How does insurance work when buying a new car?

How does insurance work when buying a new car?

You don’t have to switch your insurance to your new car right off the bat. Since most insurers offer a grace period for updating your policy with your new vehicle, your dealer will typically just need proof of insurance before they throw you the keys. Even if you don’t have auto insurance, you can start a policy before buying your car if you know the vehicle identification number.

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).*Disclaimer 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 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.

Insurance requirements for purchasing a new car
Financed vehicle
Required coverages: Comprehensive and collision coverage are usually mandated by the financer. Your state will also require some minimum amount of liability coverage to pay for any injuries or damages you cause if you're at fault in an accident.

Other coverage options: You may also want loan/lease payoff coverage, also known as gap insurance. Loan/lease payoff coverage will pay the difference between what you owe on the vehicle and the actual value of your car if it’s totaled.

Leased vehicle
Required coverages: Comprehensive and collision coverages are usually required by the leasing company, and they may not allow you to choose a deductible over $1,000. You'll likely also need a higher liability coverage amount, typically at $100,000 per person and $300,000 per accident.

Other coverage options: Consider loan/lease payoff coverage in case you total your car before your lease ends. Some lease agreements may already include gap insurance, so check before you add it to your auto policy.

Owned vehicle (no lender or lienholder)
Required coverages: You only need what your state requires — typically a minimal amount of liability coverage.

Other coverage options: Consider adding comprehensive and collision on your paid-off vehicle. If you don't have physical damage coverage and your new car is stolen, vandalized, or damaged in an accident, you won’t get any money from your insurer.

For your convenience, we're available 24/7 to immediately add your new car to your existing policy or get you started if you’re a new customer.

Which new cars are the least expensive to insure?
The least expensive cars to insure are typically those with fewer and less costly claims. In the insurance world, claims are commonly known as losses, and the number of losses a particular car has can give you a rough idea of how much it will cost to insure.

The section below lists a few recent model-year SUVs (2015–2017) with the lowest average loss rates for bodily injury claims within their size class, based on data from the Insurance Institute for Highway Safety. Vehicles with a lower percentage will typically be cheaper to insure than those with a higher percentage, but bear in mind that the data doesn’t include actual insurance costs.**

Small SUVs

  • Subaru Forester 4dr 4WD with EyeSight: -52%
  • Honda CR-V 4dr/4WD: -50.5%
  • Subaru Forester 4dr 4WD: -31%

Large SUVs

  • Ford Expedition 4dr + 4WD: -32.5%
  • GMC Yukon 4dr 4WD: -27%
  • Toyota Sequoia 4dr 4WD: -25%

Source: Insurance Institute for Highway Safety — Highway Loss Data Institute (IIHS-HLDI).

**Data based on the frequency of bodily injury claims of all SUVs tracked by IIHS-HLDI within the same size class.

While not a direct cost comparison, the information above can help steer you in the right direction if you’re looking for a car that might save you more on insurance. But remember that insurers also look at other things, such as your car’s title and damage history, when determining your rate.

How long do I have to add a new car to my insurance policy?

When buying a new car, your insurance carrier will provide a grace period between seven to 30 days to update your policy with your new ride. For example, Progressive allows 30 days, which means if you have a claim within that period, your new car is still covered in the same way your previous vehicle was.

With Progressive, you have a 30-day grace period to add your new car.

Can you send immediate proof to the dealership?
Yes! We're here 24/7 and can send proof of insurance to the dealership so you can drive off the lot in your new car. Having proof of insurance is important because most dealerships won't let you drive away without it (often, your current insurance will be good enough).

What if I don’t have my lienholder information?
Ask your salesperson at the dealership. They’ll almost always have the information you'll need. If not, no worries—we won't need it to start immediate coverage. But, you'll need to provide the lienholder's name and address within two to three days of purchasing the policy or adding the new car to your existing one.

Do you offer new car replacement if I total my car right away?
Under your collision coverage, you’ll be covered for the fair market value of the vehicle. If you owe more than the vehicle is worth, you may want to purchase gap insurance (also called loan/lease payoff coverage), which will help pay the difference between the car's worth and what you owe on your loan.

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 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 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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