Top 10 Tips for Insuring a New Car

Whether this is your first new car or your tenth, you probably already know that auto insurance is extremely important. Failing to insure your vehicle can lead to serious fines if your are caught, not to mention extraordinary liability should you get in an accident. But what's the best way to go about insuring a new car?

1. Shop Around

Even if you already have insurance through a particular agency, it never hurts to shop around before insuring a new car. Things might have changed since you last sought a quote, and different types of vehicles are treated differently depending on the carrier.

2. Consider Comparing Before Buying

If you're in the market for a new car, it might help to know how much it will cost to insure. According to Edmunds , there can be enormous differences based on make and model. So call around and ask about the type of vehicles you are considering.

3. Purchase Gap Insurance

One of the biggest mistakes people make when insuring a new car is failing to consider the difference between what the car is worth and the amount they actually owe on the loan. Before you take your new vehicle on a road trip, ask your insurance agent about gap insurance, which you can cancel when you no longer need it.

4. Ask About Features

The safety features you get with a new car are not always obvious, particularly if you aren't well-versed in auto lingo. Ask the dealership for a list of safety features that come with your car so you can supply that information to your insurance company. You'll get a better deal when insuring a new car if you can take advantage of safety discounts.

5. Know the Finance Company's Rules

When you finance a new car purchase, the lender will usually require a specific level of auto insurance on the vehicle. Learn those requirements and make sure the policy you purchase is adequate. Otherwise, you could be in big trouble with the bank.

6. Know the Insurance Company's Rules

Some insurance companies provide what they call "automatic coverage" for insuring a new car. In other words, if you already have a policy with them and you buy a new car, that vehicle is covered for a specific period of time (usually about 30 days). Others have no such policy. Make sure you know the rules so you don't drive the car off the lot with no coverage.

7. Talk to an Agent

A new car is a big investment. Rather than just buying a policy on the Internet, visit your insurance company and sit down to talk with your agent. Get his or her recommendations on the level of insurance you should have, then weigh that advice against your own experience, needs and budget.

8. Pay Up Front

It's true that most insurance companies allow you to pay for your policy in six monthly installments, but you can save money if you pay for it all up front. When insuring a new car, take advantage of that discount if you can afford to do so.

9. Reduce Other Insurance

Just because you're insuring a new car doesn't mean you're trading in or selling the old one. If you're going to hold on to older vehicles, consider lowering the insurance coverage for them. In most cases, an older vehicle isn't worth full comprehensive and collision coverage.

10. Go with Strong Insurance Companies

This is my particular preference, but there is solid reasoning behind it. If I'm insuring a new car, I want the peace of mind of knowing that the company will be able to handle any claim I'm forced to make. For this reason, I only work with companies that have excellent (and long) track records and a solid reputation.