Best Auto Insurance for New 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.

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.

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.

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.

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.

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.

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.

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.

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.

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:

• Liability
• Bodily injury
• Uninsured or underinsured motorist
• Personal injury
• Collision
• Comprehensive
• Medical payments
• Roadside assistance

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.

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.

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.

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