Insurance for a New Car

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Insurance Tips For New Car Buyers

If you’re in the market for a new car, chances are you’ve probably heard more by now about anti-lock brakes and anti-skid stability control systems than you ever really wanted to know.  It’s also a sure bet that you’ve been learning a great deal about gas mileage statistics, interior packages, and acceleration capabilities of the vehicle your interested in. 

Certainly, it’s important to do as much research as possible when buying a new car.  This is an essential part of making sure you buy the vehicle that best suits your specific performance needs, style requirements, and budget constraints.

However, it’s very easy to get caught up in the heady research process of buying a new car and neglect to think about one of the most important parts of the actual transaction—making sure you get proper insurance for your new car. 

Keep in mind that before you ever drive off the dealer’s lot, you’ll be required to purchase your state’s legally required insurance for your vehicle. However, it is up to you to ensure you have adequate coverage to protect your new major transportation investment. Car insurance is a MUST.
Liability Levels For a New Car

First, you’ll want to determine what your state’s minimum legal requirements for auto insurance are.  California, for instance, requires drivers to maintain bodily injury and property damage liability insurance at the following minimum levels:

  • $15,000 for injury/death to one person
  • $30,000 for injury/death to more than one person
  • $5,000 for damage to property

This is, of course, just a starting point.  If you’ve just bought a new car, chances are you might have additional assets you want to protect in the event of an accident.  Insurance industry authorities suggest purchasing enough liability to comfortably cover your most important assets.  As an example, if you purchase merely the minimum $30,000 in bodily injury insurance but have $200,000 in assets, injury attorneys will be anxious to target $170,000 of your assets if their clients medical bill should exceed $30,000—not an uncommon scenario in this era of inflated medical costs.

Generally speaking, a prudent level for liability limits is $50,000 bodily injury liability for one person injured in an accident, $100,000 for all people injured in an accident and $25,000 in property damage liability (in industry shorthand: 50/100/25).  This rule tends to make even more sense when you take into account that about 50 percent of the automobiles operating on U.S. roads are worth more than $20,000.

Comprehensive and Collision Coverage For a New Car

It’s up to you to determine how much additional insurance you want to buy for your new car.  Generally speaking, the more expensive your vehicle, the more insurance you’re going to want to purchase.  And of course, a new car will always be retain more value than a similar model that’s several years old and is hence worth ensuring more heavily.  Besides the price tag, you’ll want to take into account several other factors in determining how much insurance to buy:

  • Length of commute: The more you drive, the more likely an accident becomes.
  • Safety of your commute route: Do you regularly navigate vicious freeway traffic?  You might consider purchasing more insurance.
  • Crime rate of your neighborhood and workplace: If you car is at high risk of theft, you should protect yourself.
  • Your own driving record: Are you accident prone?  Then it makes sense to compensate for this risk as well.

Assess Your Risk and Get Covered

In the end, there’s no set formula for determining the optimum amount of insurance coverage for a new vehicle.  It’s up to you to properly assess the risks you’re willing to take with your investment.  After that, you can enjoy your great looking new wheels secure in the knowledge that you’re well-protected both physically and financially.