How to Transfer Insurance to a New Car
Key Takeaways:
When you buy a new car, you don’t have to automatically buy a new insurance policy. Most insurers allow you to transfer your existing policy to the new vehicle with the changes needed.Most insurance carriers offer a 7 to 30-day grace period when you purchase a new car allowing you time to update your policy. Check with your carrier to see what their time constraints are or what their policy includes.Keep in mind — buying a new car is the perfect time to reassess your car insurance coverage and get quotes for the best prices and discounts available.
When purchasing a new car, you need to insure it before driving. The question becomes should you transfer your existing insurance to a new car or should you cancel the existing policy and initiate a new one with possibly better pricing. The bottom line is you can do either.
To start, consider your current needs, including your existing policy terms and conditions, how much you’re paying per term (e.g., monthly, quarterly, or semi-annually), and how much deductible you have designated. Once you have that information, you can decide whether to stay with your current insurance carrier or look for a new insurance company.
Let’s take a look at both alternatives.
5 Steps to Transfer Insurance to a New Car
1. Contact your insurance provider.
A phone call to your insurance agent lets them know that you are buying a new car and are interested in a new car insurance transfer. Even before your new car purchase is complete and the ink has dried, you can have a new car policy in place when you drive off the lot.
2. Get an updated quote based on your new vehicle.
Once you have decided on a new car or truck, getting an updated quote is straightforward. In fact, finding out the cost sooner rather than later may help you determine if you want to do further research before committing to a new policy.
When requesting an updated quote, your insurance agent will need the following information:
Make and modelModel yearVehicle Identification Number (VIN)Safety featuresCollision warning or blind-spot detectionAnti-lock braking systemAnti-theft deviceGPS tracking systemAdaptive cruise controlLane departure warning systemAirbagsRearview camera
3. Examine your coverage needs.
Now is a great time to evaluate your coverage needs to see if they are appropriate for your new car or truck. As an example, you may want to review these things:
Your current deductible may be too high or low. Perhaps you had a high deductible when you took out your original policy to keep costs down, but now can afford more and would prefer a lower deductible.If you are financing your new vehicle, be sure you have coverage limits that meet their requirements. For most financing companies and banks, that means full coverage (which we explain in detail later).Consider purchasing gap insurance. In case of an accident where your car is totaled, this will help pay the difference between your car’s market value and what you owe on your remaining loan. This is often different and can be an unexpected burden at the worst possible time.
4. Ask about discounts.
Your insurance carrier has discounts that can improve the cost of your policy. Later in this article, we review some common discounts that you may qualify for and will save you money.
5. Initiate the transfer.
Once you have done an assessment and have decided to transfer with your existing insurance company, a call to your agent should get the job done. Be sure you understand the upfront costs which may be associated with your new car insurance.
4 Steps to Get a New Car Insurance Policy Quote
If this is your first vehicle or you want to explore insurance prices to save money, consider getting an online insurance quote with your specific information. Here are four steps to find the best price.
1. Gather your information.
Make and modelModel yearVehicle Identification Number (VIN)Personal information, including your personal demographics, whether you own or rent your home, annual salary, education level, and the names and information for all people to be listed on policy.
2. Visit an online marketplace that features a quote engine.
For example, einsurance.com offers online auto insurance quotes where you add your information to their quote engine and receive several offers for car insurance that can be easily compared.
3. Choose the coverage levels that are right for your new vehicle.
Based on your age of your car and if you paid cash or are financing your new vehicle, you have choices on the levels of coverage you want to secure.
4. Compare car insurance quotes.
Once you receive your quotes, it will be easy to compare costs. Be sure to include any discounts in the final analysis which may have to be provided by the individual insurance companies since they may differ.
What to Expect in Terms of Cost When Transfer Insurance to a New Car
Since your new car is probably worth more than your old car, there’s a good chance that the cost to insure your new vehicle will increase. It’s always a good idea to get a quote before you finalize your purchase to make sure there aren’t any surprises. Be sure the increased cost is within your budget before you commit to the sale.
As a gauge, the average cost of insurance is $1,771 per year for full coverage which is $148 per month although many things can change that number, including your choice of new vehicle, your driving record, and even the area of the country where you live.
A full-coverage policy will have coverage limits of 100/300/100. Coverage limits basically detail the maximum your insurance company will pay for an accident. Any additional funds will have to be paid by you.
You can decipher those numbers as follows:
Liability — Protects you if you or your car cause damage to someone else’s property or vehicle and will help cover the person’s medical costs up to the covered amount. It does not cover damage to your vehicle or your medical costs personally. While most states have minimum requirements on how much liability coverage a person needs, it’s always a good idea to carry more than your state recommends which can decrease your out-of-pocket costs in the event of an accident.Collision — Covers your vehicle if you are in an accident with another moving or non-moving object, vehicle, or person regardless of whose fault.Comprehensive — Protects your vehicle from things not covered by your liability or collision coverages, like theft or vandalism, severe weather, hitting an animal or a fire.
So, if you have 100/300/100 coverage, that means that you are covered with limits of $100,000 for liability, $300,000 for Collision, and $100,000 for Comprehensive.
You may have additional coverage options in your state including Uninsured and Underinsured Motorist coverage and Personal Injury Protection coverage, along with rental reimbursement, gap coverage, and towing coverage among others. This is where a solid relationship with a good insurance agent can be dividends in cost savings and good coverage.
State Laws vs. Your Insurance Carrier
Insurance is mandatory in most states while many carriers allow you time to transfer your insurance from an old car to a new car. Be sure before driving your new car that you are meeting state guidelines. Virginia and New Hampshire don’t have mandatory insurance but do require you to purchase a bond.
If you don’t know your state insurance requirements, you can find a comprehensive listing here. This also includes vintage cars, RVs, motorcycles, boats, and all-terrain vehicles, etc.
Understand the benefits of transferring insurance to your new car.
When you transfer insurance to a new car, you save time and money. If you have an established relationship with an outstanding insurance agent, it may be in your best interest to continue that business into the future.
They will also ensure that your insurance doesn’t lapse or that you will be driving without coverage for any amount of time.
Ways to Save Money on a New Car Policy
Car insurance is never inexpensive, and it always helps to find ways to decrease the costs when possible.
Saving Costs with Higher Insurance Deductibles
The higher the car insurance deductible you choose, the lower your premiums will be — sounds crazy, right?
You can choose a deductible anywhere from $0 to $1,000 and more, and the higher you go, the lower your costs. Deductibles work by offsetting the insurance carrier’s costs. For example, if you suffer $3,000 damage to your vehicle and have a $500 deductible, then you will pay the first $500 and your insurance will pay the additional $2,500 for a total of $3,000.
While the average annual deductible in the US is $500, keep in mind that it applies for each occurrence. So, if you have two accidents in a year, you will owe $1,000 make to repairs. Basically, the whole idea of deductibles is to keep people from filing unnecessary claims because they cost share with the insurer — so everyone has ‘skin in the game’.
The good news for you is by choosing a higher deductible, your premiums will be less. One note of caution — when choosing a big deductible, it’s always a good idea to keep that amount on hand (in savings or invested) so that it’s available if needed.
Always Ask About Discounts
Car insurance companies compete in a very hot market, so they are invested in keeping their customers long-term and encouraging them to insure everything in their lives with each of the company’s products. One way to entice customers and to keep them engaged is to offer discounts. While each company offers different choices, here are some of the most popular:
Multi-Policy Discounts — By insuring your car, home, and life, you are entitled to a discount.Driver Safety Discounts — These can be based on your exemplary driving record or being accident free, as well as by completing defensive driving courses (especially for seniors)Professional or Military Discounts — Many companies offer discounts if you are in the military or have a professional degree, such as doctor or attorney.Good Grades Discounts — If you have a student driver, good grades can mean as much as 5% to 25% with a B average.Payment-Related Discounts — Many companies offer discounts if you pay your entire premium in full at the beginning of the period. There are also discounts of 1%-2.5% to sign up for Auto Pay.Vehicle Safety Discounts — Today, vehicles have a lot of safety equipment standard and insurance companies are still awarding discounts for anti-theft equipment, anti-lock brakes, passive restraints, or daytime running lights.Use-Based Programs — Several companies, including Progressive (Snapshot) and Allstate (Drivewise) have on-board diagnostics readers that monitor your every move. Utilizing this type of gadget can earn you an average 6% discount but watch your braking habits.
Get a Fresh Quote on Your New Car
Whether you choose to transfer insurance to a new car or take a look around at current quotes through an insurance marketplace website, it’s important that you get the most cost effective coverage available.
The tools at einsurance.com allow you to compare car insurance quotes (as well as other types of insurance products, like health, life, business, and home), research state guidelines, and review financial services, like car and home loans. They also have a tool that allows you to directly compare insurance companies based on insurance type and your zip code.
Get a car insurance quote comparison today or call 855-372-7400 to talk with someone directly, and — enjoy your new car!
Kathryn has a background as a small business owner and currency trader. Kathryn also enjoyed a career as a Regional Director and COO in healthcare, specializing in operations, third-party insurance reimbursement, and revenue cycle management.
