If you are getting ready to trade in your old used car for a brand-new one, you will need to contact your auto insurance company to change your policy. The new car you buy will affect your car insurance rates, but it might not affect it as much as you think. It really depends on the car you buy and the car you had before. Here are several things to understand about insuring a brand-new car.
It may cost more because it is worth more
The first thing to understand is that there is a good chance your rates may increase after making this change, simply because the new car you buy is probably worth a lot more than the used car you were driving. If this is the case, you should expect to pay more for your new policy. Insurance rates are based on a lot of factors, including the value of cars.
It may cost less because of the safety ratings
The second thing to know is that you might get a discount on the policy which could cause your rates to be less than the amount you were paying, and this is due to safety ratings. When vehicles have excellent safety ratings, insurance companies charge less for insurance for the vehicles. This occurs because insurance companies have a lower risk of people filing claims on vehicles with excellent safety ratings. If you want to save money on insurance, choose a car with great safety ratings.
You will need full coverage insurance and gap coverage
When you buy a new car, it is also important to know that you should carry full coverage insurance on the car as well as gap coverage. Full coverage protects you if you have a loan and end up totaling the car, and gap coverage kicks in and pays any deficit you may have after totaling a car. Both of these types of insurance coverages can cause a policy to increase.
Insurance companies also base rates on statistics
The other thing to know is that your insurance company will want to know the type of car you bought as soon as you call to make the changes, and this is because they base rates on a lot of statistical information they have about vehicles. A certain vehicle may cost more to insure because, statistically, it has a higher chance of being involved in an accident.
Whenever you get a new vehicle, you will need to adjust your personal auto insurance policy to reflect the changes you have in cars. To get a free quote, contact an insurance company today.