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After years of making do with a clunker, you're finally ready to buy a new car. Since you don't want to worry about mechanical issues or reliability, you decide on a new vehicle backed by a manufacturer's warranty, and you choose an entry-level compact sedan (like the Nissan Versa) to keep your costs low. However, you may be surprised when you insure that car.
Is insurance more expensive for new cars? Generally, insurance costs more for a new car due to its higher cost and the increased coverage needed. Just how much more you'll pay depends on the vehicle's make and model and any discounts you're eligible for with your insurer.
Is insurance more expensive for new cars?
Car insurance companies determine your premiums on several factors, including your vehicle's make, model, age, typical repair costs, engine size, and usage.
Typically, new cars have higher auto insurance rates for the following reasons.
- They're more expensive to replace: New cars have much higher price tags than used vehicles. According to Kelley Blue Book, new cars cost an average of $47,962 in March 2025 while used cars averaged $25,180. If you're in an accident and your car is a total loss, that means your insurer would have to pay a larger amount to replace your new car than if you had an older model.
- Repair costs are often higher: Modern cars are technologically complex. With advanced sensors and driver assistance systems, newer cars can cost thousands more to repair than older vehicles, making them more expensive to insure.
- They may be at a higher risk of vandalism or theft: Especially if you pick a high-end model, your new car can become an attractive target for criminals who want to damage or steal it. Insurers generally charge higher car insurance prices to compensate for this risk, but having anti-theft features may help reduce the impact on premiums.
- You may need additional coverage: If you financed or leased your new car, your loan or lease agreement likely requires you to have a car insurance policy that includes collision coverage and comprehensive insurance — along with liability coverage — to protect the lender's or lessor's investment. With an older car that you've paid off, those coverages are optional, so you can save hundreds by dropping them.
To give you an idea of how much more auto insurance can be for new cars, we requested quotes from a major insurer for the Honda Civic. The annual cost of a full coverage policy was $1,834 for the 2025 model versus $1,482 for the 2020 model — a difference of $352 per year.
| Annual Premiums By Model Year | |
| Honda Civic | |
| 2025 Model | $1,834 |
| 2020 Model | $1,482 |
| *Quotes are based on a driver with a clean record in Florida who covers 15,000 miles per year. These quotes are for full coverage insurance policies with 100/300/100 limits. | |
Other factors affecting new car insurance premiums
Besides your vehicle's details, several other factors can affect your insurance premium.
- Age: In general, drivers in their teens and 20s will pay higher rates for insurance than older drivers. Statistically, younger drivers are more likely to be involved in accidents than other age groups, so they tend to pay more for insurance coverage.
- Gender: According to crash data, women get in fewer accidents than men. They also tend to have less serious accidents, resulting in smaller claims. Consequently, women typically pay less for auto coverage than men.
- Driving record: If you've had accidents in the past, received tickets for speeding or other moving infractions, or been convicted of driving under the influence (DUI), you'll pay significantly higher rates for insurance than if you have a clean driving history.
- Credit: In some states, auto insurance companies can use your credit score during the underwriting process to set your rates. In general, the better your credit is, the lower your car insurance rates will be.
- Location: If you live in a congested area or somewhere with a higher rate of theft or accidents, you'll pay more for insurance due to the increased risk of claims.
What types of coverage do new cars need?
In nearly every state, laws require drivers to have, at minimum, liability insurance for property damage and injuries that they cause in an accident. However, if you have a new car, you might need additional coverage to protect your own vehicle. Common coverages include:
- Collision: Collision insurance pays for repairs to your own vehicle after an accident. If you're in a fender bender and you're at fault, you can use this form of coverage to repair any mechanical or cosmetic damage.
- Comprehensive: Comprehensive coverage is designed for repairs to your vehicle due to damages that occur outside of an accident. For example, if a storm causes a tree to crack your windshield, comprehensive insurance would pay to replace the glass and repair any scratches or dents to the exterior.
- Guaranteed asset protection (GAP): Approximately 80% of new cars and trucks are leased or purchased with auto loans, per the Federal Reserve. Because of rapid depreciation, you can owe more than the car is worth quickly, which can be a problem if your car is a total loss after an accident or stolen. If you financed or leased your car, you can use GAP insurance to cover the difference between your car's value and what you owe on your loan or lease.
Lenders and leasing companies will likely require you to have full coverage — meaning a policy that includes liability, comprehensive, and collision insurance — and possibly GAP protection.
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Tips for getting lower premiums on a new car
Although coverage for new cars tends to be more expensive, there are several ways you can save money on auto insurance.
- Adjust your deductible: The deductible is your share of the cost for repairs or damages after you make a covered claim. The higher your deductible is, the more of the financial responsibility you take on. As a result, raising your deductible — for example, from $500 to $1,000 — can reduce your premiums.
- Talk to your agent about discounts: If you're happy with your existing insurer, talk to your agent about potential discount programs. Depending on your situation, you may be eligible for discounts based on vehicle use, security, or advanced safety features; in-full payment of your premiums; and the time you've gone without an accident or claim.
- Consider usage-based insurance (UBI): UBI policies use mobile apps or plug-in devices to track your vehicle use and driving habits, and they adjust your premiums based on your personal data. Those who drive fewer-than-average miles and maintain safe driving habits can save on car insurance costs.
- Shop around: Insurance premiums can vary by hundreds or even thousands between companies. If you haven't shopped around in a while, requesting quotes from several insurers and comparing car insurance rates may help you find more affordable coverage for your new vehicle.
- Review your coverage: It's a good idea to review your coverage at least once a year to make sure you have the right limits and determine if there are optional protections you can drop. For example, if you have roadside assistance through a credit card, you may not need that benefit on your insurance policy.
FAQs
Average rate:
Can a newer car be cheaper to insure?
A newer car may be cheaper to insure if it's a cheaper type of vehicle with lower repair costs. For example, say you own an older luxury or performance vehicle like a BMW or Audi. If you traded it in and switched to a less expensive vehicle, such as a new Hyundai Venue, you might pay less for coverage than you did with an older car.
What is the cheapest new car brand to insure?
With their excellent safety ratings and lower frequency of bodily injury claims, the cheapest new cars to insure include models from Subaru, Honda, and Hyundai.
Why is my insurance higher with a new car?
New cars are often more expensive to insure because it will cost more to replace the vehicle after an accident. Plus, new cars tend to be more expensive to repair due to their complex electrical systems and advanced technology.
Bottom line
Is insurance more expensive for new cars? While the answer is typically "yes," your rates will depend on several factors, including your driving record, credit history, and the coverages you select. You can save money by taking advantage of insurer discounts, adjusting your deductible, or enrolling in a UBI policy. Plus, you can shop around and request quotes from the best car insurance companies to find lower insurance rates.
Average rate:
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