AEPone - Buy Car Insurance for a New Car: The thrill of acquiring a brand-new car captivates the majority of drivers. However, the road to officially claiming ownership involves handling certain logistics, such as obtaining car insurance. Almost every state mandates car insurance, and dealerships require proof of insurance before handing over the keys.
If you’ve purchased your new car through an auto loan, fulfilling the requirements of both the lender and the state entails securing a comprehensive range of coverages, including collision, comprehensive, liability, and often uninsured motorist coverage.
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Knowing your specific needs is crucial when buying car insurance for a new vehicle. To help you navigate this process, we’ll delve into the details and guide you on obtaining the best car insurance deal.
How to Buy Car Insurance for a New Car
Before you head to the car dealership, it’s vital to determine how you’ll insure your new vehicle. Failing to do so might result in delayed access to the keys. Let’s provide you with an overview of the step-by-step process for buying car insurance for a new car.
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1. Contact Your Insurance Company
If you already have car insurance, reach out to your insurance company and inform them about your upcoming vehicle purchase, especially if it will be financed. This will allow you to obtain a quote for the new vehicle’s insurance premium either online or through a phone conversation with an agent. Ensure that you gather all the necessary details, including the odometer reading, VIN, trim level, and safety features.
Some car insurance policies offer a grace period during which new vehicles are automatically covered for a short duration. If your policy includes such a grace period, you won’t need to add the new car immediately, but it’s recommended to do so as soon as possible.
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In case you don’t currently have car insurance, take a few minutes to gather quotes from multiple insurance companies. While comparing premiums is important, also consider examining coverage limits and available discounts offered by each insurer.
2. Determine Your Coverage
While adding your new vehicle to your car insurance policy, you’ll need to select the specific coverages you require or those that are mandatory. At the very least, you’ll need personal liability insurance and/or uninsured/underinsured motorist insurance. Additionally, if you reside in a no-fault state, personal injury protection (PIP) might be necessary.
However, the mandatory insurance types prescribed by your state may not provide adequate coverage for a new car. You might want to consider (and your lender will likely require) collision and comprehensive insurance. Moreover, adding roadside assistance to cover basic repairs such as tire changes and including rental reimbursement if you heavily rely on your vehicle without a backup might be worthwhile.
If your vehicle is financed, investing in guaranteed asset protection (gap) insurance is a prudent choice. Gap insurance covers the difference between your car’s market value and the amount you owe if the vehicle is totaled and you have negative equity. Some lenders may even require this coverage.
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3. Obtain Proof of Insurance
Once you’ve successfully added your new car to your insurance policy, selected your coverages and deductibles, and completed the purchase, you’ll need to obtain the necessary proof of insurance documents.
Many insurance companies enable you to download your insurance ID cards and insurance binder, which serve as proof of car insurance. You’ll need to present at least one of these documents to the dealership before receiving the keys. After taking ownership of the vehicle, remember to keep a copy of your insurance ID cards in your car or save a digital copy on your phone.
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Factors Affecting the Cost
Car insurance premiums are influenced by various factors, with each type of coverage having its own set of rating factors. Let’s explore some of the criteria that can impact the cost of common car insurance policies.
Personal Liability Insurance
Personal liability insurance includes bodily injury coverage and property damage coverage, which come into play when you’re at fault in an accident that results in injuries or vehicle damage for the other party involved. This insurance type is required for most drivers, but the premium varies based on your unique circumstances.
Car insurance companies consider multiple factors, such as your driving record, age, claim history, and credit score, to calculate personal liability insurance premiums. If you have a history of at-fault accidents or multiple insurance claims in the past, your rate might be higher.
Your location also plays a role in determining the cost of personal liability coverage. Certain states impose higher minimum coverage requirements, leading to higher premiums.
Uninsured/Underinsured Motorist Insurance
If you are Buy Car Insurance for a New Car, Uninsured/underinsured motorist insurance is mandatory in some states. It provides coverage in cases of hit-and-runs, accidents involving uninsured drivers, and collisions with drivers who lack sufficient coverage to compensate for your losses.
The prevalence of uninsured drivers varies by region, even though car insurance is legally required almost everywhere. If your area has a high number of uninsured drivers, you may face higher rates for this coverage.
Additionally, the coverage limits you select impact your premium. Higher coverage limits translate to higher premiums.
Collision/Comprehensive Insurance
Collision and comprehensive insurance form part of a full-coverage car insurance policy. Collision insurance pays for repairs when your vehicle sustains damage from a collision, such as hitting a traffic pole, guardrail, or another car. Conversely, comprehensive insurance covers non-collision damage, including fires, floods, and theft.
Several rating factors come into play when determining the cost of collision and comprehensive insurance. These factors include your claim history, driving record, the type of vehicle you drive, your coverage limits, and your deductibles.
New Car Insurance Premiums by Company
Car insurance rates can vary depending on the insurance company you choose. Here are a few sample insurance quotes from some prominent car insurance providers:
- State Farm: $105.00
- Erie: $113.58
- Sentry: $74.40
- Progressive: $93.67
- Allstate: $103.62
- Nationwide: $99.50
- Farmers: $120.48
These quotes were collected using a sample profile of a 30-year-old single female residing in Chicago, Illinois, with no recent accidents or traffic violations. The vehicle in question is a 2019 Honda CR-V LX driven 12,000 miles annually. The chosen coverages include:
- $100,000/$300,000 for bodily injury liability coverage
- $50,000 for property damage liability coverage
- $100,000/$300,000 for uninsured motorist bodily injury coverage
- Collision coverage with a $1,000 deductible
- Comprehensive coverage with a $1,000 deductible
When comparing car insurance companies, obtain quotes from various insurers. Each insurer weighs rating factors differently, resulting in different costs for similar coverage types and limits.
While price is a significant consideration, it’s also essential to compare policies based on coverage types, available discounts, and financial strength ratings. Car insurance policies differ in their benefits and limitations.
How to Save Money on Car Insurance for a New Car
If you’re wondering whether insurance is cheaper for new cars, the answer is typically no. Insuring a new vehicle tends to be more expensive than insuring a used car or a vehicle with lower value. However, there are ways to obtain more affordable car insurance. Here are a few suggestions for saving money on your policy:
Seek out discounts
Car insurance companies commonly offer various discounts. While specific savings differ between insurers, you can often find discounts for good students, drivers without recent claims, bundling policies, insuring multiple vehicles, and completing defensive driving courses.
Obtain multiple quotes
If you are Buy Car Insurance for a New Car, Car insurance rates vary depending on the underwriting insurer. Obtaining quotes from several providers for the same coverage type and amount can help you find the most affordable policy for your situation.
Opt for higher deductibles
Certain car insurance policies, such as collision and comprehensive insurance, often require a deductible when you file a claim. By choosing a higher deductible, you can secure a lower monthly payment.
Pay your premium in full
Many insurance providers offer a small discount on your premium when you pay the entire amount upfront. Some insurers also provide discounts for enrolling in automatic payments.
Improve your credit score
In most states, insurance companies use credit-based insurance scores. If you can improve your credit score, you might qualify for a lower car insurance rate.
When Should You Get Car Insurance for a New Car?
You should purchase car insurance for a new car before acquiring the vehicle. You must provide proof of insurance to the seller before legally driving the car home. While certain policies automatically provide coverage for new vehicles for a limited time, not all plans include this feature.
How Much Is Insurance for a New Car?
If you are Buy Car Insurance for a New Car, The cost of car insurance for a new vehicle depends on various factors. Your location, age, credit score, claim history, and driving record are among the criteria used to calculate your premium. Car insurance rates also differ between insurance companies for the same coverage types and limits.
Is Insurance More Expensive for New Cars?
Yes, car insurance is typically more expensive for new vehicles. New cars retain most of their value and usually require higher repair costs compared to used vehicles. However, you can still save money on auto insurance by comparing quotes, opting for higher deductibles, and paying your premium in full.