured motorist coverage and any other coverage required in the state. The rates also include collision and comprehensive with a $500 deductible. Rates for minimum car insurance reflect the minimum amount of auto insurance required in each state.
With so many choices for car insurance companies, it can be hard to know where to start to find the right car insurance. We've evaluated insurers to find the best car insurance companies, so you don't have to.
