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New car saleOne of the most thrilling experiences is buying a car and driving it away from the dealer, parking lot -- or someone's garage. But before you do, make sure you have new car insurance squared away. All states except New Hampshire require you to carry liability car insurance when buying a new car. And depending on the value of the vehicle and whether you're financing it, you may need full coverage car insurance.

Before you drive away in your next car, read on for everything you need to know about how to get insurance for a new car:

  • New car insurance laws
  • Buying a new car: insurance grace period
  • Car insurance for new car: how much car insurance do I need?
  • What type of new car insurance you need
  • Using your old car insurance for a new car
  • How much is car insurance for new car?
  • Should I get insurance for a new car before I buy it?
  • How to get insurance on a new car in 5 steps

New car insurance laws

Before you learn how to insure a new car, the first thing you should know is your state's minimum liability car insurance requirements. Many states use 25/50/25. What does this mean? If you cause an accident, your insurance will pay third parties a maximum amount of:

  • $25,000 per person
  • $50,000 per accident
  • $25,000 in property damage

Besides keeping an eye on the amount of new car insurance you'll need, it's also important to know when do you have to insure a new vehicle.

Buying a new car: insurance grace period

States don't have an official grace period for new car insurance. The general rule of thumb is to have car insurance before you drive your car. It's the wisest idea -- if you get into a fender bender or worse, you'll have car insurance for new car.

Once you have a provisional insurance policy, most insurance companies will give you somewhere between 14 and 30 days to get your title transferred and the new car registered. It's best to speak with your car insurance carrier to find out what the new car insurance grace period is.

Am I covered by dealer insurance?

A car dealer has car insurance so you can test-drive vehicles. However, it won't cover you once you buy a vehicle. You'll need to buy your own insurance for a new car.

Car insurance for new car: How much car insurance do I need?

Just because your state has a minimum amount of new car insurance you must have doesn't mean it's enough. First of all, liability insurance only pays for damages to the other car. If you drove a brand new car right off the lot and you rear-end someone, liability insurance pays for the damages to the car you rear-ended, leaving you to pay for your new car's damages out of pocket.

It's important to decide in advance how much new car insurance you need. Consider additional coverage if:

  • You've financed your vehicle with a car loan
  • Your car is ten years or newer
  • Your car is worth more than you can afford to replace
  • You have assets you'd like to protect, such as a house

Read More: How Much Car Insurance Do I Need?

What type of new car insurance you need

If you think it's best to opt for full or additional coverage, considering the following. This list is nowhere near exhaustive but gives you the most important types of new car insurance worth adding.

Higher liability limits

Say the minimum for your state to drive legally is 25/50/25. You may want to bump it up to 50/100/50. If you get into an accident with damages and injuries higher than the amount of your coverage, the other party could sue you for the extra costs. If you own a home or other assets, they could be at risk.

Collision and comprehensive coverage

Adding both these extras means your new car will have full coverage. That's because liability insurance will cover the other party and collision/comprehensive covers you. If you've agreed to a car loan, chances are the lender will require you have both coverages.

The two types of car insurance work together to fully protect your vehicle. Collision pays for damages and losses to your car from a crash. Comprehensive pays for damages and losses from fire, weather, theft or vandalism and striking an animal.

Gap insurance

Gap insurance is not as common but still pretty useful. Imagine you purchase a brand new Honda for $22,000 and take a loan out from Honda Financial for $20,000. Some months later, your car is totaled in an accident. You still owe $21,500. But the Honda has depreciated since you drove it off the lot and your insurer will only pay you it's actual value of $18,000.

Gap insurance will pay for the difference of what you still owe on the car and what it's actually worth so you don't end up making loan payments on a car you can no longer drive.

Old car insurance, new car?

If you're planning on trading in your existing car for a new one, some of the legwork of getting insurance on a new car is done already. Even if you're planning on keeping your existing car and adding a new one, changing car insurance should be simple. Best yet -- you'll probably be eligible for a multicar discount.

All you need to do to add another car to your insurance or switch the old car with the new one is contact your insurance carrier. You'll probably need the vehicle identification number and a few details such as the make, model, year and mileage. If you don't have the VIN yet, it's alright. You can always add it once you have the keys for the new vehicle.

Just remember that the more details you can give your insurance company, the more accurate the quote on the price difference between the old and new car insurance will be. Be sure to comparison shop by getting quotes from a few insurers -- you may decide to switch car insurance carriers for a better deal.

How much is car insurance for new car?

The cost of getting insurance on a new car depends on several factors, such as the model, age, mileage, value, safety features and your driving history. Here's an idea on the cost of insuring a new car.

How much is insurance for a new car? Average rates for popular 2020 models

Make Model Average Annual Rate
HondaCR-V LX$1,333
JeepWrangler JL Sport S$1,334
SubaruForester 2.5I$1,373
FordEscape S$1,397
FordF-150 XL$1,440
ToyotaTacoma SR$1,449
ChevroletEquinox LS$1,479
FordExplorer XLT$1,492
NissanRogue Sport SV$1,494
ToyotaHighlander LE$1,494
ToyotaRAV4 Adventure$1,501
JeepGrand Cherokee Laredo$1,503
DodgeRam 1500 Express$1,524
GMCSierra 1500$1,527
ChevroletSilverado 1500 LT$1,572
HondaAccord LX$1,586
HondaCivic LX$1,606
ToyotaCamry L$1,640
ToyotaCorolla L$1,712
NissanAltima 2.5 S$1,823

CarInsurance.com commissioned Quadrant Information Services to calculate average auto insurance rates for 2020 models. Averages were calculated using data from six large carriers, in 10 ZIP codes per state.

Averages are based on full coverage policy limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. This hypothetical driver has a clean record and good credit. The rate includes uninsured motorist coverage.

Average rates are for comparative purposes only. Your own rate will depend on personal factors.

Should I get insurance for a new car before I buy it?

Knowing when do you have to insure a new vehicle is key. You shouldn't buy new car insurance before you buy the car just in case the deal falls through, but you should know how much you're insurance will cost and what type of coverage you'll buy. If you're confident you're buying the car, you can set the policy to become effective the day you sign the paperwork.

If you'd like to wait until you sign on the dotted line, making a policy effective doesn't take long. You can have the policy ready-to-go in advance with your insurance carrier. Once you sign the paperwork, call your insurer to purchase the policy. By the time you hang up, your insurer should email or fax the seller proof of coverage in just a few minutes, so you could drive away in your new car.

How to get insurance on a new car in 5 steps

If you don't have an existing policy you're transferring, you'll need to start from scratch. That's not all bad -- you'll have the chance to find the best price on insurance. Follow these five steps to get car insurance for new car.

1. Round up information about the new vehicle

To get an accurate price quote and buy new car insurance, you'll need some details about the car:

  • The vehicle identification number (VIN)
  • Make and model
  • Year
  • Trim package (leather seats, navigation, etc.)
  • Mileage

You may not have all this information, but the more details you can provide, the more accurate your quote will be. If you don't have access to the VIN, you can always provide it after you buy the car.

2. Compare quotes on new car insurance before you buy the vehicle

Once you have the information you need, you can get a few quotes for the vehicle to find the best deal. Read more on how to compare quotes to know what to look for when shopping around.

Getting insurance quotes before you buy is also smart, so you know how much your insurance will cost. You may decide the car you're interested in is too expensive to insure. It's better to realize that before you buy the car.

3. Set an effective date on your policy of choice

Once you've decided on your coverage and are ready to buy a policy, be sure you have the policy go into effect on the same day you are going to buy the car. If you'd like to wait until you sign the paperwork to ensure you don't change your mind, you can have the insurer hold the policy and all its details until you call them from the signing. You can complete the insurance transaction over the phone and have your carrier fax or email the insurance declaration.

4. Transfer the new car title

Are you wondering how to transfer a car title? The dealership and your lender will typically do the paperwork for the title when you buy a new car. The lender keeps the title until you pay off your loan in full. Once you own the car outright, the lender will mail you the title.

When you buy a car from a private seller, he or she signs the title over to you - you both sign the appropriate sections on the back of the title. You'll need to complete the transfer at the Department of Motor Vehicles (DMV). Each state has its own requirements, but typically the documents and information you need include:

  • A bill of sale showing the purchase price
  • Proof the title has been signed over to you
  • The VIN (which should be on the bill of sale and title)
  • The current odometer reading

You may have to fill out a form to document the title transfer so the DMV can reissue the title in your name.

5. Register the new car

The last step is to register the new car and let your insurance company know. Wondering how to register a car? As mentioned, you can usually register your new car at the same time as the title transfer at the DMV. When you register the car, in addition to the information you need to do a title transfer, you'll likely need the following:

  • Proof of liability car insurance
  • Proof that you've paid sales tax on the car purchase
  • Certificates showing the car has passed safety and emissions inspections

 

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