Is Insurance Cheaper For a New Car?

Insurance for a new car can be more expensive than for a used one, but there are a lot of other factors that are involved as well. Here are the details!
Written by Amber Reed
Reviewed by Brittni Brinn
There are numerous factors that determine your
car insurance
rate, and the new or used status of your car is just one of them! Read on to learn more about the costs of insuring a new car, and some hints on how to get the best deal possible.
  • Factors such as a car’s age, make, and model all play a role in determining the cost of insurance, as well as things like the driver’s demographic and driving record.
  • Depending on whether you’re financing, leasing, or buying outright, there are different kinds of car insurance that you might be required to have for your new car. 
  • Discounts, increased deductibles, and comparison shopping are just a few of the ways that you can get the lowest rate possible on your car insurance.

Is auto insurance cheaper for a new car than a used car?

Unless we’re talking about a collector’s item or an ultra-rare vehicle, a new car almost always costs more to purchase than an old car. But when it comes to insurance, it’s not always that cut and dry! Your auto insurance rates are determined by a large number of factors, and the age of your car is only one of them.
In fact, your
driving record
is one of the single biggest factors that affect how much you’ll pay for your insurance policy, and that has nothing to do with the car you drive. Additionally, factors like your age, zip code, marital status, and credit score may play a part. But the particular car you’re insuring matters too—here are a few vehicle-related factors that definitely play a part in the cost of car insurance.

Vehicle factors that impact your car insurance costs

The make and model of your car can play a big role—and whether it’s a new or used car isn’t always a significant factor. Read on to take a look at some vehicle-related factors that impact your car insurance costs, no matter what year it is. 

Risk of theft

Theft is one of the events that’s covered as part of your
comprehensive coverage
, along with things like vandalism or storm damage. So it stands to reason that if a car is more likely to be stolen, car insurance companies charge more for a comprehensive policy. And while a fancy new luxury vehicle might seem like a prime target for theft, this isn’t always the case!
One of the most commonly stolen cars in the US is the popular
Honda Accord
—apparently, it’s a perennial favorite with buyers and thieves! Full-size
pickups are frequent targets as well, as is the humble
Toyota Camry
. Your ZIP code has a role too—if you live in an area with a high rate of car theft, then you’ll pay for your comprehensive coverage. 

Safety features

Your vehicle’s
safety ratings
also have an impact on your car insurance premiums! A new vehicle is more likely to have the latest driver assistance tech and safety features, meaning that you’re less likely to get involved in an accident.
Things like a vehicle's crash test results with the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) play a part as well. If you and your passengers are less likely to suffer bodily injury in an accident (which often results in costly medical bills), then your car insurance rates will be lower. 

Repair and replacement costs

If you have
collision coverage
, then your insurance covers damages to your vehicle that arise from any kind of collision, no matter who was at fault.
If you have a car that doesn’t cost much to repair, that’s great! But if we’re talking about a vehicle like a
or a
, the average cost of repairs is typically much higher. Insurance companies take the cost of repairs into account when determining the price of collision insurance for a vehicle, as they’ll be the ones that are paying for them (minus your
, of course).
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What car insurance do you need for a new car?

If you’re buying any car, then you know that you’re going to need coverage that meets the
minimum insurance requirements of your state
. This almost always includes basic
liability insurance
, and some states require additional coverage like
uninsured/underinsured motorist
or a
personal injury protection policy (PIP)
.  But when we’re talking about new car insurance, there are even more factors to consider! Here’s how it might break down depending on whether you’re financing, leasing, or buying outright. 

Financed vehicle

If you’re financing your new car through the dealership or another lender (like a bank or a
credit union
), then
full coverage car insurance
is almost always required for the duration of your loan. This includes your state minimum, plus comprehensive and collision insurance.
If you’ve borrowed a large amount of money and/or have made a small down payment,
gap insurance
might be required as well. Once your loan is paid off, you can drop full coverage if you choose to, and most lenders permit you to drop gap insurance once your loan balance is less than the
actual cash value
(ACV) of your car. 

Leased vehicle

If you’re leasing your new car, then the requirements are similar to those of a financed vehicle. You’ll be required to have full coverage insurance for the duration of your lease, and some lease providers require that you carry a higher amount of liability insurance as well. Gap insurance is generally required too, but it may be rolled into the lease—so make sure to see if it’s included before you add on any more coverage. 

Owned vehicle

If you’re buying your new car outright, then you’re only legally required to have whatever your state’s mandated minimum coverage is. However, only buying the bare minimum is not a wise idea—particularly with newer cars.
You’ve likely paid a good chunk of change for your new vehicle, and you’ll want to protect it with a full coverage policy! If you don’t, you could be out a significant amount of money in the event of a traffic accident or some other unexpected event.

How to find the cheapest car insurance rates for your new car

There are a lot of car insurance providers out there—and while this gives you a lot of choices, it can also make it hard to find the best car insurance for you. Here are just a few ways that you make sure you’re getting the best deal possible on the coverage you need, no matter what provider you choose. 

Ask about car insurance discounts

On the quest for
cheap car insurance
, discounts are your ally! Most car insurance companies offer a wide variety of
and taking advantage of as many as you’re eligible for can add up to some real savings.
Bundling your
homeowners insurance
with your car insurance is a commonly used tactic, and discounts are often rewarded for good grades or a spotless driving history. Many auto insurance companies don’t advertise a lot of their discounts, so make sure to ask potential insurance providers what discounts they offer!

Increase your deductible

Liability coverage
doesn’t have a deductible, but both collision and comprehensive coverage do. A deductible is the amount that you have to pay out-of-pocket before your insurance kicks in, and in most cases, it’s either $500 or $1,000.
Choosing a higher deductible means a lower cost for your policy, and it can be a good way to keep your premiums down. However, just make sure that your deductible isn’t so high that you couldn’t reasonably pay it if you needed to. Also keep in mind that loan and leasing companies will typically not allow deductibles higher than $1000 for comprehensive or collision coverage.

Comparison shop

Regular comparison shopping
is a tried-and-true method for getting a great deal on anything, and this includes car insurance! Every company uses a different algorithm when they’re figuring out their rates, and it’s vital to get multiple car insurance quotes to find the one that’s the best fit for you. In general, you should try to get at least three to five different quotes before purchasing a car insurance policy.

The bottom line

At the end of the day, car insurance for a new car is generally more expensive than a used one, because the vehicle itself is worth more. However, this may not always be the case!
There are a number of factors that go into determining the cost of an auto insurance policy, and the age of the vehicle is just one of them. A high-risk driver with a used car might pay more for their insurance than someone with a new car and a clean driving record. But no matter what kind of vehicle you have, comparison shopping is one of the best ways to get a good deal on your car insurance.
“I just financed a new car and knew my insurance premium was going to rise.
was well worth it to use. They helped me find a lower premium and canceled my old policy instantly when I was ready to switch!” —Meghana D.
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