Is Car Insurance More Expensive for New Cars?

Do I Have Insurance When I Drive My New Car Off the Lot?

If you already own a car, then your insurance company will automatically provide the same amount of coverage for your new vehicle that you have on your previous vehicle. Your current policy will cover your new car for four days. For instance, if you currently own a 2002 Ford Ranger and are trading it in for a 2019 Honda Civic, your Civic will be covered according to the policy you’ve taken out on your Ranger for four days. As Neckerman Insurance Services notes, you should be aware that if you don’t have on your old car, you won’t have it for your new car either. The automatic four-day coverage is the exact same coverage that you’ve always had. If you want to upgrade the coverage for your new car, you must contact your insurance agent as soon as possible, especially if you want extra coverage for a car that you are financing or leasing.

Insurance Panda points out that if you have more than one car listed on your current insurance policy, your new vehicle will have coverage equal to the car listed on the policy with the highest amount of coverage. Do keep in mind that this maximum coverage is still only valid for four days. When you call your insurance agent to add your to car to your policy, make sure to have the following information on hand:

  • The vehicle’s make and model
  • The vehicle’s model year
  • The Vehicle Identification Number (VIN)
  • Contact information for your lender or leasing company

According to The Zebra, if you are purchasing your very first vehicle or your insurance has lapsed, you will need to acquire insurance before you buy your car. You can’t drive off the lot without it. As the driver, purchasing car insurance for your new vehicle is your responsibility. Even if the dealership offers to purchase insurance for you, you should not rely on them to do so. If you do already have insurance, it’s best to contact your agent before you purchase your new car to make sure your current policy automatically applies to your new vehicle. While four days of automatic coverage is common practice in the insurance industry, there are exceptions to the rule.

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Cheapest used cars to insure in Ontario

To give you a clear picture, I decided to develop a list of the cheapest used cars to insure in Ontario. To do this, I used IBC’s guide to find the cars with the fewest claims against them. I filtered the excel page for used 2010 cars only – eliminating trucks, vans, or wagons.

I also wanted to look at the top selling cars in Canada as of 2019 and cross reference it against the list of the cheapest cars. The Honda Civic is always a top-selling car, but it did not perform well on IBC’s guide. I put it in the list though strictly based on its popularity.

Then, I used our car insurance calculator to get Ontario car insurance quotes to see which of the top selling cars with a good insurance track record had the cheapest insurance. To isolate the insurance costs strictly on the car, I used a control subject – a 35-year-old male with a clean driving record living in Ottawa who commutes to work and drives about 10-15,000km every year. We’re going to go with a standard insurance policy with collision, comprehensive, and $1 million in liability. Obviously, if we went to the minimum on the used car (as discussed earlier), we’d save even more.

The value of the vehicle

Used car insurance rates may be considerably higher if you are insuring a classic car vs. a new, inexpensive four-door vehicle. For example, a 1965 Ford Mustang two-door hardtop convertible in prime condition has an average value of about $22,000. On the other side of the spectrum, a Nissan Versa four-door sedan has a manufacturer’s suggested retail price of just under $15,000. When factoring in insurance costs, make sure you are comparing cars of similar value.

Our recommendations for car insurance for new drivers

Whether you’re a new driver or have been driving for decades, researching and comparing quotes from several providers is a great way to find the best rate. Our insurance experts have found that Geico and State Farm are excellent options for car insurance for new drivers. Read on to learn more about these providers.

Why is the cost to repair or replace a damaged vehicle so high?

Newer cars have expensive parts, which increases the estimate by body and repair shops. Since most states have laws regarding aftermarket parts, they often must purchase original manufacturer parts, increasing costs.

When a customer submits a damage claim, the insurance company pays close attention. Except for the deductible, the insurer is responsible for the costs. This means the company monitors every step to ensure quality and performance.

Insurance companies also measure safety to ensure the vehicle receives proper repair.

Replacement parts damaged in a collision must be up to par. Aftermarket parts are often of lower quality. They may not fit correctly or corrode too quickly. This compromises the integrity of the vehicle and can place the insured at risk for future accidents.

Since the auto insurance industry is in the business of risk assessment, they consider this unacceptable. If they discover inferior products, they have the right to refuse payment to the body shop. As they often make a direct payment, they can control the outcome.

Why it costs more to insure a new car

When you buy a new vehicle, your aim is to protect it from all kinds of damage, especially if it has been financed. In this case, getting only the minimum coverage is not enough. You also need to add collision and comprehensive coverage if you want to protect your new car from physical damages. This hikes up the cost of insurance. On the contrary, an older car that has been through many years of hard work may not require the protection it once did and can get by only with the minimum coverage.

Newer models of vehicles have also been found to cost more in insurance compared to older ones. However, if your vehicle has advanced safety features and a low claim rate in the recent past, the premiums might not be exorbitant.

Car insurance premiums also vary based on your demographics, location, driving record and the type of car you drive. Comparing quotes from multiple providers is the easiest way to tell how much it might cost you to insure your new vehicle.

Getting car insurance after moving to the U.S

Immigrants and foreign nationals can be classified as new drivers when they first enter the U.S. This is because auto insurance companies usually check domestic driving records, so you can have a clean driving record in another country and still be considered an inexperienced driver after moving to the States.

Being an immigrant can make it harder to purchase car insurance. Many car insurance companies will reject applicants who don’t have valid driver’s licenses. Depending on where you live, you may still be able to get a license if you don’t have the proper government paperwork.

According to the National Conference of State Legislatures, the District of Columbia and the 16 states below allow undocumented immigrants to obtain a driver’s licenses if they can produce items like a foreign birth certificate, valid foreign passport or proof of residency in the state.

How long do you plan on owning the car?

If you want to own the car awhile, a newer car might make sense. This way, you can avoid any expensive maintenance. If there is still a warranty on it, that’s even better. However, a new car suffers from immediate depreciation, so a new-to-you car is a smart idea because it can save you about 20% off the brand new price.

Visit Ratehub.ca’s car buying guide: How to buy a car

Q: So, What Other Factors Really Impact A Drivers Car Insurance Rates?

A: Auto insurance underwriters factor in vehicle usage, driving history and claim history. They may also consider an individual’s age, marital status and gender (although some states don’t allow insurance companies to use these factors.) Younger drivers typically have more expensive insurance rates because statistically they’re more likely to file a claim. (See also: What Determines the Price of My Auto Insurance?

What car has the highest insurance rate?

The Tesla Model S Performance is the most expensive car to insure among top-selling 2021 vehicle models. … The Most Expensive Cars to Insure.

Vehicle Average Annual Premium
Dodge Ram 1500 Rebel $2,015
Lexus RX 350 $2,105
Nissan Altima 2.0 S $2,130

• Jan 11, 2022

Which car has the cheapest insurance? Cheapest cars to insure among popular models

Rank Average annual insurance premium Starting MSRP
1. Subaru Outback $1,392 $26,645
2. Jeep Wrangler $1,416 $28,295
3. Honda CR-V $1,439 $25,050
4. Subaru Forester $1,465 $24,495

What color of car statistically has the lowest crash rates?

We’ve referenced the safest color car on the road. That color is white. White cars are 12 percent less likely to be involved in an accident than black cars at any time of the day under any conditions.

When should you drop full coverage on your car? A good rule of thumb is that when your annual full-coverage payment equals 10% of your car’s value, it’s time to drop the coverage. You have a big emergency fund. If you don’t have any savings, car damage might leave you in a severe bind.

Why is auto insurance for new cars so expensive? Whats the bottom line?

You can choose to purchase liability-only coverage to keep your costs down (though this isn’t recommended), as long as you meet the minimum requirement set by your state. However, if you financed the vehicle, you might be required to purchase collision and comprehensive coverage under the terms of your loan. If so, you’ll find that these two coverage types are often the most expensive part of auto insurance because they pay for damages.

If you are ready to buy auto insurance for your new car, find the most affordable auto insurance rate based on the make, model, and year of your car by entering your ZIP code into our free tool today.

How much does new car insurance cost?

Newer cars are generally more expensive to insure than old ones, particularly if you carry comprehensive and collision insurance, as they are worth more and are therefore more expensive to replace. However, car manufacturers continually add new safety features — such as lane assist, backup cameras and blind-spot warning — which can make driving a new car safer and thus cheaper to insure.

In our research, we found a slight difference in monthly premiums between brand-new and 4-year-old cars of the same make and model. The 4-year-old model was about 5% cheaper to insure overall. Your own insurance quote will depend on the car you choose, the vehicle’s features and the coverages you select.

The best way for drivers to get the best deals on car insurance for a new car is to shop around for the cheapest rates. We found a much bigger price range between insurers than we did among different car ages. So when you’re shopping for cars, collect a few quotes online or call your insurance agent and have them pull quotes for you as part of your research. In particular, drivers looking to save money on insurance for a new automobile should look for discounts for their car’s safety add-ons.

For example, if your car is equipped with features such as advanced collision detection or anti-lock brakes, some insurers may give you a significant discount.

Drop Full Coverage on Older Vehicles

Many drivers drop full coverage on older vehicles because it’s no longer worth it. If your vehicle is only worth $3,000, then your insurance company will only pay you a maximum of $3,000 (minus your deductible) after an accident. Dropping full coverage could cut car insurance premiums in half, which is why many drivers drop full coverage on older vehicles to save money.

On a newer vehicle, you have more to lose by dropping full coverage. Your vehicle might be worth $30,000, which means it’s worth it to have full coverage car insurance. In fact, you may require full coverage car insurance if leasing or financing your vehicle.

Because people tend to have full coverage car insurance on new vehicles and only minimum liability insurance on older vehicles, insurance on old vehicles tends to be much cheaper than insurance on new vehicles.

How much is insurance for a new car?

Usually, getting a new car will increase your rate because it’ll be worth more than your old car. But the exact difference in cost will vary greatly based on the:

  • Model year
  • Make and model
  • Title and damage history
  • Amount of coverage purchased

Note that other factors may impact your rate if you’re starting a brand-new policy. But even if your rate increases, you may be eligible for a few discounts, including the smart vehicle discount for automatic emergency braking (AEB).* Just get a quote online or call, and we’ll show you which discounts you qualify for.

Should I get an insurance quote on a new car before I buy it?

Absolutely. You want to know how your new purchase will affect your insurance rate in advance. Even if you don’t have a policy with us, you can get a quote online or call 1-866-749-7436. We’re happy to provide a free quote on whatever car you have your eye on.

Am I covered by dealer insurance?

No. Dealer insurance will normally cover test drives, but it won’t protect you once you buy the car.

Popularity among thieves

Sometimes it doesn’t matter if your car is new or used. Sometimes the factor that matters most is how popular the vehicle is among thieves. Insurance companies look at statistics on what types of vehicles are most commonly stolen in specific areas. For example, in El Paso, Texas, Ford F-150 trucks are the most stolen vehicle. Taking this into consideration, the cost to insure a used truck of this make and model can be even greater than the cost to insure a new Chevy Charger.MORE: 7 things to look for when buying a used car

What Happens If I Have a Lapse in Coverage?

Insurance Panda recommends that you do everything possible to avoid a lapse in auto insurance coverage. If you go beyond your insurance company’s grace period without coverage, the consequences could be severe. In the event of an accident, you wouldn’t have any coverage. Lack of coverage means that you would be personally responsible for paying for any damages that are your fault. You would also be subject to higher rates when you do continue your coverage. A lapse in coverage is a significant factor in determining the rate you pay for insurance. Customers with lapses in coverage are often classified as high-risk. Clients in the high-risk category usually have to pay higher premiums. On the other hand, if you have had five consecutive years of coverage, you may be able to pay up to $216 less than someone with lapses in coverage. Obtain insurance for your new car as soon as possible to continue your coverage.

How to transfer insurance to a new car

If you already have an auto insurance policy in place, it’s easy to transfer insurance coverage over to your new vehicle. Simply contact your insurance provider by telephone or log-in to your account online to make changes. Let your car insurance agent know you’d like to add a vehicle to your policy, sign off on the desired coverages, and you’re good to go.

How to switch insurance to your new car

New Progressive customers

If you’re currently insured with another insurance company, you can simply start a new policy with your new car. Get a car insurance quote online or call us at 1-866-749-7436.

Current Progressive customers

You won’t need to start a new policy. You can transfer your insurance or coverages to your new car, even while you’re at the dealership, by logging into your policy or calling 1-866-749-7436.

Tips for buying insurance for a new car

  • Know your VIN: Having your Vehicle Identification Number handy will help speed up the quoting process, and you won’t be able to purchase a policy without it.
  • Tell us what you use it for: You may need additional coverage if you use your car for ridesharing or business errands.
  • Add regular drivers: If family members will be driving your new car regularly, make sure to list them on your policy.

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