Buying a new car can be a wonderful experience. From the pristine exterior and interior, the odometer in the single digits, and that new car smell, driving a new car out of the dealership’s parking lot is a wonderful feeling.
But shopping for new car insurance can seem like a daunting task. you want to make sure you’re buying the right coverage without overpaying. that’s how it’s done.
is car insurance required for a new car?
every state except new hampshire and virginia require auto insurance. the minimum insurance required will depend on your state. In addition to state law, if you have an auto loan or lease, additional coverage may be required by your lender or leasing company.
These are the types of coverage you may need to have.
civil liability insurance
Liability insurance pays for property damage and bodily injury when you cause a car accident. it also covers the cost of a legal defense, court judgments and settlements. Your state most likely has a minimum requirement for auto liability insurance. For example, to buy car insurance in California, you must buy at least 15/30/5 in liability coverage.
Here’s what those numbers mean.
- 15 = $15,000 bodily injury/death coverage for one person per accident.
- 30 = $30,000 bodily injury/death coverage for more than one person per accident.
- 5 = $5,000 property damage coverage per accident.
- the vehicle identification number (vin) for the new car
- driver’s license numbers for all drivers on the policy
- date of birth of all drivers on the policy
- garage address (usually your home address)
- compare car insurance quotes from different insurance companies.
- Understand what types of coverage you need.
- select how much coverage you want.
- Consider optional coverage types (such as gap coverage, new car reimbursement, or roadside assistance).
- the make and model of your new car
- your driving record
- where do you live
- your claim history
- the amount of coverage you choose
- the amount of your car insurance deductible
- your credit-based insurance score
It’s a good idea to purchase more than your state’s minimum liability requirements. that’s because those amounts are woefully inadequate. For example, if you cause a serious accident that seriously injures multiple people, $30,000 won’t get you very far, which means you could have significant out-of-pocket costs.
A good rule of thumb is to buy enough auto liability insurance to cover what you could lose in a lawsuit.
related: main types of car insurance
collision and comprehensive insurance
If you have a car loan or lease, your lender or leasing company will most likely require you to have comprehensive and collision insurance. that’s so you don’t abandon your financial obligations if your car is destroyed or stolen.
Collision insurance pays for your car repairs if you are in a car accident, no matter who is at fault for the accident. For example, if you back up into a pole, collision insurance may pay for your repairs (minus your deductible).
Comprehensive insurance pays for repairs for things like falling objects, flooding, collision with an animal, auto theft, vandalism, fire, and hail.
uninsured motorist coverage
Uninsured motorist coverage and underinsured motorist coverage pay your medical costs if someone without auto liability insurance (or insufficient auto liability insurance) crashes into you.
Uninsured motorist coverage is required in some states and optional in others. overall this is a good cover to have. one in eight drivers in the us uu. You don’t have car insurance, according to the Insurance Research Council.
personal injury protection
Personal Injury Protection (PIP) coverage pays for 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 the district of columbia where pip is optional.
what other types of new car insurance should i consider?
When shopping for auto insurance on a new vehicle, you may want to consider a few additional types of coverage.
If your car is totally damaged due to an issue covered by your policy (like a flood or car accident), differential insurance covers the difference between the value of your car and what you owe on the loan. For example, if you have $25,000 outstanding on your loan but the full value of your car was only $22,000, this coverage pays the $3,000 “gap.”
new car replacement insurance
If your new car is destroyed due to a problem covered by your policy, new car replacement insurance pays for a new car of the same make or model. this is a good option for cars whose value depreciates quickly.
rental reimbursement insurance
rental reimbursement insurance pays for a car rental or substitute transportation (such as subway or bus fare) if your car is being repaired for a problem covered by your policy (such as a car accident).
roadside assistance insurance
If your car breaks down, roadside assistance insurance pays for services like a tow truck, locksmith, dead battery jump start, and fuel delivery.
what information do I need to buy new car insurance?
When shopping for auto insurance on a new car, you’ll want to have the following information:
How can I prepare to buy car insurance for a new vehicle?
You need car insurance before you drive off the lot with your new car. this is how you can prepare:
how much does car insurance cost for a new car?
Your auto insurance rates for a new car depend on several factors, such as:
more and less expensive new cars to insure
Below are the five least expensive vehicles to insure, based on a forbes advisor analysis of the best-selling 2021 models.