Insurance for New Cars: What You Need to Know

When you buy a new car, you’ll need to have proof of insurance if you want to drive it off the lot. On average, full-coverage insurance for new cars (2023 and 2024 model years) costs $254 per month, according to Insurify data. 

How much you spend on auto insurance depends on many different factors, such as your driving record, age, the type of vehicle you own, your coverage choices, and your location.

Here’s what you should know about buying auto insurance for a new car, including the importance of comparing rates to make sure you’re getting the best deal on coverage.

When to buy insurance for your new car

You can’t drive a car legally without having an active car insurance policy that meets the state’s minimum liability coverage requirements or financial responsibility laws.^[1]

When you buy a new car, you’ll need to have a car insurance policy in place if you want to drive it off the lot. If a police officer pulled you over on the way home, you’d need to have proof of auto insurance — even if the car has only belonged to you for a few minutes.

If you already have car insurance

If you already have a car insurance policy in place for your old car, contact your insurance agent and give them your new vehicle information so they can make the necessary changes to your policy.

Many insurance companies offer a grace period between when you buy a new car and when you need to update your policy, and your insurer should be able to give you a time frame when you call.

If you don’t have car insurance or are switching companies

If you don’t have an existing car insurance policy or are planning to switch companies, you’ll need to sign up for a policy right away so that you can drive your car legally from day one.

You can contact different insurance companies by phone, go to their websites to get quotes, or use an online quote-comparison tool to compare rates from multiple companies in one place. This often only takes a few minutes.

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How a new-car grace period works

A new-car insurance grace period gives drivers a temporary extension of coverage to newly purchased vehicles under an existing auto insurance policy. This grace period typically lasts between seven and 30 days and gives you time to update your policy.

Having that leeway can be helpful since you likely won’t have the information for the exact car you want until you buy it. For example, your premium prices may be lower if you opt for a model with special safety features, and you may not make that decision until the day you buy the car.

How much new-car insurance costs

How much you’ll spend on new-car insurance depends on a wide variety of factors, but a full-coverage policy for new car models from 2023 and 2024 costs $254 per month on average, according to Insurify data.

A major influencing factor when it comes to car insurance rates is the type of car you buy.^[2] How much it costs to repair or replace the car, the likelihood of theft, the safety record, and even the size of the engine can play a part in pricing.

For example, the Ram Pickup comes with a much higher average monthly premium ($275) than the Nissan Rogue ($224). Check out other prices for new-car insurance in the table below.

How to get new-car insurance

If you don’t already have car insurance or you’ve decided to switch insurers when you buy a new car, it can feel a bit overwhelming to start your hunt for the right coverage.

Follow these steps to find auto insurance coverage that works for you.

1. Determine how much coverage you need

Think carefully about how much car insurance coverage you need. You’ll have to meet the state’s minimum liability requirements, but you may want more coverage, like collision insurance, for added peace of mind.

2. Compare car insurance quotes

After determining how much coverage you need, request quotes from at least three different insurance companies to see which insurer can offer you the right type and amount of coverage for the best price.

The goal isn’t just to find the cheapest policy — it’s to secure the best coverage for an affordable price that meets your needs.

3. Look for discounts

It never hurts to ask about what discounts you may qualify for before purchasing a policy to get your premium price as low as possible.^[3] All insurers offer different types of discounts, but some popular ones include:

• Multi-policy discount: If you bundle auto insurance with other policies from the same company, such as home or renters insurance, you can often save on both policy types.

• Good driver discount: Drivers with a clean record free of accidents, DUIs, or speeding tickets can save since they pose less of a risk to insurers.

• Safe-vehicle discount: If you equipped your car with advanced safety features or bought a new car that has great safety ratings, you may be able to score a discount.

• Student discount: If you’re a student driver or pay for your child’s car insurance, look for student-based savings for things like having good grades or taking a defensive driving course.

4. Take out a new insurance policy and provide proof of insurance

Once you’ve selected an insurance company, you can purchase your new policy. That way, if you’re financing or leasing your new car, you can provide the necessary proof of insurance before driving home. Make sure your new policy goes into effect before you cancel your old one so that you can avoid a lapse in coverage.

Your new insurance company should mail you your ID cards, but many insurers also have an app where you can download them digitally on your smartphone.

5. Cancel your old policy

Contact your previous insurance company to cancel your old auto insurance policy. If you cancel your policy mid-term but paid your premiums up front, you may be eligible for a refund.

Make sure your new policy is in effect before you cancel your old one.

Factors that affect new-car insurance rates

Whether you’re buying a new or used vehicle, several factors affect the price you’ll pay for insurance coverage:

• Driving record: Insurance companies assess your history of accidents, violations, and claims to determine risk and how much to charge you. Try to keep your driving history as clean as possible.

• Vehicle type: The make, model, and year of your car influence rates based on repair costs, safety features, and theft likelihood.

• Coverage and deductibles: The level of coverage you choose and your deductible affect premiums, with more robust coverage and lower deductibles resulting in pricier premiums.

• Location: Where you live, down to your ZIP code, affects auto insurance rates due to factors like traffic density, crime rates, and weather conditions.

• Annual mileage: The more you drive, the more you increase your chances of getting in a car accident, which can increase car insurance rates.

New-car insurance FAQs