New Car Insurance: How To Get The Coverage You Need
Buying a new car can be a delightful experience. From the pristine exterior and interior, single digit odometer and that new car smell, driving a new car off the dealer’s lot is a wonderful feeling.
Buying new car insurance for a new vehicle may feel less fun, but it’s an essential step
When to Buy New Car Insurance
There are specific situations when you want to buy new car insurance, such as:
You move to a new state. At the very least you’ll need to tell your insurer that you have moved. In some cases your insurer might not operate in your new state and you’ll have to look for new car insurance. And in some cases your current insurer might not offer competitive rates in your new location.
You buy a new vehicle. If you haven’t owned a car before or you’re adding a vehicle to your household, you’ll need to buy new car insurance for it. If you’re buying a new car but trading in a current vehicle, your existing auto insurance policy likely automatically covers the new vehicle for 30 days, giving you time to contact your insurer. Still, it’s best to let your insurer know right away.
Your renewal rates have a significant increase. Car owners across the country are receiving renewal notices that have a large increase in rates. This may be the time to look for new car insurance. The best car insurance companies combine competitive rates with robust coverage options and good customer service.
Your auto insurance policy is being non-renewed or canceled. If your insurance company is ending coverage, buying new car insurance before the end date is crucial.
New Car Insurance Grace Period
A new car insurance grace period is when your current insurance coverage is extended as temporary coverage to a new vehicle that is replacing another vehicle. This allows you to drive off the lot with your new car with car insurance coverage in place.
How long does a new car grace period last?
The length of the grace period varies by car insurance company, if offered at all. A 30-day grace period is typical but can be as short as seven days.
Check with your insurer about its grace period rules before buying a new car. It’s important to get car insurance on the new car before the end of the grace period so you don’t end up with a lapse in coverage.
What car insurance coverage is given during the grace period?
Insurance companies can vary on whether only a replacement car gets a grace period or it extends to an additional car being added to your household. A replacement vehicle generally receives the same coverage as the car it replaces and an additional car gets the same coverage as the car with the most coverage on your policy.
That means if you had only liability insurance previously on all your cars, that’s all you’ll get on the new vehicle during the grace period. If you need comprehensive and collision coverage, it’s best to alert your car insurance company immediately about the new car and make sure the correct coverage is in place.
How to Buy Insurance For a New Car?
Buying car insurance for a new vehicle is like getting coverage for any vehicle. You’ll want to find a quote that can fit your budget and then lock in coverage with an application.
Get Multiple Quotes for the Vehicle
It’s wise to compare car insurance quotes from multiple insurers. Costs can vary significantly from one company to the next for the exact same driver and vehicle. It’s best to know what coverage types you want before you get quotes, so that you’re comparing costs for the same coverage levels.
Apply for a Policy When You Know the Car You Want
If you know what car you’re buying, contact your insurance agent and arrange for insurance to begin the day you pick up the car. Then you’ll have the coverage and insurance ID card that you need to drive away in the new car.
Have the make, model and year of the vehicle you’re buying, as well as the vehicle identification number (VIN). Also know approximately how many miles you’ll be driving the car each year.
Cancel Your Old Car Insurance Policy
If you have existing car insurance, you want to cancel your old coverage. Contact your insurance company or agent. They might request you cancel in writing.
Provide the date you want to cancel. If you paid in advance, your insurance company should offer a pro-rated refund for the rest of the coverage period.
Is Car Insurance for a New Car Required?
Every state except New Hampshire, South Carolina and Virginia requires car insurance. The minimum insurance required will depend on your state. On top of state laws, if you have a car loan or lease, your lender or leasing company will likely require comprehensive and collision coverage, which pays to repair or replace your car due to problems covered by your policy, such as a car accident or theft.
Collision and Comprehensive Insurance
If you have a car loan or lease, your lender or leasing company will likely require you to buy collision and comprehensive insurance. That’s so you don’t walk away from your loan or lease if your car is totaled or stolen.
Collision insurance pays for repairs to your vehicle if you get into a car accident, no matter who is at-fault for the accident. For instance, if you back up into a pole, collision insurance can pay for your repairs (minus your deductible).
Comprehensive insurance pays for car theft and repairs due to damage from problems such as falling objects, floods, collisions with an animal, vandalism, fire and hail.
Uninsured Motorist Coverage
Uninsured motorist coverage and underinsured motorist coverage pay for your medical costs if someone without liability car insurance (or without enough liability car insurance) crashes into you.
Uninsured motorist coverage is required in some states and optional in others. In general, this is a good coverage to have. One in eight drivers in the U.S. don’t have car insurance, according to the Insurance Research Council.
Personal Injury Protection
Personal injury protection (PIP) coverage pays medical bills and other expenses (such as lost wages and funeral expenses) for you and your passengers, no matter who is at fault for the car accident.
There are 12 states that require PIP under “no-fault insurance” laws, three other states that require PIP, and four states and Washington, D.C. where PIP is optional.
What Other Types of New Car Insurance Should I Consider?
When buying car insurance for a new vehicle, you may want to consider additional coverage types.
Gap Insurance
If your car is totaled due to a problem covered by your policy (like a flood or car accident), gap insurance covers the difference between what your car is worth and what you owe on a car loan. For example, if you have $25,000 outstanding on a loan but the value of your totaled car was only $22,000, this coverage pays the $3,000 “gap.”
New Car Replacement Insurance
If your new car is totaled due to a problem covered by your policy, new car replacement insurance pays for a brand new car of the same make or model. This can be a good option for cars that quickly depreciate in value.
Rental Reimbursement Insurance
Rental reimbursement insurance pays for a rental car or substitute transportation (such as subway or bus fare) if your car is being repaired for a problem covered by your policy (like a car accident).
Roadside Assistance Insurance
If your car is disabled, roadside assistance insurance pays for services, such as a tow truck, locksmith, jump-start for a dead battery and fuel delivery.