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Icon CheckLast updated: October 18, 2022

Best Auto Insurance for New Cars

Find the best insurance for a big purchase or lease.

Best Overall
State Farm Logo

State Farm pairs solid coverage with affordability. With its AM Best A++ financial strength rating, you can depend on its ability to pay out a claim.1

Best for Military
USAA Logo

USAA has a strong track record for auto insurance, with 100 years in the business. Active-duty military members, veterans, and their families benefit from competitive car insurance rates and exceptional customer service.

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Buying or leasing a new car is a great feeling. It’s more than just that new car smell (though that doesn’t hurt); new cars come with the latest safety and entertainment features. And unlike a used vehicle, a new car is fresh from a dealer’s lot with a clean maintenance history, so you won’t be hit with unexpected service needs right after you buy it.

Maybe you received the new car as a gift, or maybe you saved for years while driving used cars to afford your new one. Whatever the circumstances, you want to protect your new purchase, especially if you get into an at-fault accident. We’ll guide you through our recommendations for the best insurance provider for your new ride. Let’s begin finding the best car insurance for your new vehicle in terms of cost, claims process, customer satisfaction, and other factors.

Comparison of the Best New Car Insurance Companies

Insurer What it’s best for New car replacement coverage Gap coverage Better car replacement coverage Original parts coverage Full review
#1. State Farm Overall No Yes, if you financed your vehicle with a State Farm loan No No, but has a satisfaction guarantee for non-OEM (original equipment manufacturer) parts State Farm review
#2. USAA Military No Yes, if you financed your vehicle with a USAA loan Car replacement assistance, which adds 20% to the actual cash value of your car No USAA review
#3. Liberty Mutual Coverage options Yes, for 1 year or 15,000 miles Yes Yes, for 1 model year newer and 15,000 fewer miles than current vehicle Yes Liberty Mutual review
#4. Acceptance High-risk drivers No No No No N/A
#5. Farmers New car replacement Yes, for 2 years or 24,000 miles No No Yes, for vehicles up to 10 years old Coming Soon

Summary of the Best Auto Insurance for New Cars

  1. 1.

    Best Overall: State Farm

  2. 2.

    Best for Military: USAA

  3. 3.

    Best for Coverage Options: Liberty Mutual

  4. 4.

    Best for High-Risk Drivers: Acceptance Insurance

  5. 5.

    Best for New Car Replacement: Farmers

Detailed List of the Best Auto Insurance for New Cars

1. Best Overall - State Farm

What We Like Most:

  • Local agents
  • Rideshare insurance available
  • Discounts for having multiple cars

If you’re not sure where to look for insurance for your new car, State Farm is a great place to start. The company offers low auto insurance rates and excellent customer service — J.D. Power gave it a score of 847 out of 1,000 for customer satisfaction.2 There’s a reason State Farm is the largest auto insurer in the U.S.

ProsWho It's Best For
  • pro
    Drivers looking for good rates and discount options
  • pro
    Customers who financed their new car with State Farm loans
  • pro
    People who drive for a rideshare company like Lyft or Uber
  • pro
    People looking for exceptional rental and travel expenses coverage (State Farm covers up to $500 per incident)
ConsWho It's Not Best For
  • con
    Customers who financed their vehicles with separate lenders, as they are not eligible for gap coverage
  • con
    Drivers who want to purchase new or better car replacement coverage, as State Farm does not offer this type of coverage
  • con
    Drivers in Massachusetts and Rhode Island, where State Farm no longer sells new policies

Lower Monthly Premiums

When you’ve taken on the expense of a new car, you’ll want to save on auto insurance costs. State Farm offers some of the lowest rates on the market without compromising quality. In addition to baseline low rates, State Farm offers discounts for newer vehicles.

New cars have improved safety features, which can decrease the risk of injuries and damages in an accident. For this reason, you can get discounts for owning a new vehicle. You’ll save money if your new car has any of the following features:

  • A high vehicle safety rating
  • Factory-installed airbags or another passive restraint system (which will get you up to 40 percent off medical-related coverage)
  • An alarm or similar approved anti-theft mechanism

State Farm also offers an array of bundling options, so you’ll save money by combining your auto insurance with your life, home, condo, or renters insurance.

Payoff Protection

If you financed your new car with a loan from State Farm Bank, you’ll automatically receive Payoff Protector, State Farm’s alternative to gap insurance. Because new cars depreciate quickly, the amount you owe on your vehicle might be less than what it’s worth. In the event of a total loss, State Farm will cancel any remaining outstanding principal on your loan after the insurance payout. Like regular gap insurance, however, Payoff Protector doesn’t cover loan interest, fees, or late charges.

Options for Rideshare Drivers

If you bought your new car with the intention of making side cash by driving for Lyft or Uber, State Farm is a good choice for your insurance. State Farm’s rideshare insurance extends the coverage you carry on your personal policy, providing added protection beyond what states require Lyft and Uber to offer.

Rideshare companies only offer liability insurance, and only when you’ve matched with a rider or have a rider in your car. That means if you get into an accident while you’re waiting to match with a rider or driving to a rider, you won’t be covered. Even in a covered accident, liability coverage does not extend to your own vehicle and limits may vary. With State Farm, the coverages you choose for your personal policy will protect you when rideshare coverage doesn’t.

In the event of a claim, you’ll deal directly with State Farm rather than a partner company. Your deductible won’t increase if you add rideshare coverage, but expect your premiums to rise by 15 to 20 percent. If you plan to use your vehicle primarily for rideshare driving, check out our roundup of the best car insurance for rideshares.

2. Best for Military - USAA

What We Like Most:

  • Lowest rates for military members, veterans, and their families
  • Rideshare insurance available
  • Usage-based insurance available for low-mileage drivers

USAA offers financial services to military members both past and present, as well as their families. The company is known for its competitive rates and top-notch customer service. If you’re affiliated with the military, USAA is a great choice for protecting your new vehicle.

ProsWho It's Best For
  • pro
    Customers who want the option to replace their totaled cars with upgraded vehicles
  • pro
    Members who financed their new vehicles with USAA car loans
  • pro
    Drivers who bought their new vehicles within the last three years
  • pro
    People looking for a company with a reputation for customer satisfaction (USAA received a satisfaction rating of 884 from J.D. Power, well above the overall 835 rating for other providers)
ConsWho It's Not Best For
  • con
    Anyone who’s not affiliated with the U.S. military
  • con
    Customers who want to purchase conventional new car replacement coverage
  • con
    Drivers of leased vehicles, as they are not eligible for gap protection

Car Replacement Assistance

Although USAA does not offer new car replacement coverage, it does have something similar — car replacement assistance. If your car is totaled, this optional coverage will add 20 percent to the actual cash value (ACV) of your car when you receive your insurance payout. For example, if your car was worth $20,000 at the time of the accident, USAA will pay you $24,000. If you own your car outright, this coverage can help you buy a new vehicle in the event of a total loss.

DID YOU KNOW?

After five years, the average vehicle will be worth about 40 percent of its original sticker price.3

If you financed your vehicle, either through USAA or another lender, car replacement assistance serves as gap insurance. The difference is that gap insurance will cover the difference between what you owe on the car and its worth, while car replacement assistance will add 20 percent to your car’s ACV, whether that’s higher or lower than the loan difference.

To buy car replacement assistance coverage, you must carry collision and comprehensive coverage, and your vehicle cannot be leased. If you choose USAA and drive a leased vehicle, you will need to purchase gap insurance through your dealer (which can be expensive) or through a stand-alone gap insurance provider.

Benefits for USAA Auto Financing

If you financed your new car with a USAA loan, you have the option to purchase Total Loss Protection, which also functions like gap insurance. Total Loss Protection pays for the difference between what you owe on a loan and what your car is worth, up to $50,000. Unlike most other forms of gap coverage, Total Loss Protection pays for your collision or comprehensive deductible as well, for up to $1,000.

Total Loss Protection will not pay for a new vehicle if your car is totaled, but it will give you peace of mind that regardless of how much your new car depreciates after you buy it, you won’t be on the hook for your loan in the event of a total loss.

Additionally, if you haven’t purchased your vehicle yet, USAA offers competitive auto loans. Its new car loan APRs start at 3.19 percent, which is less than the average interest rate for a new vehicle of 4.07 percent, according to Experian.4

Discount for New Vehicles

USAA offers a special discount for new vehicles. To qualify, your vehicle must be less than three years old. Though USAA doesn’t disclose the exact amount of the discount, your agent should apply it to your policy automatically. The discount isn’t available in Puerto Rico.

3. Best for Coverage Options - Liberty Mutual

What We Like Most:

  • Save up to 30 percent with driver monitoring program
  • Cheap average rates
  • Over 2,000 local agents throughout the U.S.

With several coverage options that benefit new car owners specifically, Liberty Mutual is a solid option for protecting your new ride. The company offers several ways to protect yourself from the costs of depreciation that are common with new cars. Customize your policy based on your circumstances and needs.

ProsWho It's Best For
  • pro
    Drivers who want the assurance of new car replacement coverage
  • pro
    People who financed or leased their vehicles and want gap insurance
  • pro
    Customers who bought new vehicles more than a year ago and would benefit from replacement coverage for a better car
  • pro
    People who want coverage that ensures a mechanic will repair their vehicle with OEM parts, rather than aftermarket parts
ConsWho It's Not Best For
  • con
    People who prioritize customer satisfaction, as Liberty Mutual does not have the best record (according to the National Association of Insurance Commissioners, the company receives more than twice as many consumer complaints as expected for a company of its size5)
  • con
    Teen drivers and their families, who can find lower rates elsewhere

New Car Replacement

Because new cars depreciate after you drive them off the lot, your car’s worth might be less than what you paid even a few months after you bought it. In the event of a total loss, your insurance payout will equal the ACV of your vehicle at the time of the incident. This might not be enough money to pay for a new vehicle. That’s where new car replacement coverage comes in.

Here’s how it works:

  1. If your new vehicle is stolen or totaled, Liberty Mutual will pay you the amount it costs to buy a brand new vehicle of the same make and model, regardless of depreciation.
  2. If you owe money on a loan for your vehicle, you’ll continue to make payments with no change to the amount you owe, and you will receive a new replacement vehicle.

To be eligible for Liberty Mutual’s new car replacement coverage, your vehicle must meet the following requirements:

  • Less than a year old
  • Fewer than 15,000 miles
  • Not on a lease
  • Comprehensive and collision coverage
  • No previous owners

If you don’t meet these requirements, look into gap coverage or better car replacement instead.

Gap Coverage

If you financed or leased your new vehicle, you’ll be on the hook for the full value of the loan or lease in the event of a total loss. Gap coverage pays for the difference between what you owe and the car’s worth (minus your deductible, for collision or comprehensive claims). Depending on your circumstances, gap coverage could save you thousands of dollars during a stressful time.

Many institutions require you purchase gap coverage for your financed vehicle. It’s much less expensive to purchase gap coverage from your insurance provider than from the dealer, but not every company offers this coverage. Since Liberty Mutual does, it’s a good option for new car owners who financed or leased their vehicles.

TIP

Consider gap coverage if you financed your car for 60 months (five years) or more, or if you put down less than 20 percent when you financed the vehicle.

Better Car Replacement

Liberty Mutual’s better car replacement coverage is similar to its new car replacement, but with wider eligibility. As long as your vehicle is not leased, you can purchase this coverage. It’s a good option if you purchased your new car more than a year ago.

In the event of a total loss, Liberty Mutual will give you money to buy a replacement vehicle that is one model year newer and has 15,000 fewer miles than the one you had. So, if your car is stolen or totaled, you’ll get a vehicle upgrade. That can save you money, especially considering elevated costs of vehicles due to the new car shortage.

4. Best for High-Risk Drivers - Acceptance Insurance
acceptance insurance logo

What We Like Most:

  • Accepts high-risk drivers
  • Bundle with renters', homeowners', or pet insurance
  • Good for those with bad credit

Nothing puts a damper on a new car like not being able to insure it. If you have a DUI, bad credit, or something else that may cause standard insurers to turn you away for being a high-risk driver, Acceptance is a good option. The company offers nonstandard insurance for people who need it.

ProsWho It's Best For
  • pro
    People with SR-22s, bad credit, a history of accidents, or other high-risk driver designations that make it hard to find car insurance
  • pro
    Customers looking for a roadside assistance membership plan with unique perks, including reimbursement for traffic tickets
  • pro
    Drivers interested in purchasing hospital indemnity coverage, which helps you pay for medical bills that health or auto medical coverage policies don’t cover
  • pro
    Drivers on the youngest and oldest ends of the spectrum, as some insurers consider them high risk
ConsWho It's Not Best For
  • con
    Customers with good credit and a clean driving record, who can find less expensive insurance elsewhere
  • con
    Drivers who want to purchase replacement coverage for their new car
  • con
    People who do not live in one of these states: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Mississippi, Missouri, Nevada, New Mexico, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia

Coverage for High-Risk Drivers

According to the Insurance Information Institute, standard insurance providers might turn you away for the following reasons:

  • You have a history of accidents, traffic violations, or DUI convictions.
  • You don’t have a long driving history (this is especially common for teen drivers).
  • You have no insurance record, have a record of not paying on time, or have violated the terms of your insurance.
  • You have a low credit score.
  • You live in an area with a high level of theft and vandalism.6

If any of these apply to you, Acceptance is a good choice for protecting your new vehicle, as it specializes in nonstandard insurance. That means it will sell you an auto insurance policy, even if you’re a high-risk driver. Acceptance offers all of the following standard auto insurance coverages:

If you need an SR-22 to prove to the state that you have sufficient auto insurance, Acceptance will file it for you.

Unique Roadside Assistance

When you buy a new car, you want to feel assured that whatever happens, you’re prepared. Like many insurance providers, Acceptance offers roadside assistance plans, Towbusters and Towbusters Plus. Acceptance’s roadside assistance offers a few uncommon perks. Most notably, if you sign up for Towbusters Plus, you’ll also get TicketProof, which will reimburse you for traffic tickets and other associated fees.

Feature Towbusters Towbusters Plus
Price per month $13 $15
Price per year $156 $180
Claims covered per year 5 5
Lockout assistance Yes Yes
Jumpstarts and tows Yes Yes
Spare tire installation Yes Yes
Gas, oil, or coolant delivery (materials at your expense) Yes Yes
Battery service and mechanical aid (minor adjustments) Yes Yes
Towing 25 miles 25 miles
Out-of-network towing reimbursement $75 $75
Traffic ticket reimbursement No $100, up to twice a year
Reimbursement for legal fees if traffic ticket sends you to court No $200
Traffic school reimbursement if DMV requires you attend No $250
Rental reimbursement No 10 days, $25 per day

Help With Medical Bills

A new car is a big expense that will contribute to your monthly car insurance costs for a while. In the event of an accident, you might find yourself saddled with medical bills even if you have auto or health insurance. With health insurance, you’re still responsible for copays and deductibles, and many health insurance plans don’t cover the cost of an ambulance ride. Additionally, health insurance plans with low monthly premiums often have high deductibles and out-of-pocket expense limits.

Another one of Acceptance’s uncommon offerings is its hospital indemnity protection, or “help in case” plan. This is not a form of insurance, but a plan meant to ease the financial burden of injuries if you or a family member are injured in a car accident. Hospital indemnity protection will pay for costs that your medical payments coverage and health insurance might not completely cover, like copays, deductibles, hospital stays, hiring a nurse, ambulance costs, and lost wages. This coverage costs $8 per month, or $96 per year.

Event Coverage
Accidental death or dismemberment Up to $10,000 in direct payment
Medical expense Up to $1,000 in coverage
Hospital stay $125 per day for up to 1 year
5. Best for New Car Replacement - Farmers

What We Like Most:

  • Good drivers can save money with the Signal app
  • Transportation costs covered when your vehicle is being repaired
  • Roadside assistance available

Founded in 1928, Farmers is known for its array of discounts and coverage options. It’s a good choice for new car owners looking for flexibility and an impressive new car replacement option.

ProsWho It's Best For
  • pro
    Drivers who want long-lasting new car replacement coverage
  • pro
    New car owners who want OEM coverage
  • pro
    People looking for a company with good financial strength and customer satisfaction rates
  • pro
    Customers who will take advantage of Farmers’ array of discounts (e.g., for safe driving, sharing a family car, having vehicle safety features, or bundling with another policy or car)
ConsWho It's Not Best For
  • con
    People in who live in Alaska, the District of Columbia, Delaware, Hawaii, Maine, New Hampshire, Rhode Island, Vermont, or West Virginia (where Farmers is not available)
  • con
    Drivers looking for the absolute least expensive insurance

Long-Lasting New Car Replacement

Like Liberty Mutual, Farmers offers new car replacement coverage. With this coverage, Farmers will cover the cost of a new vehicle of the same make and model in the event of a total loss. Farmers’ coverage lasts longer than Liberty Mutual’s — for up to two years or 24,000 miles.

New car replacement coverage is a good idea if you want to replace your totaled car with another new one. If you own a vehicle that’s expensive or depreciates quickly (e.g., luxury, electric, or other specialty vehicles like classic cars), this coverage is an especially wise choice.

OEM Coverage Option

Many people buy a new car with the intention of using it for many years. That means keeping it maintained with high-quality auto parts.

If your car sustains damage in an accident, a mechanic can use either OEM or aftermarket parts when they repair it.

OEM parts come from the same manufacturer as the car (e.g., Toyota) and work only in that manufacturer’s cars, while aftermarket parts are made to fit a range of vehicles. If you bring your car to a dealership, they will use OEM parts. A repair shop will typically use aftermarket parts unless you pay extra for OEM parts.

Aftermarket parts aren’t necessarily worse than OEM ones (in some cases, they might even be better), though quality varies. OEM parts are more expensive, but you know what you’re getting and they often come with warranties.7

Farmers offers optional OEM coverage on vehicles 10 years old and newer, which covers the cost of using factory-original parts in covered repairs. That way, you’re not paying for OEM parts out of pocket. People who put a lot of miles on their car each year, like road trippers and daily distance commuters, might consider buying OEM coverage for the peace of mind in knowing that their new car will always have durable and high-quality parts.

Strong Industry Reputation

After almost 100 years in the insurance business, Farmers has established a solid reputation. The Better Business Bureau gave Farmers an A rating, and Farmers has been accredited with the BBB since 1951. In other words, the BBB determined that Farmers is committed to resolving consumer complaints in good faith, and customer interactions are likely to be positive.8

Farmers also has an A rating with AM Best for financial strength, meaning that if you need to file a claim for your new car, you can be sure Farmers will be able to pay it.9

Methodology

Our team is committed to offering high-quality recommendations. We use three factors to identify the best auto insurance providers.

  1. Company facts: We scour the market for auto insurance providers and compile information on each one’s cost, coverages, geographic availability, driver restrictions, and discount options. We prioritized companies whose offerings will provide the greatest financial protection for a new car. Additionally, we take into consideration ratings from independent sources, which evaluate companies for their customer satisfaction and financial strength. These sources include the Better Business Bureau, AM Best, Moody’s, S&P Global Ratings, J.D. Power, and the National Association of Insurance Commissioners.
  2. Proprietary information: AutoInsurance.com has two decades of experience helping customers find the best policies for their needs, for the least amount of money. As a result, we have millions of data points from customer transactions at our fingertips. We’ve analyzed this information to uncover what factors predict customer success for each company, specifically for customers with new cars.
  3. Institutional knowledge: Our team is made up of experts who are well-versed on each auto insurance provider and its strengths and weaknesses. Moreover, we benefit from the expertise of our president of insurance services at Centerfield (AutoInsurance.com’s parent company), Paul Ford, who has spent three decades in the auto insurance industry. Paul has past experience with Canadian Access, Capital One Insurance Services, NetQuote, Datalot, InsLogic, and Bankrate.

Citations

  1. Search for a Rating. (2022). AM Best.
    https://ratings.ambest.com/

  2. 2021 U.S. Auto Insurance Study. J.D Power. (2021).
    https://www.jdpower.com/business/press-releases/2021-us-auto-insurance-study

  3. 2022 Best Resale Value Awards: Top Cars, Trucks, and SUVs. Kelley Blue Book. (2022, Feb 27).
    https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/

  4. Credit unions amass largest share of the automotive finance market in five years. Experian. (2022, Jun 2).
    https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/

  5. Results By Complaint Index. National Association of Insurance Commissioners. (2021).
    https://www.naic.org/cis_refined_results.htm?TABLEAU=CIS_COMPLAINTS&Cocode=23043&REALM=PROD

  6. What if I can’t find auto coverage? Insurance Information Institute.
    https://www.iii.org/article/what-if-i-cant-find-auto-coverage

  7. Aftermarket Versus Manufacturer Car Parts. Edmunds. (2009, Aug 25).
    https://www.edmunds.com/car-maintenance/aftermarket-versus-manufacturer-car-parts.html

  8. Farmers Insurance. Better Business Bureau. (2022).
    https://www.bbb.org/us/ca/woodland-hills/profile/insurance-companies/farmers-insurance-1216-18605/overview-of-bbb-ratings

  9. Search for a Rating. (2022). AM Best.
    https://ratings.ambest.com/