When you buy a car, does it have insurance?

You must buy car insurance when you purchase a new car. The national average cost of auto insurance is $118.91/mo.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 25, 2021

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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

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Things to Remember...

  • Auto insurance can protect you from being held liable for an accident
  • There are different types of auto insurance
  • Shopping around for the best rates is important

Insurance is a very important aspect of having a car and driving it around. Without it, you could not only face some serious penalties, but you also could be held liable for damages caused by an accident.

That’s why it is so important to ensure that you have the proper insurance on your new vehicle. It’s even more important to understand how to manage your auto insurance policy. Start comparing car insurance rates now by using our FREE quote tool above!

The Basics of Insurance

Auto insurance is meant to protect you from being liable in case of an accident. It can also cover repairs on your car or even replace it in the event of a total loss. The extent of your protection is laid out within your insurance policy.

Your insurance policy is considered a contract between you and the insurance company, and the insurance company will provide you coverage on your vehicle in exchange for your monthly payments, called premiums.

Instead of paying for costly repairs on your vehicle due to an accident, you would only be required to pay the deductible. A deductible is the amount of money you pay for repairs out of pocket before your insurance covers the rest.

The amount of your deductible also plays a part in the determination of the cost of your premium. The higher the deductible you pay, the lower your premium will be. It is always important, however, to know that you can afford the deductible beforehand.

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Types of Auto Insurance

There are many types of car insurance. Some are necessary and some are more of an option. These optional types of insurance act as a cushion in the event that you need more coverage.

What kind of car insurance you need varies from state to state, but all states require that you have some form of insurance or proof of financial responsibility.

Here’s a quick look at some different areas that make up basic auto coverage:

  • Bodily injury liability will pay out for injuries for anyone injured by your car. It will also payout for pain and suffering if the other party sues
  • Medical payments or personal injury protection (PIP) – will reimburse you for any lost wages while out of work and for in-home medical care that you receive
  • Property damage liability  will pay for damages caused to someone else’s vehicle or property
  • Collision coverage – will pay for any damages to your car in a collision or if the car is totaled, it will pay for a replacement
  • Comprehensive coverage will reimburse you for other damages caused by something other than an auto accident
  • Uninsured and underinsured motorist coverage this protects you if you are hit as a pedestrian by an uninsured or a hit-and-run driver

Here are some areas of additional coverage that you could also opt for:

  • Umbrella insurance – provides extra liability insurance that goes above and beyond your standard auto policy. This type of insurance is often purchased by those who have a substantial amount of assets to protect.
  • GAP insurance  will pay for any money owed on a loan in the event of an auto accident with a total loss. This is often purchased for newer vehicles.

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Ensuring Your Vehicle is Insured

When you buy a car, it doesn’t automatically have insurance on it. However, all dealerships require that you show them proof of insurance before driving off the lot.

Obtaining insurance quotes beforehand will help save you time at the dealership when it comes time to finalize your coverage.

Here are some key pieces of information to have on hand for the insurance company:

  • Your name
  • Policy number
  • Names and driver’s license numbers of additional drivers
  • Make and model
  • Year
  • VIN number
  • Odometer reading

The Importance of Shopping Around

Shopping around is important whether you currently have auto insurance or have never had it. A new car can mean a higher premium. You can save a significant amount of money by obtaining competitive quotes from different companies.

There are other ways to lower your premium as well. Here are some ways you can save even more money:

  • Complete a defensive driving course
  • Purchase your auto, life, and homeowners insurance from one insurance company
  • Install security devices on your vehicle
  • Pay your premium all at once

Car insurance may seem like an added expense, but in the event of a serious auto accident, you will be glad that you had the coverage to help protect you, your family, and your vehicle.

It’s not worth it to get caught without insurance. Start comparing auto insurance rates now by entering your ZIP code in our FREE quote tool below!

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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