New Car Insurance

You should get insurance for a new car as soon as possible since most vehicle dealerships require proof of insurance before you drive off with a new vehicle. However, when you need to get the insurance depends on whether the dealer offers a grace period, which gives you time after purchase to get a car insurance policy. Even with this in mind, we recommend that you compare policies from multiple car insurance providers before purchasing a new car.

New Car Insurance Grace Period

If a company offers a grace period, it typically lasts seven to 30 days from the date of purchase. This grace period is a set amount of time in which you’re allowed to drive your vehicle without starting a new insurance policy. Whether you have a grace period depends on a few factors, including:

• Insured status: One reason you may have a grace period is that you are rolling over your previous insurance policy into a new one. In this situation, your old coverage types and limits may apply until a new car insurance policy starts.
• Insurance company: Grace period rules can vary significantly by insurer. For example, Progressive allows for a 30-day grace period, while some providers have none at all.

Since grace periods vary from company to company, it’s best to figure out exactly what your policy will allow for. You can find this information in the fine print of your contract, but it may be easier to ask an insurance agent.

When Does a New Car Insurance Policy Start?

If you buy insurance before taking ownership of a new car, the policy will begin the moment you drive your vehicle off the lot. This is often required by dealerships because it’s illegal for anyone to drive without auto insurance.

You’ll need the following information on hand to start a new car insurance policy before buying the vehicle:

• Purchase price
• Vehicle identification number (VIN)
• Your contact information

Most car insurance providers will be able to start your policy within 24 hours. You can even find same-day insurance from many auto insurance companies.

According to our research, the national average cost of full-coverage car insurance is $2,681 per year. Your premium, however, is likely to vary based on personal and car-specific factors.

Technically speaking, whether a car is new or used doesn’t factor into your premiums. However, you’ll see rates go up for a new car if it’s more expensive overall than your previous car.

Best Insurance for New Car

In our research, we found that Travelers tends to be the best overall car insurance provider due to its affordable rates, coverage options and customer service. However, there are several other providers worth considering as well, if you’re looking for the best insurance for your new car.

What Factors Affect New Car Insurance Costs?

The value of your vehicle is just one of many factors that insurers use to determine premiums. When you insure any vehicle, new or used, several things are taken into account, like your age, driving history and credit score.

Here are additional factors that affect the cost of car insurance:

• Age: Younger drivers and especially teen drivers typically pay higher premiums than drivers in other age groups. How long you’ve had a driver’s license can also be a factor, as experience usually leads to responsible driving behaviors.
• Driving history: A clean driving record gives you access to the lowest rates. Any at-fault accidents, speeding tickets or driving under the influence (DUI) violations could greatly boost your premiums.
• Credit score: In states where it’s legal, insurance companies typically charge drivers with poor credit scores more for coverage than those with average or good scores.
• Location: Car insurance rates vary from state to state, but they also vary within states. Those in New York City or in one of California’s urban areas will often pay far more for coverage than drivers in rural regions nearby.
• Marital status: Some insurance companies charge married drivers less for coverage than drivers who are single.
• Types of coverage: The types of insurance that you include on your policy make a big difference in what you’ll end up paying. Minimum coverage policies will usually be the cheapest, with additional coverages increasing your cost.
• Coverage limits: The limits you set for insurance coverage play a major role in your premiums. Generally speaking, your monthly premiums will be less if you have lower coverage limits.
• Deductible: Your deductible, which is the amount you’ll pay out of pocket for repairs or a total loss claim, can also affect your insurance premium. In most cases, your premium will be less if you have a high deductible on your new car insurance policy.
• Discounts: Most insurance companies offer discounts on their coverage. One of the most common is a bundling discount for combining your auto insurance policy with other insurance products such as homeowners, renters or life insurance.

Buying a new car insurance policy is mostly the same as getting insurance for any other car. With most insurers, you should be able to find coverage, purchase it and start your policy while you wait at the dealership. 

Getting New Car Insurance

The process for getting new car insurance coverage is relatively simple. You’ll just need to follow these steps:

1. Prepare the information needed to start getting quotes. This includes the car’s VIN number, purchase price and your contact information.
2. Start shopping for free quotes. You can compare car insurance quotes online quickly and easily with most providers. We recommend getting estimates from at least three providers before making a decision.
3. Choose your insurance provider and plan. Pick the quote that offers you the best combination of cost and peace of mind. You should be able to start your auto coverage policy almost immediately.
4. Give the dealership your new insurance card. Most companies now offer a mobile app that allows you to pull up your insurance card whenever you need it. You’ll be able to send this to the dealership to get your keys, usually through an emailed PDF copy.

For the most part, new cars don’t require any different types of insurance coverage than other vehicles. The kinds and amounts of coverage you need depend on other factors, such as where you live and whether your lender has extra requirements if you take out a new car loan.

State Minimum New Car Coverage Requirements

Each state has its own minimum insurance requirements. Usually established by the state’s department of motor vehicles (DMV) or a similar agency, these standards often vary widely. 

You can find your state’s requirements and our recommendations for providers with cheap rates by clicking your state on the map below:

Standard Types of Required New Car Insurance

State minimum requirements are almost always made up of some variation of the auto insurance coverage options listed below.

• Bodily injury liability insurance: Covers lost wages and medical bills for other parties in an accident for which you’re found at fault.
• Property damage liability coverage: Covers the cost of damages to other vehicles and property involved in an accident that you caused.
• Personal injury protection (PIP): Covers medical expenses and lost wages for you and other members of your party, no matter who caused an accident.
• Medical payments (MedPay): Covers medical bills but not lost wages for you and your party, regardless of who is found at fault for a collision.
• Underinsured motorist/uninsured motorist coverage: Covers your property and injury claims if an at-fault driver doesn’t have sufficient coverage to pay for them.

New Car Insurance Requirements

Some lenders require borrowers to carry new car insurance add-ons that cover damages to the vehicle in every circumstance. This is meant to protect the lender’s financial interest. That’s why you may be required to carry additional coverage options like these if you take out a loan to buy a new car:

• Collision coverage: Covers damages to your vehicle regardless of who is found at fault for an accident.
• Comprehensive coverage: Covers damages to your vehicle from sources other than accidents such as fires, theft or vandalism.
• Gap insurance: This type of insurance covers the difference between what you owe on a vehicle and what it’s worth in the event of a total loss.
• Loan or lease payoff: Covers the remaining balance on an auto loan or lease in the event of a total loss.

New Car Insurance Additional Coverage Options

While standard options are mostly the same from one provider to the next, many insurance companies differentiate themselves through additional choices. Many of these add-ons help to manage other aspects of new car ownership, such as breakdowns and emergencies.

Some of the most common optional coverages you’ll find are:

• Roadside assistance: Covers the cost of emergency roadside services such as towing, fuel delivery and flat-tire repair or replacement.
• Rental reimbursement: Covers the cost of a rental car while your vehicle is being repaired or replaced.
• Mechanical breakdown insurance (MBI): Covers repairs to certain car components following a breakdown, similar to an extended car warranty.
• Rideshare insurance: Covers you during downtime if you drive for a rideshare company like Lyft or Uber.
• Travel expenses: Covers food, lodging and other travel costs if you can’t use your car following a covered loss away from home.

Most auto insurers offer unique lineups of optional new car insurance coverages. You can learn about all available options as well as what each plan covers by speaking with an agent.

It’s best to get auto insurance for a new car before you buy it — and in many cases you’ll be required to. Thankfully, you have the ability to quickly get car insurance quotes online or over the phone with policies that can start the same day, if needed. We recommend that you compare car insurance quotes from multiple insurers before purchasing a new vehicle.

New Car Insurance: Recommended Providers

It’s so easy to shop around for car insurance that you can probably do it while you wait for the financing department or another delay that’s involved in buying a car. Our team recommends State Farm and Travelers as good places to start your search.

Travelers: Best for Most Drivers

If you’re looking for affordable coverage and a wide selection of options, you may want to check out Travelers. We found that the company has an ample coverage portfolio, with many of Travelers’ choices appealing to owners of new vehicles. For example, Premier New Car Replacement^® will cover the cost of a brand-new replacement of the same make and model in the event of a total loss.

Keep reading: Travelers insurance review

State Farm: Best Customer Experience

State Farm is the nation’s largest insurer and another solid choice for coverage. Drivers can often find inexpensive new car insurance through State Farm, and the company also offers an extensive selection of additional coverage options. With a large number of insurance discounts to choose from, State Farm policyholders can get the coverage they want at affordable rates.

Keep reading: State Farm insurance review

Below are some frequently asked questions about new car insurance.

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

• Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
• Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
• Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
• Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
• Customer experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

Our credentials:

• 800 hours researched
• 45 companies reviewed
• 8,500+ consumers surveyed

*Data accurate at time of publication.