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Will my auto insurance rates change when I buy a new car?
In many cases ¨C yes. Insurers price their rates based on many factors and the type of automobile you drive is one of those factors. However, that doesn¡¯t necessarily mean that your rates will go up. For example, purchasing a new car with better safety features can actually lower your rates!
Financed cars require more insurance. Clearly, the amount of insurance you buy will affect the price of your policy. New cars that are financed through a bank will require you to carry a certain amount of comprehensive, collision and liability insurance ¨C which means higher premiums. Purchasing a car outright gives you the opportunity to decrease those levels and save money on your premiums. While most states have minimum coverage requirements prescribed by state law, it is almost certain that you will be required to carry coverage well over those amounts if your car is bank financed.
What can you do? If you are buying your car outright, make sure you know your state¡¯s minimum coverage levels. To see your state¡¯s minimum requirements, go to: http://www.iii.org/individuals/auto/a/canidrive/. This doesn¡¯t mean that you should automatically choose those levels. Take a few minutes and see what levels you are comfortable with and then get quotes for each of those different levels. Going with a higher level may only mean paying a few extra dollars and provide you with peace of mind that you are covered. If you are financing your car through a bank, shop around for the best insurance deal possible using online resources such as our Auto Insurance Center.