Posted: 01/24/2011 - 2:12 PM ET
Insuring a New Car
Purchasing a new car can be incredibly exciting, especially when you've only ever driven used cars. There's a reason, after all, that hands-on car washes and auto detailers offer "new car smell" as a scent option. Before you and your precious new ride leave the lot, however, it's important that you get your car insured. In fact, we recommend that you handle insurance before you even sign the purchase contract.
While we know you want to find cheap car insurance for your new car, we want to remind you of a couple of things:
- New cars come with new premiums. If your previous vehicle was much older, a new vehicle with more technology and a higher blue book value - as well as being a greater temptation to would-be thieves - may cause your auto insurance rates to increase.
- Financed cars require full coverage. If you're like most of us, and have to either lease or finance your new vehicle, you should know that your lease company or lender will probably require that you have comprehensive and collision coverage in addition to whatever combination of liability coverage, uninsured motorist coverage and personal injury protection (PIP) is required by law in your state of residence.
We suggest that you consult your insurance agent once you have an idea of what make and model of new car you plan to purchase, so that you can be certain that your budget will absorb the new cost of auto insurance, as well as your new car payment. Remember that with leased vehicles, you may also have to have gap insurance.
The other reason to have a chat with your existing car insurance company before you purchase a new vehicle is to make sure you're covered from the moment you leave the lot.
If you used your old car as a trade-in, many insurers will cover your new car for two weeks to a month, and some state laws require a longer buffer period than that - but not all do. If you are keeping your old car, or if your new car or truck is being purchased for business purposes, you may not have coverage at all. All auto insurance companies have different transfer and extension policies, so don't just assume you have coverage.
Even though it's likely that your new car will cost more to insure than your old car, there are still many insurance discounts that can help knock down that higher new-car premium.
Some of them are:
- A clean driving record (is your record clean?)
- Multiple-car discounts (if you're keeping your old vehicle).
- Safety features that go beyond the norm (OnStar, a backup camera, daytime running lights, extra airbags, Lo-Jack, or electronic stability control).
- Your time as a customer with your existing insurer, if you don't switch companies.
- Having excellent credit.
- Bundling your auto insurance and homeowners or life insurance with the same company.
- Completing a defensive driving class (NOT to erase a ticket).
New cars are wonderful for many reasons - they're more reliable, have newer technology, and often incorporate green design and construction even if they're not hybrids. Getting cheap car insurance for a new car is possible, but as with all auto insurance, the discount you don't get, is the one you don't ask for.