You need insurance on a new car before you can drive it off the lot. If you don’t already have a policy, you’ll have to compare quotes and buy car insurance before you can take home your new car.
If you’ve already got car insurance, you can also add your new car to your existing policy. You don’t need to add your new car to your insurance right away since your existing policy will automatically cover your new car for at least a few days, though you’ll have to update your policy at some point.
Do you need insurance before buying a new car?
Yes, you need to have at least enough car insurance to meet the minimum coverage laws where you live before you can buy a new car. That means that you’ll have to get insurance for your new car if you’re not already covered by an existing policy.
Car insurance dealerships usually won’t let you leave the lot if you don’t have proof of insurance. But it doesn’t take long to get insurance for a new car. You can get a quote in as little as a few minutes and get covered as soon as you pay for the policy.
If you don’t know the exact car you’re buying, you can still get quotes ahead of time and then just finalize the policy once you have the car’s vehicle identification number (VIN).
How much insurance do you need for a new car?
You’ll have to get at least enough car insurance to meet your state’s minimum coverage requirements, but if you’re financing or leasing a new car, you’ll probably be required to have full coverage.
Even if you’re buying a new car in cash, it’s still a good idea to have full-coverage car insurance, since you’ll want coverage for your brand new car if it’s damaged.
Collision coverage: Covers the costs if your new car is damaged in a collision with another driver or object.
Comprehensive coverage: Covers the cost if your new car is damaged by something that’s not a collision, like if a tree falls on your car or it’s stolen.
There are some extra types of car insurance coverage that you might also want to consider for a new car. New car replacement can be a pricey add-on, but it will pay to replace your totaled car with one that’s the same model year — regardless of your car’s depreciation.
Gap insurance for new cars
Some lenders require gap insurance, too. Gap insurance helps you pay for the “gap” between the remainder of your loan and the car’s value after depreciation when it’s totaled.
Basically, if you total a financed car and the regular payout you get from insurance isn’t enough to pay off your remaining car payments, gap insurance will cover the rest.
Gap insurance is useful for new cars because of how large your outstanding loan would be if you crashed your new car right after getting it.
Even if you don’t have to get gap insurance, it’s a good idea if you put down a small down payment on your car’s loan or if you have a lot of payments ahead of you. Otherwise, you risk months of having to pay out the loan on the totaled car yourself.
How does your insurance work for a new car?
The good news is that if you’ve already got car insurance, it will automatically cover a new car. You’ll have to show the dealership proof of coverage, but there’s no need to buy a new policy for a new car.
Once you get it home from the dealership, it’s easy to add your new car to an existing insurance policy. You can contact your insurance provider to let them know you bought (or are buying) a new car, sometimes you can even add a new car to your policy through your company’s mobile app.
In order to officially add it to your policy, your insurance company will want to know the new vehicle’s make, model, and VIN, as well as which driver in your household will be the primary driver.
When do you have to add your new car to your insurance?
You’ll have to add your new car to your existing insurance policy shortly after taking it home. Most car insurance companies offer a grace period when it comes to adding a new car to your policy, which can be as long as 30 days or as little as a week, or even a few days.
A grace period does not mean that you can drive off the lot without any insurance. It only applies to drivers who already own another insured vehicle.
Be aware that waiting longer than your insurance company’s grace period to add your new car to your insurance could leave your new car unprotected after an accident, and could set you up for fines or worse.
How to buy a new car insurance policy
If you don’t have car insurance already, you’ll need to buy a new policy at the same time you buy a new car, which can be tricky.
If you know the specific car you’re buying you can ask the dealer for the car’s vehicle identification number (VIN). The VIN has information about the car’s make, model, age that helps the insurance company come up with rates.
Once you know the car’s VIN, you can shop for quotes, pick a policy and set your start date to the day that you plan to pick up the vehicle. You can choose to do this ahead of time or the same day you buy a car.
If you don’t have a VIN yet, you can still shop around for the best company and give them all the necessary information except the VIN. Then you can contact the insurance company to finalize your policy when you go to pick up the car.
Steps for buying insurance on a new car
To get insurance for your new car, follow these steps:
Once you know the car you’re buying, ask for the vehicle identification number
Shop around for quotes ahead of time
Pick a policy, choose coverage levels, and set the start date to when you’ll pick up your new car.
Show proof of insurance and safely drive your new car off the lot
How much is insurance for a new car?
The exact cost of insurance for a new car depends on factors like your age, location, driving history, and the coverage amounts you choose, but a new car will usually cost more to insure than an older model.
We compared car insurance rates for 2017 and 2022 versions of the same car. On average, insurance for a new car was $550 more expensive per year than for an older model.
Insured vehicle | 2022 | 2017 | Difference |
|---|---|---|---|
Honda Civic | $1,049 | $519 | $530 |
Toyota Corolla | $1,187 | $527 | $660 |
Ford F-150 | $1,010 | $548 | $462 |
Insurance rates from GEICO for a 30-year-old driver living in Ohio.
Car insurance for new cars is usually more expensive than insurance for a car that’s a few years old. A new car will eventually become cheaper to insure as it ages and loses its value.
Why is insurance more expensive for new cars?
At a basic level, car insurance is more expensive for new cars simply because they’re worth more, but let’s take a look at what this actually means for your car insurance rates:
Higher overall value. Car insurance companies calculate how much they would have to pay you if your car is totaled, and a new car costs them more to replace than an older car.
Expensive safety tech. While safety features can sometimes lower your car insurance rates, they can have the opposite effect. Motion sensors or features like hands-free driving cost more to fix if they’re damaged in an accident.
More coverage. You’ll probably want full-coverage car insurance on a new car, and you may even need gap insurance or new car coverage, which will increase your protection but also increase your rates.
Frequently asked questions
What kind of insurance should you get for a new car?
You should get comprehensive and collision coverage for a new car even if your lienholder doesn’t require it. Comprehensive and collision coverage mean you’ll be covered if you need to repair or replace your car after it’s damaged. You should also consider gap insurance.
Do I need to buy car insurance from the dealer?
You don’t need to get insurance from the dealer that sold you your new car. In fact, it’s probably a bad idea to do this. Dealerships may try to upsell you and get you to pay higher premiums for insurance you don’t need.
Can you drive a car without insurance right after you buy it?
Driving a car without insurance isn’t allowed, even if you just bought the car. But you can get insurance right before you go to the dealership or right before you drive the car off of the lot. But you can drive your car home before you’ve officially added it to your policy (assuming you’ve got one) since you’ll be automatically covered during your company’s grace period.
How long do you have to add a new car to your policy?
Companies have different rules about the amount of time you have to add a new car to an existing policy. You might have anywhere from a week to 30 days, though some companies have even lower and higher limits. It’s best to ask your insurance provider if you’re not sure.
Methodology
We found the cost of insurance for new and older cars by collecting quotes for a 30-year-old single male driver living in Ohio. Our driver had a long insurance history with no lapses or claims, accidents, or tickets.
We gathered quotes from GEICO for three types of cars: a Honda Civic, Ford F-150, and Toyota Camry. Our quotes had the following limits:
Bodily injury liability: $50,000 per person, $100,000 per accident
Property damage liability: $50,000 per accident
Uninsured/underinsured motorist: $50,000 per person, $100,000 per accident
Comprehensive: $500 deductible
Collision: $500 deductible
