Insurance for a New Car: Cost, Coverage, and Requirements
New cars cost more to insure, but the right coverage and discounts can lower your rate. Compare new car insurance quotes today.
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Written byKatie Powers
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Katie PowersLicensed P&C Agent, Senior Insurance Editor
Licensed auto and home insurance agent
4+ years experience in insurance and personal finance editing
NPN: 20564519
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Edited byBecky Helzer
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Becky HelzerEditor
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Reviewed byDaniel Roccato
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Daniel RoccatoAdvisor
30+ years in financial services
Clinical Professor of Finance, University of San Diego
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Data reviewed byKonstantin Halachev
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Konstantin HalachevVP of Engineering & Data Science
7+ years experience in data analysis
Ph.D. in Computational Biology
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If you’re buying a new car, insurance is one of the first things you’ll need to sort out — often before you even drive off the lot. New cars generally cost more to insure than used vehicles because of their higher replacement value.[1]
But by comparing car insurance rates, you can keep your costs manageable. Here’s what to know about when you need insurance for a new car, what coverage to carry, how much it typically costs, and ways to save.
Quick Facts
Most insurers offer a grace period of seven to 30 days for new vehicles.
Financed and leased cars generally require comprehensive and collision coverage.[2]
Gap insurance and new-car replacement insurance can cover depreciation losses if you total your new car.
Do you need insurance before buying a new car?
In most states, you’ll need proof of insurance before you can drive a new car off the dealer’s lot, especially if you’re financing or leasing the vehicle. Dealers typically verify your insurance status before handing over the keys.
If you already have a car insurance policy, your existing coverage may extend to a new vehicle for a short period. This is known as a grace period, and it usually lasts between seven and 30 days, depending on your insurance company.
During that window, you’ll need to contact your insurer to add the new car to your policy.
If your existing policy doesn’t include comprehensive and collision coverage — or you’ve had a lapse in coverage — you’ll need to buy a new policy before getting a car.
How much does insurance cost for a new car?
New cars are more expensive to insure than used cars. The higher new-car insurance cost stems from replacement value, since it costs more to repair or replace a new vehicle than an older one.
Insurance companies also factor in the car’s make, model, safety ratings, and theft rate when setting your insurance premium. A high-performance sports car, for example, will generally cost more to insure than a midsize sedan.[3]
Here’s how the average car insurance cost breaks down by coverage level, according to Insurify data.
Vehicle Type  | Average Monthly Quote: Liability Only | Average Monthly Quote: Full Coverage |
|---|---|---|
| New car | $109 | $220 |
| Used car | $97 | $163 |
Disclaimer: Table data is based on real-time quotes from Insurify’s network of 500+ insurance partners. Actual rates may vary depending on the policyholder’s individual profile and coverage needs.
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What coverage do you need for a new car?
If you’re financing or leasing a new car, your lender will require full-coverage car insurance. New-car buyers should also consider additional protection like gap insurance and new-car replacement coverage.
State-minimum liability requirements
Every state except New Hampshire requires drivers to carry a minimum amount of liability coverage for bodily injury, property damage, or both. Liability insurance covers injuries and property damage you cause to others in an accident, but it doesn’t protect your own vehicle.
Check your state’s minimum requirements to understand the liability coverage you need.
Comprehensive and collision
Lenders and leasing companies require both comprehensive and collision coverage to protect their financial interest in the vehicle. Collision coverage pays for your car repairs after an accident, while comprehensive coverage protects against non-collision events, like theft, hail, vandalism, and animal strikes.
Comprehensive and collision are optional if you own your car outright. But given a new car’s high value, both are recommended.
Gap insurance
Gap insurance covers the difference between what you owe on your loan or lease and the car’s actual cash value if it’s totaled.[4] Since most new cars lose up to 20% of their value in the first year, gap insurance on a new car can prevent a significant out-of-pocket loss.
You can buy gap insurance from your insurance company or the dealership. Insurers typically charge less, so compare pricing before accepting a dealer offer.
Keep in mind that gap insurance isn’t necessary if you own your car outright or owe less than what the car is worth. In other words, a large enough down payment lets you skip gap coverage.
New-car replacement coverage
New-car replacement coverage pays to replace your totaled car with a brand-new model of the same make and model year, rather than paying out the depreciated value. This differs from gap insurance, which covers the gap between your loan balance and the car’s value.
Major insurers typically offer new-car replacement coverage, with eligibility windows ranging from one to two model years.
New-car insurance rates by vehicle
Auto insurance costs depend on the type of new car you drive. The table below shows average monthly full-coverage rates for the Kelley Blue Book’s 10 bestselling cars in 2025, based on Insurify data.
Vehicle | Average Monthly Quote: Full Coverage |
|---|---|
| Ford F-Series | $172 |
| Chevrolet Silverado | $182 |
| Toyota RAV4 | $173 |
| Honda CR-V | $158 |
| Dodge Ram | $160 |
| GMC Sierra | $184 |
| Chevrolet Equinox | $168 |
| Tesla Model Y | $288 |
| Toyota Camry | $203 |
| Toyota Tacoma | $176 |
Disclaimer: Table data is based on real-time quotes from Insurify’s network of 500+ insurance partners. Actual rates may vary depending on the policyholder’s individual profile and coverage needs.
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How to insure a new car in 6 steps
Follow these steps to make sure your new vehicle is covered from the moment you take ownership:
Gather your information
Collect your driver’s license, vehicle identification number (VIN), and details about your financing or lease agreement.
Review your current policy
If you already have car insurance, check with your insurance agent to verify your grace period and confirm coverage.
Compare car insurance quotes
If you’re buying a new policy, get quotes from three to five insurers to find the best car insurance for your needs.
Choose your coverage
Decide on your coverage levels, deductibles, and any add-ons like gap insurance or roadside assistance.
Purchase your policy
Once you’ve selected an insurer, buy the policy and get your proof of insurance and ID cards before heading to the dealership.
Update the dealer and your lender
Provide your proof of insurance to the dealer at pickup. If you’re financing, your lender may also need a copy.
How to save on new-car insurance
Insuring a new car doesn’t have to cost a fortune. Check out several ways you can save on new-car insurance.
Compare quotes before purchasing
Rates for the same vehicle can vary significantly between insurers. Getting quotes from at least three to five insurance companies before buying the car helps you factor insurance cost into your purchase decision. You can compare quotes online in minutes.
Choose a vehicle with lower insurance costs
Vehicles with high safety ratings, lower horsepower, and low theft rates cost less to insure. Before you finalize your purchase, check the insurance costs for your specific make and model. You can start by researching the cheapest cars to insure.
Take advantage of new-car discounts
Many insurers offer discounts that apply to new-car buyers, including:
New-car discount: Some insurers offer a lower rate for vehicles less than a certain age.
Anti-theft device discount: New cars often come with factory-installed anti-theft systems that qualify for savings.
Safety feature discount: Advanced safety features like automatic emergency braking and lane-departure warning can reduce your rate.
Not all car insurance discounts are available from every insurer, so ask about what’s offered when you get your car insurance quote.
Increase your deductibles
Choosing higher deductibles — $1,000 versus $500, for example — can lower your premium. But make sure you can afford the deductible out of pocket if you need to file a claim. For a new car with a loan, balance the savings against the financial risk.
New-car insurance FAQs
See below for answers to common questions about buying insurance for a new car.
How long do you have to insure a new car after purchase?
Most insurance companies offer a grace period of seven to 30 days to add a new car to your existing auto insurance policy. But if you don’t have current coverage — or have only liability — you’ll need to buy insurance before driving the car off the lot.
Is insurance more expensive for a new car than a used car?
Yes. New-car insurance costs are typically higher because the vehicle replacement value is higher. The make, model, safety features, and theft rate also affect the price.
Do you need gap insurance on a new car?
Gap insurance on a new car is highly recommended if you’re financing or leasing, since new cars can lose a significant portion of their value in the first year. It covers the difference between what you owe and the car’s actual cash value if it’s totaled.
Can you drive a new car home without insurance?
In most states, no. You’ll need proof of insurance before driving off the lot. If you have an existing car insurance policy, your grace period may cover the drive home, but check with your insurer first.
What is new-car replacement coverage?
New-car replacement coverage pays to replace your totaled vehicle with a brand-new one of the same make and model year. Without this new car insurance coverage, your insurer would pay based on the depreciated cash value.
How do you add a new car to your existing insurance policy?
Contact your insurance company or insurance agent with your vehicle identification number, purchase date, and financing details. Many insurers can add the car to your policy over the phone or online.
Does your credit history affect your new-car insurance rate?
In most states, insurers use credit-based insurance scores as a factor in setting rates. A strong credit history can help you secure a lower premium.
Sources
- Insurance Information Institute. "What determines the price of an auto insurance policy?."
- Insurance Information Institute. "What is covered by a basic auto insurance policy?."
- Insurance Information Institute. "Shopping for a safe car."
- Insurance Information Institute. "What is gap insurance?."
Methodology
Insurify data scientists analyzed more than 190 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 500+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.
Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).
Liability-only premium averages correspond to policies with the following coverage limits:
- Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
- Property damage limits between $10,000 and $50,000
- No additional coverage
- Comprehensive coverage with a $1,000 deductible
- Collision coverage with a $1,000 deductible
Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.
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Katie PowersLicensed P&C Agent, Senior Insurance Editor
Licensed auto and home insurance agent
4+ years experience in insurance and personal finance editing
NPN: 20564519
Featured in
Becky HelzerEditor
Daniel RoccatoAdvisor
30+ years in financial services
Clinical Professor of Finance, University of San Diego
Konstantin HalachevVP of Engineering & Data Science
7+ years experience in data analysis
Ph.D. in Computational Biology