Type of Insurance You Should Get When Buying a New Car

How to Get Insurance for a New Car 

You can’t get a new insurance policy before purchasing a new car because you need specific information related to the car to get the insurance. You should to know at least the following three things before getting an auto insurance policy: 

• • Vehicle Identification Number (VIN) – You can’t purchase a car insurance policy without the car’s VIN number. 
  • Car’s purpose – Depending on how you plan to use the car, whether it’s for personal use or business use, you might need to purchase additional insurance coverage.  
  • Other regular drivers – If other drivers in your family will use the car on a regular basis, then you will need to add them to your car insurance policy. 

While you can’t purchase new car insurance before actually getting a new car, you can start shopping around to collect a few different insurance quotes. That way you can have an idea of what the car insurance will cost you based on the types of cars you are looking at. Once you buy the car, you can call the insurance company with the VIN number and officially purchase the insurance. 

Buying car insurance is typically very easy. You can most likely do it on your smartphone while you are at the dealership after you’ve signed the paperwork. If you wait until you get home, one phone call to the insurance provider should get the job done. 

Is There a Grace Period When Insuring a New Car? 

It’s important to know that the dealership’s car insurance does not cover you once you’ve purchased the car and left the lot. Their insurance is only meant to cover test drives. 

However, most insurance companies do offer a grace period for people who purchase a new car. This means that your current auto insurance policy might cover you for a short period of time (likely between 7-30 days depending on the insurance company) after you have purchased a new car. This gives you time to update your auto insurance policy after buying a new car. If you are planning to get a new car, you should remember to do two things: 

• Check with your insurance provider about their grace period – If your insurance company does offer a grace period, you should bring whatever is needed to the dealer to prove that you are eligible for this temporary insurance coverage. 
• Don’t forget to update your policy – Make sure you update your policy before your grace period ends! Having a lapse in insurance coverage can negatively impact your insurance rates in the future. 

Are New Cars More Expensive to Insure? 

The answer to this question depends on how you look at it. In general, newer cars are probably more expensive to insure, but it is not always significant. On one hand, you might want to carry comprehensive and collision insurance if you have a newer car, which means a more expensive insurance policy. On the other hand, newer cars often have additional safety features (lane assist, back-up cameras, blind-spot cameras, etc.). These safety features make the car safer to drive, which can mean a lower cost of insurance.  

What Type of New Car is the Most Affordable to Insure? 

There are various factors that impact insurance costs, but in general, the cars with fewer and less costly insurance claims come with less expensive insurance. For example, since a Honda CR-V 4dr/4WD is more likely to end up with a bodily injury claim than a Ford Expedition 4dr + 4WD, it is likely that the Ford will be cheaper to insure. If you are looking to buy a particular car, it might help to look up the car’s overall accident statistics and safety ratings to have a better idea on potential insurance costs. Again, there are other variables involved, but this is a good place to start. 

What Kind of Insurance Do I Need for a New Car? 

The type of car insurance you get is dependent on whether your car is financed, leased, or owned. One thing is for certain, you must fulfill your state’s mandatory insurance requirements. The minimum insurance requirements will vary in each state, but most states require liability insurance for bodily injury and property damage. Some states might also require uninsured motorists and personal injury protection.  

In addition to your state’s minimum insurance requirements, there might be additional requirements depending on how you purchased your vehicle. 

• Financed – If you are going to finance your vehicle, then your lender will probably require you to have comprehensive and collision coverage. 
• Leased – If you want to lease your vehicle, then you will likely be required to have comprehensive and collision coverage. Additionally, there could be limits on your deductible (such as not being allowed to have a deductible over $1,000) and requirements for a certain amount of liability coverage (such as $100,000 per person). 
• Owned – If you own your car completely, then you should only need the minimum amount of insurance coverage that the state requires. Of course, you can always add comprehensive and collision insurance if it makes sense for your vehicle. This will provide coverage in the event your car is stolen, vandalized, damaged, etc. 

What is New-Car Replacement & Gap Insurance? 

New-car replacement insurance and gap insurance are both optional coverages you can choose if it makes sense in your situation. 

• Gap insurance – This type of insurance is good for vehicles that are loaned or leased. In the event that your car is totaled, gap insurance will cover the difference between the car’s cash value and the amount you still owe on the car. For example, if your car is totaled and its cash value is set at $15,000 but you still owe $17,000 on the car, gap insurance will cover the $2,000 gap that you wouldn’t get with standard collision coverage. This keeps you from “going in the hole” if your car is totaled before it is completely paid off.
• New-car replacement – This type of coverage is not as common, but new-car replacement insurance will pay for the cost of a new car equivalent to the one you totaled. For example, if your car was worth $25,000 when brand new but had depreciated in value to be worth $20,000 before getting totaled, then new-car replacement would give you the $5,000 that the standard collision coverage wouldn’t give you. This allows you to buy a brand new vehicle in the same price range as the one you had before. 

Buying a New Car? Contact James Grace Insurance! 

Buying a new car is not a small decision, but don’t let the insurance process stress you out. James Grace Insurance is here to help you with every step of the process. Our team guarantees exceptional service. Because we are an independent insurance agency, we can make sure we find the coverage you need at an affordable price. We’ll do the shopping, you’ll do the saving. Don’t hesitate to contact us today to get started!