New Car Insurance

If you’re buying a new car, you’ll need to get a new car insurance policy if you don’t already have one. If you already have car insurance, you’ll need to update your policy as soon as possible. We recommend including full coverage in your new car insurance to ensure you’re protected from most types of vehicle damage, including collisions, severe weather, theft, and more.

Our experts analyzed thousands of policies purchased by real drivers to determine how much more it costs to insure a new car over a used model. Based on their analysis, new car insurance costs about 12% more than insurance for a car that’s five years old and 28% more than insurance for a car that’s ten years old.

Here’s how that breaks down across some of the nation’s top insurance companies:

Our experts also analyzed the difference in minimum liability costs and full coverage for new cars because we recognize coverage needs vary by individual. We found that while minimum liability costs don’t change much based on the car you drive, full coverage costs can vary widely depending on the value of your car.

Minimum liability is intended to pay for damages to other parties if you cause an accident—so when insurance companies set liability rates, they account for the fact that liability claims depend more on the other driver’s car or the extent of their injuries. But full coverage pays for damages to your own vehicle, so the value of your car and the cost to repair or replace it will have a big impact on your premium.

Here’s what it costs on average to insure a 2023 model from some popular automakers:

Learn more: Why is my car insurance so high?

How much coverage to buy for a new car

• If you’re paying cash for the car: If you can afford to repair or replace your car out-of-pocket, state minimum liability is probably fine. Otherwise, it’s a good idea to invest in full coverage.
• If you’re leasing your car or taking out a loan: Your lender will probably require you to carry full coverage as part of your financing terms. You may also be required to carry gap coverage and/or increase your liability limits.

Every state sets minimum liability insurance requirements for all vehicles, so any policy you purchase must include at least these liability limits, as well as any additional coverages required in your state, like uninsured/underinsured motorist (UM/UIM), personal injury protection (PIP), and/or medical payments coverage (MedPay).

If you’re driving a new car, it’s usually a good idea to carry full coverage insurance, as well. A full coverage policy includes the liability insurance required by your state plus comprehensive coverage and collision coverage.

Full coverage will pay to repair or replace your car if it’s stolen or damaged due to a car accident, severe weather, vandalism, falling objects, and more. It does cost more than minimum liability insurance—but if you don’t have it, you could be left paying thousands of dollars in vehicle repairs.

Our experts looked into what drivers pay on average each month for minimum liability insurance and full coverage for cars that are two years old or newer. In their research, they found costs are significantly higher for brand-new cars.

NEED TO KNOW

Unlike liability-only insurance, full coverage requires you to pay a deductible before your insurer will pay for a covered loss. You can lower your insurance premium by choosing a higher deductible, but be sure to select an amount you’ll be able to pay on short notice if you have to file a claim.

Learn more: Your guide to the 6 types of car insurance coverage

Optional coverages for new cars

Gap insurance

New cars depreciate as much as 20% in the first year, which means your vehicle may lose value faster than you’re paying it off. That could leave you owing more than it’s worth, especially in the first 1–2 years of your loan. That’s where gap insurance comes in.

If your vehicle is stolen or declared a total loss, full coverage will only pay up to the car’s actual cash value (ACV). If you owe more on your car loan than the vehicle’s ACV, you’ll be responsible for the remaining balance—but if you have gap insurance, it will pay for the difference between what you owe and the car’s value.

Note: Some insurance companies, like GEICO, don’t offer gap insurance. Others, like Progressive, offer a similar product called loan/lease coverage.

New car replacement

If your policy includes new car replacement and your car is totaled within the first year of ownership (or before a certain mileage limit), your insurance company will cover the cost of replacing your vehicle with the same make and model.

Our experts analyzed thousands of policies purchased by Jerry users and determined that it costs an average of around $271 a year to add new car replacement to an existing car insurance policy.

Higher liability limits

Liability insurance will pay for property damage and bodily injury to others if you cause an accident. But if you only have state-minimum coverage, your liability insurance might not cover all of the damage.

If you’re leasing your vehicle, your lender may require you to carry high liability limits, such as $100,000/$300,000 for bodily injury and $100,000 for property damage—sometimes written as $100k/$300k/$100k. But even if it’s not required, most insurance experts recommend increasing your liability coverage to these amounts to better protect yourself against lawsuits after an at-fault accident.

Based on our experts’ analysis, this is the average monthly cost of raising your liability limits to either $50k/$100k/$50k or $100k/$300k/$100k:

If you don’t have insurance yet: Buy a new policy

Almost every state requires you to have car insurance before you can legally drive your new car—so if you want to drive home from the dealership, you’ll need to have a valid car insurance policy in place.

If you need to buy car insurance, it’s a good idea to start this process before you buy the car, since a lot of dealerships require you to show proof of insurance before they can finalize your sale.

If you have car insurance: Add your vehicle to your existing policy

If you already own a car, transferring your insurance to a new vehicle is fairly simple. Just contact your insurance agent to let them know you bought a new car and would like to transfer auto insurance coverage from your previous vehicle to the new one. Be ready to provide all the following information about your new vehicle:

• Vehicle identification number (VIN)
• Registration information
• The name and information of your lender
• Any vehicle customizations or damage
• The coverage you would like to apply to the new vehicle

If you buy insurance with Jerry, it’s easy to update your vehicle information right in the app, so you can feel confident you’ll be covered right away.

New car grace period

If you already have car insurance, most insurance companies offer a grace period in which your car will be covered before it’s been added to your existing auto policy. However, the details of these grace periods may vary depending on your insurer and where you live, including which claims will be covered and how long the grace period lasts.

Here are some general guidelines around grace periods, although you should contact your insurance company to verify your coverage details before you purchase a new vehicle.

• If you’re buying your first car: There is no grace period. You must purchase a new policy before you drive, even if you’re only driving your new car home from the dealership.
• If you want to transfer a liability-only policy to a new car: The grace period to update your insurance varies based on your carrier and the state where you live, but you’ll typically have between 7 and 30 days to add your new car to your insurance.
• If you want to transfer a full coverage policy to a new car: The grace period to update your insurance is typically between 4 and 14 days, depending on your insurance company and location.
• If you want to change your coverage: Let your insurance company know within 4 days of your new car purchase if you want to carry different coverage on your new vehicle.

The bottom line:To ensure you’re fully protected, check with your insurance agent to find out the details of their grace period, then update your car insurance policy to include your new car as soon as possible.

MEET OUR EXPERTS

Amy Bobinger

Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars. Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.

Sarah Gray

Sarah Gray is an insurance writer with nearly a decade of experience in publishing and writing. Sarah specializes in writing articles that educate car owners and buyers on the full scope of car ownership—from shopping for and buying a new car to scrapping one that’s breathed its last and everything in between. Sarah has authored over 1,500 articles for Jerry on topics ranging from first-time buyer programs to how to get a salvage title for a totaled car. Prior to joining Jerry, Sarah was a full-time professor of English literature and composition with multiple academic writing publications.