Buying a new car is often a cause for celebration, but it can also raise an important question: how much will my insurance increase with a new car? Car insurance for a new vehicle can be more expensive, especially if you’ve previously been driving an older car or only had the minimum required coverage in your state. In this guide, Bankrate’s insurance editorial team reviews the types of coverage you may want or need when buying a new car and provides tips on finding the best policy at the most affordable price.

In nearly every state, you must have an active insurance policy before driving your new car off the lot. How you purchase that policy may vary depending on your situation.

If you’ve already finalized your new car selection with the dealer and have the VIN ready, you can purchase your insurance policy before heading to the showroom. By providing basic details about your new vehicle, you can contact your insurer either by phone or online to activate your policy. It’s advisable to print your declarations page or have your insurer’s mobile app ready to show the dealer that you’re covered when you arrive to pick up your car.

If you’ve done your research and know the year, make, and model of the car you’re planning to buy, but don’t have the VIN yet, you can still coordinate with your insurer to discuss the coverage options and estimated cost. When you obtain the VIN, simply contact your agent or go online to provide it. Keep in mind that the quoted price might slightly adjust once your insurer has the VIN, as it provides more detailed information about the car, including its trim level and installed safety features.

If you haven’t prepared with your insurer before going to the dealership, you can ask the dealer to arrange your coverage. Many dealerships have their own insurance agencies or partnerships with insurers, allowing them to manage the process for you. While this convenience is helpful, it may not yield the most competitive price or optimal coverage options, as dealers typically do not shop around for quotes or tailor policies to your specific needs.

Purchasing a new car can impact your insurance costs for several reasons. Often, your state’s minimum coverage requirements may not suffice.

If you’re financing or leasing the vehicle, your lender will typically mandate full coverage, including optional collision and comprehensive insurance. While this can be more expensive than minimum coverage, it provides comprehensive protection for your vehicle in case of an accident where you’re at fault. If you’re accustomed to driving an older vehicle, you might not have needed or desired this level of coverage.

Additionally, the presence of advanced safety features in your new car can influence insurance costs. Enhanced safety features can lower premiums due to reduced accident risks. However, these technologies can also be costly to repair, prompting insurers to adjust premiums accordingly. Ultimately, these factors collectively determine the cost of your insurance policy.

As mentioned earlier, the required insurance coverages can vary depending on the state in which you reside. When purchasing a new vehicle, you’ll likely need to carry the following coverages, mandated either by your lienholder, leasing company, or state regulations:

  • Comprehensive Coverage: Often referred to as “other than collision,” comprehensive insurance covers damage from incidents other than accidents, such as theft, vandalism, or weather-related damage. It typically includes a deductible that you must pay before coverage applies.
  • Collision Coverage: This coverage pays for damage to your own vehicle caused by an at-fault accident, as the name suggests. Like comprehensive coverage, collision insurance is usually required if you have a car loan or lease and involves a deductible.
  • Bodily Injury Liability: Bodily injury liability coverage pays for the medical expenses of others if you are at fault in an accident. It’s usually expressed as two numbers, such as 25/50, indicating coverage limits per person and per accident respectively. This coverage is mandatory in nearly every state.
  • Property Damage Liability: Property damage liability covers the cost of damage you cause to someone else’s property in an at-fault accident. For instance, if you damage another vehicle and have $25,000 in property damage liability, your policy will cover up to $25,000 for repairs. Similar to bodily injury coverage, property damage liability is typically required by state laws.

In some cases, additional car insurance add-ons may be advisable, especially if you’ve recently purchased a new vehicle or want to protect against specific risks:

  • New Car Replacement Insurance: This coverage ensures that your insurer pays the replacement cost of your new vehicle rather than its depreciated value if it’s totaled shortly after purchase. While not offered by all insurers, it provides added financial protection for new car owners.
  • Gap Insurance: Gap insurance bridges the gap between what you owe on your new vehicle and its actual cash value in the event of a total loss. It’s beneficial if you owe more than the vehicle’s current market value, safeguarding you from financial loss.
  • Accident Forgiveness: This optional endorsement forgives the impact of a single accident on your insurance premium, regardless of fault. It’s a valuable option for safe drivers looking to avoid rate increases after an occasional accident, though not all insurers offer it as standard.

Choosing the right mix of coverages and add-ons can provide peace of mind and ensure you’re adequately protected in various driving scenarios with your new vehicle.

If you already have an existing auto insurance policy, transferring coverage to a new vehicle or adding it to your current policy is generally straightforward. You can easily initiate this process by contacting your insurance provider via phone or logging into your online account to make the necessary adjustments.

However, even if you decide to keep your current insurance policy, it’s wise to compare car insurance quotes. Purchasing a new car presents an opportunity to reassess your insurance requirements, and you might discover a more cost-effective option with another insurer. This can help mitigate any potential increase in your car payment resulting from your new purchase.