What You Should Know About Insurance When Buying a New Car

If you're purchasing a new vehicle, there are some important things to know about insurance.

Liz Froment | 

May 26, 2022 | 4 min read

Updated on March 25, 2026

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Navigating the car insurance process can feel tricky, but it's entirely doable and likely necessary. Here are some commonly asked questions about buying coverage.

• Do I need car insurance for a new car?
• How much does car insurance cost?
• When should I start shopping for car insurance?

Do I Need Car Insurance for a New Car?

In most cases, yes. Almost every state requires a minimum level of car insurance in place before you drive off the lot. The coverage generally specifies a minimum dollar amount for property damage, bodily injury, and death due to an accident. Your car insurance helps cover the cost of damages and medical bills if you're in an accident. You can always add more coverage to your car insurance plan, but you can't go below the minimums laid out in your state.  You can usually find your state's requirements on the department (DMV) or registry (RMV) of motor vehicles website. 

If you already have car insurance, contact your insurance representative and let them know you're buying a new car. You will still need a new policy for your new car, but since your insurer has all your information, it can speed up the process. 

Often, your existing proof of coverage is enough to satisfy dealers. Many insurers also allow for a grace period to switch your old policy to a new one. But make sure you update your policy to include your new car as soon as possible.

How Much Does Car Insurance Cost?

Experian reported that as of February 2026 the national average cost of car insurance in the U.S. was $2,290 annually or $191 per month. But there's not one set rate for car insurance. 

Here are a few factors that can impact the cost of your car insurance: 

• Driving record
• Location
• Age
• Car type
• Selected Coverage

In general, younger drivers tend to pay more for insurance due to their relative inexperience. New cars could also cost more to insure. 

Over time, there are ways to potentially lower your premium. For example, some insurers provide a "good driver" discount offering lower rates if you aren't in any accidents for a set period. Others may offer a discount if you bundle your home, renters, or car insurance together. You may also belong to an alumni group or club that works with a specific insurer offering lower rates.

So, as you dig into the process, call around and search online to see if you have options to lower your rates before you lock them in.

When Should I Start Shopping for Car Insurance?

If you don't currently have insurance, you'll want to get an idea of the expected costs before you buy the car. You may plan to pay your car insurance premium monthly, so it's helpful to get a general sense of the expense when you're planning your new car budget. For instance, it may turn out a car you had your eye on has much higher premiums than expected, potentially blowing your budget.

Once you've narrowed down the types of cars you want to buy, start shopping for insurance quotes. 

With most major insurance providers, you can go online and enter basic information about yourself and the car, including the make, model, year, and trim level, plus the type of coverage you want. From there, you'll get a list of quotes that can help you figure out the costs and your budget.

The good news is, unlike many other types of insurance, you can get car insurance very quickly — usually in less than a day. To get the process moving forward, your insurer will ask for more in-depth information to finalize your premium rate, including:

• Your car's vehicle identification number (VIN)
• The purchase price
• How you plan to use the vehicle 
• Your personal information, such as your license and address. This is also true for any other drivers in your household you want to insure
• The start of coverage date

With your coverage in place, you'll be able to focus on finalizing your car purchase.

Liz Froment

I love learning about money — deals, financing, and what to avoid. All that came in handy after my own extensive car search, where I put everything I learned about the financial side of things to use. That's where I can help you too. I want to give you tools to help you find the best vehicle that will fit your practical and financial needs.