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How a New Car Affects Your Insurance Rates

person with tablet shopping for new car with insurance

If you bought a new car, you might be worried about the effect on your auto insurance rates. Will the price automatically go up? And is the new car going to be more expensive to insure?

Read on to answer your questions and understand how a new car can affect your automobile insurance rates.

Understanding Your Grace Period

If you recently bought a new vehicle to replace your old one, you should have some existing car insurance coverage. When it comes to your new vehicle, it’s essential to understand how the grace period works.

While this policy varies from company to company, most insurance carriers will offer a grace period (typically no longer than 30 days) where your existing coverage protects your new vehicle. After it ends, you need to get a new policy for it.

It’s up to your insurance carrier to determine how long the grace period is or whether there will even be one. Be sure to contact your carrier with any questions you have about the grace period.

Are New Cars More Expensive to Insure?

The answer is “yes and no.” That is because many different factors can affect your insurance premium. And while a new car does not automatically require more expensive insurance, certain makes and models of vehicles may end up costing more to insure.

For example, your insurance company will examine statistics to determine if your car’s make and model are prone to theft. If so, your insurance will likely be higher than if you were driving a different vehicle.

Additionally, the insurance carrier will consider the vehicle safety record as well as installed safety features. A poor safety record and no safety features may result in a higher premium, while the opposite may ultimately lower your rates.

Finally, the insurance company will consider the cost of repairing or replacing your new car. This is why expensive sports cars are pricier to insure; they are more likely to get stolen and require costly parts for repairs.

Factors Affecting Insurance Premium

We have covered the primary factors affecting the cost of insuring your new vehicle. However, there are a few other factors that you should be aware of that impact your monthly insurance premium regardless of whether you have a new car or not.

couple in kitchen looking at car insurance bills in their kitchen

The types of coverage you get and the limits you select affect how much you pay. Someone paying only liability insurance (which can be dangerous) will always pay less than someone with comprehensive insurance. And lower coverage limits will always result in lower premiums than higher limits.

Your age and your credit are factors affecting the insurance cost. The carrier will also examine your driving record and how much you regularly drive. In some cases, a safe driving record can help you lower your premium.

The Right Time to Shop Around

If you already have car insurance, then you may be tempted to stick with the same carrier once you buy a new car. However, if you really want the lowest possible insurance premium, this is the perfect time to shop around and get quotes from different insurance carriers so you can save money.

Why shop around? For one thing, switching carriers remains the best way to lower your premium. While you can ask your existing carrier about discounts and bundles, finding a better deal from a new company will almost always save you more money.

On top of that, you are likely to get very different quotes when insuring a brand new car. In short, the only way to know if your current car insurance rates are fair is to compare and shop around.

Also, make sure you ask different carriers about similar types of coverage, limits, and deductibles. That means determining ahead of time whether you need special insurance to protect your new vehicle.

Consider New Car Replacement and Gap Insurance

Once you buy a new car, you will want to prioritize keeping it safe. Consider purchasing new car replacement insurance or gap insurance for the vehicle to offer your car maximum protection.

Gap insurance is designed for those who are still paying their car loan off or leasing a vehicle. In the event that your car is completely totaled in a wreck, gap insurance will pay for the “gap” between how much the vehicle is worth and how much you owe on it.

New car replacement goes a step further and will pay for you to get a replacement car equivalent to the one you had before. While these optional types of insurance will increase your insurance premium, they also offer the best possible protection for your new vehicle.

Get the Best Insurance for Your New Car

Now you know the truth about insuring your new car, it’s time to find the best coverage for your needs at a great price.

USAgencies specializes in protecting you and your car in Alabama and Louisiana. If you’re ready to get quality coverage, start your car insurance quote online, give us a call at 800-420-3712, or visit us at the nearest office.