Although it may be possible to buy a car without insurance, most dealerships require that you have coverage for your new car before you can hit the road.
All states require car insurance except Virginia, where you can opt out of it by paying a $500 fee. There are also exceptions in remote parts of Alaska. But in all other states, you must show proof of insurance before you can start driving. To be legally insured, your car insurance policy must meet the minimum car insurance requirements in your state.
Here’s what you need to know before you buy insurance for a new car.
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When do I need to buy insurance for my new car?
If you don’t currently have car insurance, you’ll need to buy a policy before you can drive your new car.
If you already have a policy, you can show your insurance card at the dealership as proof of coverage. This will allow you to buy a car, but you’ll still need to contact your insurance carrier about your new purchase. Most insurers offer a grace period of seven to 30 days to inform them of a new vehicle.
However, even if you have coverage, it’s wise to tell your insurance company that you plan to get a new car before you buy. Since new vehicles are generally worth more than older cars, your new car insurance premium will probably be more expensive. You’ll want to factor the increased premium into your budget ahead of time.
Another reason to talk with your insurance company before buying your car? The dealership may try to upsell you on various insurance and other financial products, such as gap insurance. It’s a good idea to already have an insurance policy you feel confident about so you won’t be persuaded to pay more for extras.
See what you could save on car insurance
Easily compare personalized rates to see how much switching car insurance could save you.
GET MY RATES
New car replacement coverage
If a crash totals your new car, or if it’s stolen, new car replacement insurance will pay to replace it with a vehicle of the same make, model and value.
If your new car is totaled in a covered incident, comprehensive and collision insurance will pay for the actual cash value of your vehicle, minus your deductible. However, because cars quickly lose their value after the time of purchase, your $30,000 car may only be worth $25,000 when you get into an accident.
Unlike comprehensive or collision insurance, which would pay only $25,000 minus your deductible, new car replacement coverage would pay for how much it costs to replace your vehicle with a new car of the same make and model minus your deductible.
How can I save on new car insurance?
The best way to make sure you get the best deal for your new car insurance policy is to shop around and compare quotes from multiple insurance companies. It’s also a good idea to shop around once a year and switch insurers if you find a more affordable option that still satisfies your coverage needs.
» MORE: Average cost of car insurance
Here are some ways you can lower your auto insurance bill:
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Increase your deductible. This is a guaranteed way to lower your rate, but only consider it if you know you can afford the higher amount if you need to file a claim.
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Bundle policies. You might save by combining your auto policy with another insurance policy under the same company, such as bundling home and auto insurance together.
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Ask about discounts. Insurers may offer discounts for things like having protective equipment in your car (like air bags or a burglar alarm), safe driving and taking safe driving courses. Military members and federal workers can often qualify for discounts, too.
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Build your credit. Many insurers use a credit-based insurance score to price rates, and drivers with poor credit tend to pay more for car insurance than those with good credit. You can build your credit by making on-time payments and keeping your credit card balances low. NerdWallet recommends staying under 10% of your total credit limit. Not all states allow insurers to use credit to price rates.
Buying a new car can be expensive, so make sure you don’t compromise the coverage you need just to save a few bucks, which would leave you underinsured. To stay under budget, shop for insurance quotes before you buy your new car to get the best picture of how much your new ride will cost, including insurance.