Buying a new car can be an exciting experience.
But it’s also important to think about buying car insurance for your new vehicle so you’re covered as soon as you drive it off the lot. Start by obtaining the cheapest car insurance from reputable providers.
If you’re shopping for your first car, the process of getting insurance coverage is a little different than if you’re transferring a policy from your current car to a new one.
If you already have car insurance, you’ll need to switch coverage from your current vehicle to the new one. In most cases, this should be a fairly straightforward process that involves contacting your agent or reaching out to your insurance company either online or by phone. You’ll need the details of the vehicle you’re purchasing, including the year, make, and model, along with the Vehicle Identification Number (VIN). Depending on what kind of vehicle you’re buying, your insurance premiums may increase or decrease compared to what you pay currently.
If you’re financing the car, you’re going to need additional coverage that may not be necessary if you pay cash. Depending on your lender, you may need to carry gap insurance in the event that your new car is totaled or severely damaged. It makes up the difference between what you owe on your lease or loan and what the vehicle’s book value is. You may also be required to carry collision or comprehensive coverage to pay for repairs or vehicle replacement after a covered claim, such as a fender bender or a hailstorm.
Buying a new car is a great time to shop around for insurance coverage, even if you’re happy with your current policy and costs. That’s especially true if you haven’t done so in a while. Experts recommend getting competitive quotes once a year, just to make sure you’re getting the best coverage you can for your budget.
What If You Don’t Have Car Insurance?
If this is your first car or you don’t already have a car insurance policy in place, you’ll need to shop around for the best company and coverage for your needs and budget. Here’s what you’ll need to do:
- Determine what types of car insurance you are required to have (e.g., liability, personal injury protection, comprehensive and collision, etc.).
- Have your personal info ready, including your driver’s license and Social Security numbers, address, and so on.
- Include the kind of vehicle you’re planning to buy, including make, model, year, and Vehicle Identification Number (VIN), if you have one.
- Get quotes from at least three insurance companies.
- Compare policy premiums, coverage amounts, and limits.
- Make an informed choice and purchase your new insurance policy.
It’s important to start this process at the same time you start shopping for a car at the dealer because you’ll need coverage as soon as you buy the vehicle. You’ll also want to allow time for agents to get back to you with quotes, to pick a company and policy, and to determine your insurance cost as part of your overall budget for your new car.
If you’ve had car insurance in the past and still have a copy of the policy, that’s a good place to start. An older policy will at least give you an idea of what you paid in the past, and what types of coverage you had. If nothing else, you’ll have contact information to get started.
Car insurance costs vary widely, depending on the make, year, and model of the vehicle along with your age, driving record, credit rating, and other factors. Which insurance company you choose can also have a big impact on rates. Our studies have shown that some insurance companies have more affordable rates than others, across a wide range of demographic groups.
All states except New Hampshire and Virginia require some type of car insurance. Coverage requirements vary by state, but mandatory liability coverage for bodily injury and property damage is the norm. Here are some of the types of coverage you will need when purchasing a new car, depending on what state you live in:
- Liability insurance: This provides coverage to help pay for injuries to individuals not in your vehicle or property damage caused by a crash when you are at fault. Liability insurance minimums vary by state, so you’ll need at least the minimum coverage required.
- Personal injury protection (PIP): Sometimes referred to as “no-fault” insurance, this coverage helps pay for medical expenses and lost wages if you or your passengers are injured in a crash. This coverage is required in states with no-fault insurance.
- Collision insurance: The cost of parts and labor to repair your vehicle is covered by collision insurance. While not required by law, your lender will likely require collision insurance in order to secure financing for a leased or purchased vehicle.
- Comprehensive insurance: Vehicle damage caused by hail, fire, or something else other than a collision is covered by comprehensive insurance. Again, this is not required by law, but will likely be necessary to get vehicle financing.
- Uninsured and underinsured motorist coverage: Required in many states, this provides coverage to pay for injuries and property damage caused by another driver with insufficient coverage or none at all.
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