How to Choose the Best Auto Insurance When Buying a New Car

Buying a new car is exciting but before you drive it off the lot, you need to make sure it’s properly insured. Whether you’re financing, leasing, or paying in full, auto insurance isn’t just a legal requirement it’s your financial safety net.

Choosing the right policy can feel overwhelming, especially with so many options and price differences. This guide will walk you through exactly how to pick the best auto insurance when buying a new car, from understanding coverage types to comparing quotes the smart way.

Understand What’s Required (And What’s Optional)

Every state in the U.S. has its own minimum auto insurance requirements, but liability coverage is mandatory almost everywhere. That said, meeting the minimum legal requirement isn’t always enough to protect you.

Required: Liability Coverage

This pays for damages you cause to others (their vehicle, property, or medical bills) in an accident. It doesn’t cover your own car.

Bodily injury liability: Covers injury to others
Property damage liability: Covers damage to other people’s property

Typical minimum limits might be $25,000/$50,000/$25,000, but this is often not enough if you cause a major accident.

Tip: Consider increasing your limits to at least 100/300/100 ($100,000 per person, $300,000 per accident for injuries, and $100,000 for property damage).

Optional (But Recommended) Coverage

Here’s where new car owners should pay attention:

Collision coverage: Pays to repair or replace your car after a crash
Comprehensive coverage: Covers theft, vandalism, weather damage, and falling objects
Uninsured/Underinsured motorist: Protects you if another driver has too little or no insurance
Gap insurance: Pays the difference between your car’s value and what you owe on your loan or lease
Rental reimbursement: Covers the cost of a rental car while yours is in the shop

If your car is leased or financed, collision and comprehensive are usually required by the lender.

Consider Your Driving Habits and Risk Profile

Insurance isn’t one-size-fits-all. Your driving needs and financial situation should guide your policy choices.

Key Factors to Think About:

Do you drive long distances daily? Consider full coverage and roadside assistance.
Is your new car a target for theft? Add comprehensive coverage.
Do you live in a high-risk area for weather or accidents? Increase liability and consider higher protection limits.
Can you afford a higher deductible? Raising your deductible can lower your monthly premium but make sure you can pay it out of pocket after a crash.

How to Compare Quotes Like a Pro

Shopping around is one of the best ways to save money. But comparing auto insurance quotes isn’t just about picking the cheapest premium.

What to Compare:

Coverage levels (liability, collision, comprehensive)
Deductibles (lower deductibles = higher premiums and vice versa)
Discounts (safe driver, student, new customer, multi-policy)
Customer reviews and claims satisfaction
Financial strength of the insurer (look at AM Best or J.D. Power ratings)

Example:
You may find one company offers a $120/month premium with a $500 deductible, while another offers $110/month with a $1,000 deductible. That $10 savings may not be worth it if you’d struggle to pay a higher deductible after an accident.

Use tools like Policygenius, NerdWallet, or The Zebra to get side-by-side comparisons from multiple insurers.

Bundle with Home Insurance to Save More

If you’re a homeowner, bundling your auto insurance with your home insurance can unlock significant savings sometimes up to 25% off both policies.

Benefits of Bundling:

One deductible for claims that affect both your car and home (like a garage fire)
Easier account management with a single insurer
Loyalty discounts and perks
Better chances of staying covered with the same provider over time

Top insurers for bundling in 2025:

State Farm – Generous discounts and strong customer service
Allstate – Wide range of bundling options and online tools
Progressive – Competitive rates and multi-policy savings

Ask your current home insurance provider if they offer auto insurance and what bundling discounts are available.

Quick Checklist Before You Drive Off the Lot

Here’s what to have ready when buying your new car:

Compare at least 3 quotes with the same coverage levels
Know your state’s minimum insurance requirements
Decide on your deductible and whether to add gap insurance
Call your insurer to activate coverage before or at the time of purchase
Request your proof of insurance to show at the dealership

Final Tip: The best policy is the one that protects your wallet and your peace of mind not just the cheapest one. Think long-term, and consider your personal risk tolerance when choosing coverage.

Up next: Best Car Insurance Companies for Homeowners in 2025