What to Know About Buying Insurance for a New Car

Don't wait to update your auto insurance.

April 3, 2026

When should you get auto coverage when buying a new car?

Most dealerships require that you have proof of insurance before driving the car. And if you’re taking out a loan, your lender may require that your car is covered before you take the wheel. In any case, you must have auto insurance to legally drive your new vehicle. So, get a car insurance policy before you drive the vehicle off the lot.

Auto insurance companies can more easily provide a quote if they have the car’s vehicle identification number (VIN). So, if you’re making a vehicle purchase and have a car in mind, ask the dealership for the car’s VIN. They want to make the sale, so they’ll be happy to give it to you. Many insurers let you buy a policy online or on an app. So, you might be able to buy a policy using your phone while at the dealership or speaking to a private seller.

If you already have an auto insurance policy, your insurance agent can update it to cover your new vehicle. Your rate, of course, will likely change. Many insurance companies have a grace period—such as one week or one month—for informing them about any changes.

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What happens if you wait to buy auto insurance?

If you have an accident in your new vehicle and it gets totaled before you buy insurance, you’ll need to pay for the full damages yourself.

Keep in mind that driving without auto insurance is a criminal offense. So, if you’re pulled over by the police and can’t provide proof of auto coverage, there will be a penalty. Depending on the state, you might pay a fine, get your driver’s license temporarily suspended, or even spend a few months in jail.

Your current auto policy may extend coverage to your new car, but that doesn’t mean you’ll have enough coverage. If you have an older sedan and upgrade to a new car and then total it, for example, you may not get the compensation you need when filing a claim.

How can I lower my auto insurance rates?

As you compare quotes, ask about available discounts. Many insurers offer a discount if your vehicle has safety features such as air bags, lane-departure warnings, and anti-theft devices. Insurance companies often offer bundling discounts, too. So buying your car and home insurance from the same company may reduce your cost.

Other factors like a clean driving record and choosing a higher deductible may also lower your insurance rates.

Also, think about which coverages you need. Liability coverage, which protects you if you hit someone else's vehicle, is legally required. It helps pay for property damage if you have an accident and hit another car or someone's mailbox. If you lease your vehicle or take out a car loan, your lender will likely require you have comprehensive and collision coverage.

New car replacement coverage isn't legally required, and it will raise your car insurance costs, but it might be worth it. Most new cars lose 20 percent of their value in the first year, according to Kelley Blue Book. If you total your car, new car replacement coverage will pay you enough to buy another new car.

What is gap insurance?

Gap insurance covers the difference between your car’s value and how much you owe on the loan.

Let’s say you buy a car, and the purchase price is $20,000. A while later, you have a crash and total it. The car has depreciated to $15,000, so you still owe $5,000. Gap coverage pays that $5,000 difference, so your loan goes back to zero.

If you’re financing a car, it’s usually a good idea to get gap insurance. If you can pay off the vehicle, however, you might not need gap insurance.

Does it make sense to get coverage for original equipment manufacturer parts?

Original equipment manufacturer (OEM) parts are replacement parts that are identical to the ones your car had when it was new. The manufacturer that designed your car makes them, so they fit your vehicle perfectly and function like original parts.

Another option is aftermarket parts made by a different manufacturer. They’re comparable to your car’s original parts but may not be identical. Aftermarket parts are usually cheaper, but they might not fit your car as well. Some also break down easier, although some aftermarket parts are good quality.

If you buy a brand-new vehicle, getting OEM parts coverage for at least three years is a good idea. If you’re leasing a vehicle, you should always choose OEM parts. If your leased vehicle does not have original parts when you return it, you may break your contract. You must then pay to have third-party parts replaced with OEM parts—and will likely pay a fee on top of that.