Can You Afford to Insure Your New Car?

Checking car insurance rates before you buy a car is an important part of calculating the real cost of owning a car. It can also help you choose between different cars, because the same person can pay very different prices to insure different makes and models.

When most people think about buying a car, they usually look at the sticker price and the monthly payment on a loan or lease. But insurance is also a monthly bill that you will pay as long as you own and drive the car. And, it can add several hundred dollars a month to your transportation expenses. 

Some Cars Cost More to Insure

Even similar cars may have vastly different costs to insure. One may cost two or three times more to insure than another. If you only find this out after you buy the car, you may be stuck paying more than you can really afford. Or you may find yourself needing to sell the car (usually at a loss!) because you can’t afford the insurance.

You might think that getting an electric vehicle will save you money, but the reality is, they often cost more to insure. For example, in my specific situation, a 2024 Honda CRV would cost me $117 per month to insure. A 2024 Tesla Model 3 would cost me $175 per month to insure. But I’ve got a long, clean driving history. I don’t drive much. And, I don’t live in a state with particularly high auto insurance rates. For a younger driver in a more expensive state, or someone with a claim on their history, the difference can be much larger. In addition to being electric vehicles, Teslas often have insurance costs similar to luxury vehicles. For me, I would have to weigh the cost of the car and the increased insurance to see if the money I save on gas would offset the other costs.

The cost of insurance depends on many factors, including the driver, the insurance coverage, and the vehicle’s characteristics. Of these three things, the car you choose is the one variable you can easily and safely change. Therefore, checking the insurance cost for each car you are thinking about is a smart way to control your total cost of car ownership.

Some People Cost More to Insure

Insurance companies look at your driving record, including accidents and tickets, and whether you have kept insurance in force in the past. They also consider your age and years of driving, your address, and sometimes your credit history, because these things are linked with claim risk in their data. This information has a big impact on the price. Unfortunately, these are not variables that you can typically control in the short term. 

What You Can Control about Your Car Insurance

Your Insurance Coverage

You have a little more control over the coverages that you choose. You’ll have to purchase at least as much coverage as the state minimum requirements, and you probably want more than minimum coverage. You’ll usually be required to carry both collision and comprehensive coverage if you have a loan. Comprehensive coverage pays for damage to your vehicle, either repairs or replacement. Beyond these requirements (and smart choices!), you can choose coverage levels, extra coverages like rental car reimbursement, and deductible levels. These will all impact your overall insurance cost.

What Car You Choose to Buy

What you do have more control over is the car you choose to drive. Insurance companies have different costs based on what they know about a vehicle. They study how often different models are in crashes, how badly they are damaged, how much they cost to repair or replace, and how often they are stolen. Cars that are expensive to fix or replace, are involved in more claims, or are popular with thieves usually cost more to insure. On the other hand, cars with strong safety ratings and good crash test results may qualify for lower rates or discounts. These cars are favored by insurers because they help protect the people inside and may reduce injuries.

If you compare insurance costs before you buy, you can build a more accurate budget. You will know not just what you will pay for the car, but also what you will pay to insure it every month and every year. That can help you decide whether a car really fits your income and other bills. It also may keep you from becoming “car poor” with a vehicle you love but cannot really afford. It can also help you compare two or three cars that you like. If one car costs a little more to buy but much less to insure, it may end up cheaper overall.

Checking early also gives you time to shop around among insurance companies. Different insurers use different formulas, so the same driver with the same car can see very different prices from one company to another. 

If you start before you are sitting in a dealership office, you can collect quotes from several companies and choose a combination of coverage and price that works best for you. You might also discover military car insurance discounts for things you already have or plan to do, like good grades for students, safe driver programs, or owning a car with specific safety features.

Steps to Picking a Car You Can Afford to Insure

Choosing the car that’s best for you involves many factors. But the following steps may help you get a rough framework of what you should consider:

Make a List of Potential Choices

The first step is to make a short list of cars you are thinking about. For each car, you will need basic details like the year, make, and model. If you are looking at a car already for sale, a listing will often include this information, and sometimes even the vehicle identification number, or VIN. 

The more specific you can be, the more accurate your insurance quote will be. Small changes in engines or trim levels can change repair costs and, therefore, the price of insurance. 

Gather Your Personal Documents

This is not an unfamiliar requirement for service members, families, and veterans. We are used to paperwork. Insurance companies will ask for your name, address, date of birth, and contact information. They will also need information about your driving record and any other drivers in your household. They may ask how many miles you expect to drive each year, whether you use the car for commuting, school, or business, and where the car will usually be parked. 

If you already have auto insurance, have your current policy on hand so you can match coverages and limits when you compare quotes, or share your existing declarations page with the agent.

Get Car Insurance Quotes

Once you have the needed information handy, reach out to at least a few insurance companies or comparison sites for quotes. You can go directly to insurers online, by phone, or through an agent, or use a comparison website. 

When you ask for quotes, try to keep your coverage choices the same each time. Use the same liability limits, deductibles, and extra coverage for each quote so you can truly compare the prices. Be sure to ask or click through any sections for discounts and answer those questions honestly, since they can lower your price.

If you already have insurance on another car, the easiest thing you can do is to contact your current company before you decide on a new car. Many insurers let you log in on a website or app. You can pretend to “replace” your current car with a different one by entering the relevant details. It will then show you what your new premium would be. You can try this with more than one possible car and write down the results. This will quickly show you which options raise your bill a lot and which ones keep it about the same or even lower it.

Review Your Pro-Con List

Once you have quotes, compare them carefully before you buy your car. Look not only at the total price, but also at what you are getting for that price, such as liability limits, comprehensive and collision coverage, and any extras included. 

If one car turns out to be much more expensive to insure than the others, think about whether that extra cost is worth it for you over the years you plan to own the car.

Make Your Purchase & Get It Insured

After you choose a car and an insurance company, you may need to set up the policy before you drive the car home. If you already have a car, your existing policy may cover you for a short period (often 7–30 days) until you get a new policy in place. You will likely also need to show proof of insurance when you register the car.

When you are ready to buy, call or go online to your chosen insurer, confirm the final details for the exact car you selected, and arrange for coverage to start on the day you pick it up. Doing the work ahead of time means this last step will be quick and smooth, and you can feel confident that your new car fits your budget, including the cost to insure it.