What you need to know before insuring your new car

Finding the right insurance policy for your new set of wheels.

Driving home in your new set of wheels is one of the best feelings out there, but let’s not forget one little detail: car insurance. After all, to be legally road-worthy, every car must be covered by an insurance policy.

Here’s how to set up a policy for your new ride so that you can legally drive off the lot.

Here’s why you need car insurance — and how to save hundreds on a policy

Can I drive a new car without insurance?

The short answer is no. Driving any car without insurance is against the law.

Even if it weren’t against the law, you would be taking a huge risk. Without insurance coverage, you bear the full burden of property damage or bodily injury that results from an accident.

In fact, most dealerships require proof of car insurance before they’ll give you the keys to drive off the lot. To avoid last-minute paperwork hang-ups, call your insurance company to add your new vehicle to your existing policy, even if you’re buying your car on a weekend or after hours.

Or pick up coverage in advance if you’ve committed to a purchase but haven’t yet signed on the dotted line. You’ll need the vehicle’s VIN number, make and model when you call your agent.

Is my new car covered on my old insurance?

It depends on your insurance provider. Many insurance policies include a grace period for new vehicles under your original policy contract. Carefully read your policy so that you know whether yours covers a grace period for new vehicles and how long it’s good for.

A common grace period for new vehicles under an established policy is four days, and the coverage offered is typically equal to the greatest amount of coverage for any vehicle under your existing policy.

To avoid ending up without coverage when your grace period is up, add the new car to your existing policy as soon as possible.

Costs of insuring a new car

With so many variables, how much you’ll pay to insure your new wheels varies by car, payment and more.

New cars typically cost more to insure than older cars, but that’s assuming the new one is more valuable than the old one. For example, this year’s Hyundai Sonata is definitely cheaper to insure than a Ferrari from any model year. Even more than your car’s relative age, a vehicle’s value plays heavily into the cost of insuring it.

How you pay for your new car also affects insurance costs: If you aren’t beholden to a bank or dealership, you aren’t required to purchase a pricey comprehensive or full-coverage policy, although you might still want to consider it.

Length of policies on new vehicles

How long you’ll need to carry insurance on your new vehicle also depends on how you’re paying for it.

If you’re taking out an auto loan through a bank or dealership, the bank may require comprehensive coverage over the life of the loan — that is, until you pay it off in full. This requirement ensures that your lender gets its money back no matter what. Plus, it also protects you from getting stuck with a payment on a wrecked car.

If you’re buying the car with cash, you’ll need a policy that at least covers the minimum required by your state. Six-month term policies are common, allowing you to reassess your needs and costs twice a year.

Car insurance requirements vary by state. Learn what’s required in yours.

How to get an insurance policy for a new vehicle

Here are a few questions to ask when comparing providers and coverage to find the most affordable rate for your needs.

• Is the car used or new? New cars generally cost more to insure — and might be worth insuring at a higher level of coverage.
• How often do you drive? If you drive every day, paying for comprehensive coverage makes sense. The more you drive, the more likely an accident or incident could happen.
• Where do you park? Parking on the street, particularly in high-crime areas, means you’re more likely to need coverage for theft and hit-and-run damages.
• Are you under 25? Drivers under 25 years old are nearly always charged more for insurance coverage than older drivers.
• Is the car for business or private use? Having to cover other drivers in the vehicle or driving long distances for business both play into policy costs and coverage.
• Are you willing to pay more for peace of mind? It might be worth it to you to know you’re covered for natural disasters or other circumstances outside your control. More costly comprehensive coverage may be just what you’re after.

Bottom line

Once you’ve settled on the ride of your dreams, you’ll have the info you need to shop around for an insurance provider. Compare premiums and benefits to find the most comprehensive coverage you’re looking for at an affordable rate.