What Is the New Car Discount?

Buying a new car is exciting. But did you know it can help you save on car insurance? This is how the new car discount works.
couple holding the keys of a new car

Buying a new car can be a big and exciting change. This is especially the case if your new car is nicer than your last one. But it can also help you save money on your car insurance. Some auto insurers will knock a certain percentage off your car insurance for buying a car that’s less than three years old. Insurers refer to this as the new car discount.

Car insurance companies offer many types of discounts for their customers. They do this to reward you for practicing good habits like safe driving or customer loyalty. Getting discounts is also one of the best ways you can lower your auto rates, even if you don’t qualify for a lot of them. Most insurers will offer discounts for:

This article will help you understand the new car discount. This includes information about both how it works and how to get it. We’ll also go over who offers it, along with some frequently asked questions.

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How Does the New Car Discount Work?

Many of the discounts you can get on your car insurance have something to do with safety. This is because car insurance companies prefer to do business with people who they don’t think will cost them lots of money. In other words, you’ll save on car insurance if your insurer sees you as a safe driver rather than a dangerous one.

Purchasing a new car is just another way to show your insurer that you’re a safe driver. This is because new cars normally have state-of-the-art safety features that older cars simply don’t have. Owning a new car means that you should have more protection in an accident, helping you avoid costly personal injury claims.

Car insurance companies also offer discounts for specific auto safety features such as anti-lock brakes and anti-theft devices. With a new car, you could potentially get the new car discount and these other discounts.

While it varies by state and insurer, you can typically get the new car discount if your car is one to three years old. It’s a good idea to double-check with your insurer on how new your car needs to be for you to qualify.

It’s important to note that not every insurer offers a new vehicle discount. Some top insurers offer it, while many others don’t. Your rates may even go up from buying a new car. That’s because it’ll likely cost more to insure than your old car. If that’s the case, you could always try switching to an insurance provider that offers a new car discount.

Who Offers the New Car Discount?

Five major auto insurance companies offer discounts to customers for buying a new car. Below are the companies and some info about the new car discounts they offer:


You can get a new car discount from Allstate if your car is the current model year or one year prior and you’re the first person to own it. Keep in mind that they don’t say exactly how much you’ll save with the discount. This may vary by driver and situation. Contact your Allstate insurance agent for more info about how much you can save.


GEICO is another insurance company that offers a discount for buying a new car. Listed on GEICO’s website as the “New Vehicle Discount,” they say you can save up to 15% on your car insurance if you own a car that’s three years old or newer.


USAA also offers a new car discount to its customers. You can qualify if your car is three or fewer years old. But they don’t mention how much you’ll be able to save if you get the discount. It may be a good idea to talk to your USAA insurance agent to find out more about how much you can save.

Travelers Insurance

You can get a new car discount on your Travelers auto policy if you own a vehicle that’s fewer than three years old. However, this discount isn’t available for Travelers customers who live in California.

State Farm

State Farm offers discounts to drivers with new cars that have all the most recent safety features and devices. You should consult State Farm’s policy on qualifying for their new car discount. Also, be sure to ask your agent about any other questions you have on this discount.

Note that these aren’t the only companies that offer a new car discount. State or local insurers may also offer it. It’s worth it to contact your car insurance company to see if you save on your insurance for owning a new car, even if you’re not sure that they offer the discount.

NJM Insurance

To grab the NJM new car discount your vehicle must be two model years old or newer. The discount is only available from this provider in the states of CT, MD, NJ, OH, and PA. They don’t disclose how ,much this discount could save you. You’ll need to contact NJM to learn more.

Frequently Asked Questions

Q: Does buying a new car lower your insurance?

A: Buying a new car can lower the amount you pay for insurance. But since new cars can cost a lot to insure, it can also raise your rates. Your insurance rates could go down by a certain percentage if you’re able to get a new car discount from your auto insurance company.

Q: What do I do if my rates go up for buying a new car?

A: You have some options if your rates go up after buying a new car:

  • Try to get a new car discount. Many top car insurance providers have one for at least a year or two after you get a new car.
  • Look for other discounts. You can find more discounts to lower your rates, even if you qualify for the new car discount. Most insurers have discounts for things like safe driving, being a good student, or having low annual mileage. The more savings you get, the better!
  • Switch companies. You can also switch to another provider with better prices and more discounts. Consider comparing quotes between top auto insurance companies if you think you’re paying too much.

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