Car Insurance for a New Vehicle

Once you get over the excitement of buying a new car and climbing behind the wheel for the first time, you have to deal with the misery and drudgery that is car insurance.

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Getting a complete auto insurance policy that covers you for everything you need is important, but it can also be expensive and involve endless insurance shopping and comparing.

How Much Does Car Insurance Cost for a New Car?

New vehicle car insurance costs between $900 and $1,000 on average for a 6-month policy. However, the amount you pay will differ considerably from state to state and will also depend on the policy options you choose, the discounts you qualify for, and more.

Your insurance rates will also drop by between 2% and 4% on average for every year your vehicle ages.

What Car Insurance Coverage Do You Need?

The average cost of a new car in the United States is over $36,000, the vast majority of which is financed by auto loans. It’s a lot of money to spend on a car, especially when you consider that it’s more than the average person will spend on a wedding, funeral or down payment for a house.

When you have so much money invested in a vehicle, you need to pay special attention to coverage options and make choices you wouldn’t make when driving an old car.

These coverage options include:

Collision Coverage

Collision insurance covers damage to your vehicle when you are involved in an accident. This is true if you are at-fault for the accident and it also applies if you hit a wall or a car. One of the quirks of this type of insurance concerns animal collisions and is something we have covered in the past.

Collision coverage doesn’t cover you against animal collisions. However, if you swerve, avoid the animal and hit a tree or another car, you will be covered. Of course, we wouldn’t recommend putting your life in danger like that and experts recommend you don’t swerve and simply slam on the brakes in situations like this. But it’s good to know where you stand with regards to damage coverage.

Comprehensive Coverage

Comprehensive coverage will increase your car insurance rates significantly but if you have a new car, it’s worth it. Comprehensive coverage will take over where collision coverage leaves off; it will cover you in the event you hit an animal and suffer damage to your car and it will also cover you for vandalism and weather damage, including floods, hail, and hurricanes.

Uninsured Motorist Coverage

If you are hit by an uninsured driver or an underinsured driver, they won’t have the necessary liability coverage needed to cover your bodily injury and property damage costs. This is where underinsured/uninsured motorist coverage comes in.

Underinsured/uninsured motorist coverage is required in some states but not all. It will cover some of the costs resulting from an accident with an uninsured driver and will also cover you if an individual doesn’t have enough liability insurance to pay for everything.

New Car Replacement

New car replacement is an optional add-on to an existing policy and one that new car owners should consider. It adds an extra layer of protection, some additional peace of mind, as it promises to replace your car like-for-like in the event it’s completely destroyed within a fixed period of time.

The exact time frame will depend on your chosen car insurance company and the specific auto policy rules. Generally, you’ll be covered for 100% of the costs if the car is wrecked within the first two model years, and some companies offer reduced coverage for all years after that.

Gap Insurance

Gap insurance is offered by car dealerships and is designed to cover the difference between the value of the vehicle at the point of purchase and the value of the vehicle after it has depreciated. New cars suffer rapid deprecation and can lose as much as 20% within the first year and 10% every year after that, making gap insurance very important.

Other Coverage Options

All the coverage options outlined above are considered optional in the majority of states but only scratch the surface with regards to available car insurance options. You can also get medical payments and personal injury protection coverage, although in these cases, it makes no difference if you’re driving a new car or an old car.

Most state laws also require you to have a minimum amount of liability coverage. This will cover the other driver if you cause an accident. Generally, a full coverage auto insurance policy includes basic liability coverage in addition to collision and comprehensive coverage.

Cheapest Options for New Car Insurance Coverage

The cheapest provider for someone else may not be the cheapest provider for you. There are too many variables at play here, including the type of car, the features it includes, and all the options and discounts outlined above. However, some of the cheapest options for new car liability coverage include:

  • Allstate
  • GEICO
  • State Farm
  • Progressive
  • Farmers
  • Nationwide
  • Liberty Mutual

If you’re a member of the military or veteran, USAA may be the cheaper option. In fact, the USAA is nearly always the cheapest option for new car insurance quotes and even used car insurance quotes.

How to Get the Best Auto Insurance Quote

To get the most accurate car insurance quote, you will need to provide the insurance company or insurance agent with the most accurate information possible. This will allow them to provide you with an accurate quote and ensure you get the right price.

  • The age (date of birth) of all drivers to be added to the policy.
  • The driver’s license numbers of all individuals added to the policy.
  • The zip code of the garage where the car(s) will be stored.
  • The driving history of all drivers using the car(s).
  • The insurance history of all drivers using the car(s).
  • The Vehicle Identification Numbers (VIN) of the cars to be added to the policy. 
  • The details of all safety features and anti-theft features in the vehicle(s).
  • All discounts you are eligible for, along with proof.

Get all of this information prepared, speak with insurance agents, check comparison sites, and get as many free quotes as you can.