Insuring New Car Models: Everything You Need to Know

Paying out of pocket for the replacement of a new car can be expensive — that’s why it’s important to get adequate insurance coverage to pay for damages after an accident.

Insurers consider various factors when calculating new car insurance costs, but make and model are among the most significant. Higher value vehicles have higher actual cash values (ACV). Insurers take on more risk when covering these vehicles because they will have to pay more in the event of total damage.

Generally, newer cars are about 20% more expensive to insure because they’re worth more than older vehicles.

• How to Insure Your New Car
• Which Coverage to Get
• Mistakes to Avoid
• Average Cost of Insurance
• Cost of Insurance for New Models
• Cheapest New Cars to Insure
• Most Expensive New Cars to Insure
• Insurance Payouts for New Cars

The type of coverage is one of the most critical factors you need to consider. Not only will it affect the cost of your policy, but it will also determine what your insurance covers.

In most cases, liability coverage that includes bodily injury and property damage is enough to meet state minimum requirements. But, it is usually doesn’t include enough coverage to repair or replace a new vehicle in the event of an accident.

Getting car insurance for a new car can be challenging, especially for first-time buyers. Certain blunders, such as not getting enough coverage or insuring within the grace period, could cause problems. MoneyGeek listed some of the most common missteps to avoid when insuring a new car.

New car insurance costs can be expensive because of the high value of new vehicles. For example, the average cost of full coverage car insurance is $1,424 per year. But, the average annual rate increases to $2,520 for expensive car models.

However, actual rates may vary depending on individualized factors, including your age, car make and model, location and driving history.

While new car insurance can be costly, there are ways to reduce the cost of car insurance. MoneyGeek recommends:

• Shopping around. When looking for the best and cheapest car insurance policy, shopping around and comparing prices can help. Insurance companies have different quotes and offers. Consider getting personalized quotes from at least three insurers.
• Looking for discounts. Insurance companies also offer significant discounts for various circumstances. Some insurers give discounts to cars with safety features. If you complete a defensive driving course, you may also get a discount.
• Choosing a higher deductible. If you want lower insurance premiums, you can opt for a higher deductible. However, keep in mind that raising your deductible means you'll have to pay more out-of-pocket if you file a claim.

While a new car can mean a newly bought car, it can also be synonymous with a recent model year car. The more current your car’s year, the more expensive it is to insure because it has a higher ACV.

For instance, the average cost of auto insurance for a 2005 Ford F-150 is $999 per year. A similar policy for a 2020 Ford F-150 costs $1,269, about 27% more to insure than an older model.

The cost of new car insurance also varies depending on the car’s make and model. For instance, the cheapest car to insure is the 2020 Subaru Forester ($1,150), and the most expensive is the 2020 Nissan GT-R ($3,096).

Auto insurance for a new car may vary depending on the model. New car models that are worth less money also tend to be cheaper to insure.

Based on MoneyGeek’s analysis, the cheapest new car models to insure are:

• Subaru Forester: $1,150 per year
• Honda CR-V: $1,172 per year

Driving a more expensive model can lead to higher insurance premiums. New car models that tend to be faster than other cars are also more expensive to cover because they’re seen as riskier to insure.

MoneyGeek evaluated average insurance premiums for different new car models and found that the most expensive to insure are:

• Nissan GT-R: $3,096 per year
• Audi R8: $2,963 per year

Newer car models, especially the most recent ones, are worth much more than older cars. However, there is no guarantee of a high payout in the event of a claim. Various factors could impact the value of your vehicle — one of these is depreciation.

Generally, a brand-new car’s value depreciates by 10% the moment you drive it off the lot. By the end of the first year, it can depreciate 20%.

Depreciation plays a key role in determining how much money you receive in an insurance payout. Given that insurance typically pays out ACV, which deducts the depreciation value from the pre-accident car value, you may not get a high payout after an accident.

MoneyGeek answered frequently asked questions about purchasing coverage for a new vehicle to help you find the best new car insurance.

To obtain the average costs per model year of the cars featured in this article, MoneyGeek sourced quotes for each model from Quadrant.