According to The Street, Whether you’re purchasing a new vehicle from a dealership or a private seller, securing car insurance is a necessity. Every state except New Hampshire mandates a minimum level of auto insurance for legal driving on public roads. If you’re financing or leasing your vehicle, your lender may impose additional insurance requirements.
Tips to Save on Car Insurance
While bundling policies, increasing deductibles, and seeking discounts are effective strategies for lowering insurance costs, choosing the right vehicle also plays a crucial role in determining your premiums.
The Impact of Your Vehicle Choice
Howard Goldberg, vice president of the customer solutions center for Plymouth Rock Assurance, notes that various pricing factors come into play with different insurance carriers. “The vehicle itself can be a key factor,” he explains. Unsurprisingly, high-end luxury or sports cars incur higher insurance costs. For instance, the Maserati Quattroporte Trofeo has an annual premium of $6,166, making it the most expensive car to insure, while the Honda HR-V is the cheapest at around $1,673 annually.
Moreover, even variations within the same model can affect insurance costs. Insure.com’s analysis found that high-tech safety features, such as anti-theft devices, can reduce auto insurance rates by approximately 9%.
Understanding Your Coverage Needs
Each state has its own minimum liability insurance requirements, which often fall short of providing adequate protection in the event of a serious accident. If you are financing or leasing a new car, lenders will require collision and comprehensive insurance.
- Collision Insurance: Covers damages to your vehicle in an at-fault accident.
- Comprehensive Insurance: Protects against damages from non-collision events like theft, vandalism, or natural disasters.
Lenders may also mandate gap insurance, which covers the difference between your car’s value and the remaining loan balance if your vehicle is totaled. While collision, comprehensive, and gap insurance are not legally required, they are essential for protecting your investment, especially for newer vehicles. Conversely, for older cars, maintaining only liability insurance may be a more financially sound choice.
Average Car Insurance Costs in the U.S.
Here are the average annual costs for car insurance based on Insure.com data:
- State Minimum Liability: $502
- Full Coverage (Liability, Collision, and Comprehensive): $1,897
- Gap Insurance: Typically 5% to 6% of your comprehensive and collision premium (generally under $60).
Shop Around for the Best Rates
Once you have determined your coverage needs, start shopping for car insurance. Even if the first quote seems appealing, it’s wise to obtain at least three or four quotes from different insurers. According to Insure.com, comparing quotes can save you as much as $3,000.
Adding Your New Vehicle to Your Policy
When you buy a new vehicle, adding it to your insurance policy is usually straightforward. You’ll need to provide your insurance carrier with the vehicle identification number (VIN). Insurers typically offer a grace period for transferring coverage between vehicles.
Also read: RECALL UPDATE: Hundreds of U.S. Schools Impacted by Listeria Contamination Food Recall
Goldberg advises, “In most cases, you are given a few days to transfer coverage from one vehicle to another.” While having this grace period is helpful, it’s best to ensure your new car is insured before driving it off the lot.
Tips for Saving on New Car Insurance
To save on your new car insurance, consider these strategies:
- Bundle Your Policies: Purchasing both home and auto insurance from the same company can save you up to 25%, depending on the carrier.
- Increase Your Deductible: Raising your deductible from $250 to $500 could lower premiums by about 8%, while increasing it to $1,000 may drop premiums by nearly 11%. Keep in mind that higher deductibles mean higher out-of-pocket costs when filing a claim.
- Look for Discounts: Many insurers offer a variety of discounts for maintaining a clean driving record, completing a defensive driving course, paying premiums in advance, opting for paperless billing, and discounts for military veterans. Savings can range from 5% to 25% or more, depending on the insurer and the discounts for which you qualify.
