Insuring A New Vehicle: What To Expect

Buying a new car is an exciting experience, but before you can drive it off the lot, you'll need to insure it. Here's what you should expect when insuring a new vehicle:

Timing is Key

Most dealerships require proof of insurance before you can take your new car home, so it's best to purchase insurance before buying a new car to ensure you have enough coverage. If you already have car insurance, your current policy may cover your new car temporarily, but it's essential to check with your insurance provider to confirm. Dealerships will not let you drive away without valid insurance.

Know Your State's Requirements

Different states have varying requirements for the types and amounts of insurance needed. It's important to understand the minimum coverage and limits mandated by your state and whether you may need additional coverage. Liability insurance, for example, is required in all states except Virginia and remote areas of Alaska.

Gather Necessary Information

To obtain a car insurance policy, you'll need to provide basic information about the vehicle, including its make, model, year, and Vehicle Identification Number (VIN). You'll also need to understand the primary use of the car and provide details about who will be driving it regularly.

Contact Your Insurance Provider

If you're adding a new car to an existing policy, reach out to your insurance agent or representative. They can guide you through the process and help you understand any changes needed to your coverage. If you're switching insurance providers or buying insurance for the first time, shop around and compare quotes from multiple insurers to find the best rates and coverage for your needs.

Know your state's minimum insurance requirements

When insuring a new vehicle, it is important to know your state's minimum insurance requirements. Each state has different requirements for the types and amounts of insurance you need, and it is essential to understand these requirements before purchasing a policy. Here are some key points to consider:

• Liability Insurance: This is required in almost every state, and it covers any damage or injury you may cause to other drivers, their passengers, or their property. The minimum amount of liability insurance required varies by state and typically includes bodily injury coverage per person and per accident, as well as property damage coverage per accident.
• Uninsured/Underinsured Motorist Coverage: This type of coverage is required in almost half of the states. It helps pay for injuries to you or your passengers if you are hit by a driver with insufficient or no insurance. In some states, uninsured/underinsured motorist property damage coverage is also required.
• Personal Injury Protection (PIP): PIP is mandatory in about 20% of states, including no-fault states. It covers medical expenses, lost wages, and other benefits for you and your passengers, regardless of who is at fault in an accident.
• Medical Payments Coverage: Required in a few states, this coverage pays for your medical expenses if you are injured in an accident. While it is typically considered optional, it can be helpful if you have high health insurance deductibles.
• State-Specific Requirements: Certain states have unique requirements. For example, California has the California Automobile Assigned Risk Plan to help low-income drivers obtain insurance. Michigan requires property protection insurance with a minimum limit of $1 million in property damage coverage, as it is a no-fault state.
• Full Coverage: While minimum insurance requirements vary by state, full coverage typically includes liability, comprehensive, and collision insurance. Comprehensive coverage pays for damage to your car when you are not driving, such as weather damage or theft. Collision coverage pays for repairs to your car after an accident, regardless of fault.
• Leased or Financed Vehicles: If you lease or finance your vehicle, your lender may require you to purchase full coverage, including collision and comprehensive insurance. They may also set specific minimum liability limits for extra financial protection.
• Shopping for Insurance: It is recommended to shop around and compare quotes from multiple insurance providers. This allows you to find the best rates and ensure your policy meets your state's minimum requirements.

Understand what additional coverages you may want

When insuring a new vehicle, it's important to understand the minimum coverage and limits required by your state, as well as any additional coverages you may want or need. Here are some additional coverages you may want to consider:

Comprehensive and Collision Coverage

Comprehensive and collision coverage are often required if you have a car loan or lease. This type of coverage will protect your vehicle in the event of an accident, theft, or damage caused by something other than a collision, such as fire, flood, or vandalism. It is worth noting that comprehensive and collision coverage only cover the market value of your car, not what you paid for it.

Gap Insurance

If you lease or finance your vehicle, you may want to consider purchasing gap insurance. Gap insurance covers the difference between the market value of your car and what you still owe on it if your car is totaled or stolen. This can be especially important for new cars, which depreciate quickly.

Loan/Lease Payoff Coverage

Loan/lease payoff coverage, also known as loan lease payoff coverage, can help pay the difference between what you owe on your vehicle and its actual value if it is totaled or stolen. This type of coverage is useful if you have a loan or lease and want to ensure you are not left with a large bill if something happens to your car.

New Car Replacement Coverage

New car replacement coverage will provide you with the money to buy a brand-new vehicle of the same make and model if your current one is totaled in an accident. This can be a valuable option if you want to ensure you can replace your new car without incurring additional costs.

Roadside Assistance

Roadside assistance covers the cost of emergency services such as towing, fuel delivery, and flat-tire repair or replacement. This can be a useful addition to your policy if you are concerned about breakdowns or other vehicle emergencies.

Rental Reimbursement

Rental reimbursement will cover the cost of a rental car while your vehicle is being repaired or replaced. This can be a helpful option if you rely on your car for daily activities and need a temporary replacement during unexpected situations.

Remember to review your leasing or financing company's requirements, as they may mandate specific coverages and limits. It is also essential to understand your state's minimum coverage requirements and consider purchasing higher levels of coverage to ensure adequate protection in the event of a serious accident.

Get quotes from multiple insurance companies

Getting quotes from multiple insurance companies is a crucial step in insuring your new vehicle. Here are some detailed instructions and tips to help you through the process:

Know What Information You Need

Before reaching out to insurance companies, make sure you have all the necessary information at hand. This includes personal details such as your full name, birthdate, and Social Security number. Additionally, you will need information about the vehicle, such as the make, model, and Vehicle Identification Number (VIN). Having this information readily available will streamline the process of obtaining quotes.

Understand Your Insurance Requirements

Different states have different requirements for car insurance. It is essential to understand the minimum coverage and limits mandated by your state. Some states may also require additional coverages, such as personal injury protection or uninsured motorist coverage. Knowing these requirements will help you ensure that the quotes you receive meet the legal standards.

Contact Multiple Insurance Companies

Reach out to several insurance companies to obtain quotes. You can do this by visiting their websites, using online comparison tools, or speaking directly with their representatives. Provide them with the information you have gathered, and be honest about your driving history and any previous claims. This will help ensure that the quotes you receive are accurate.

Compare the Quotes

Once you have received quotes from multiple insurance companies, take the time to compare them thoroughly. Look at the coverage options, deductibles, and premiums offered by each company. Consider the limits and types of coverage you require, especially if you have specific needs, such as comprehensive or collision coverage. Additionally, review the customer service reputation of the insurance companies and their responsiveness in handling claims.

Consider Available Discounts

When reviewing the quotes, pay attention to any available discounts that could reduce your premium. For example, many insurance companies offer discounts for bundling multiple policies, such as combining your auto insurance with homeowners or renters insurance. Other common discounts include those for safe driving records, vehicle safety features, or membership in certain affiliate groups or professional organizations. Don't be afraid to inquire about these discounts when speaking with the insurance companies.

Make Your Decision

After carefully comparing the quotes and considering all factors, choose the insurance provider that best meets your needs and offers you the most favourable terms. Ensure that the coverage options, deductibles, and premiums align with your requirements and budget. Remember, it's not just about finding the lowest price but also about getting the right coverage for your new vehicle.

Prepare the information you need to start getting quotes

To get an auto insurance quote, you will need to provide some basic information. This includes:

• Vehicle information: make, model, and year
• Vehicle identification number (VIN)
• Your contact information
• Full names of all drivers who will be on the policy
• Birth dates of all drivers on the policy
• Social Security numbers of all drivers on the policy
• A copy of the declarations page from your previous insurance company (if applicable)

You will also need to understand the minimum coverage and limits required by your state and whether you may want additional coverages. You will typically be asked about the car's primary use, if it is garaged at a different location, and who will be driving it regularly. If you are financing or leasing your vehicle, your financing or leasing company may require specific car insurance coverages and limits, including collision and comprehensive coverage.

If you already have a car insurance policy, you can update it to cover your new car. Keep in mind that your rates may change. If you are switching to a new insurance company, you should wait to get your new policy before canceling your current coverage.

Review your coverages and make any necessary changes

When reviewing your coverages, you should first understand the minimum coverage and limits required by your state. You will also need to know whether you want or need additional coverages. You will typically be asked about the car's primary use, its garaging location, and who will be driving it regularly. You may need to add drivers to your car policy if they live with you and will be driving your car regularly.

If you are financing or leasing your vehicle, your financing or leasing company will likely require specific car insurance coverages and limits, including collision and comprehensive coverage. Talk to your leasing or financing company and your insurance agent to find out what coverages you may need.

If you already have car insurance, your new car may be covered temporarily by your existing policy. However, it's important to make sure your new car is insured, so check with your insurance agent to confirm.

When reviewing your coverages, you will want to consider any leasing or financing requirements specified by your lender. For example, your lender may require comprehensive and collision deductibles to be set at $500 or lower.

Frequently asked questions