What Is the New Car Discount?

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

Trading in your car for the latest model can be a big and exciting change. This is especially the case if it’s nicer than what you drive now. However, it can also present an opportunity to save money. Some insurers lower your premium when you buy a vehicle that’s less than three years old. Insurance providers refer to this as the new car discount.

In this article:

  • How the new car discount works
  • How to qualify
  • Companies offering new car discounts
  • How much you save
  • Frequently asked questions

How the New Car Discount Works

Many car insurance discounts involve vehicle safety. This is because insurers prefer to do business with people who they don’t think will cost them lots of money. In other words, your rates will be lower if your provider sees you as a safe driver rather than a dangerous one.

Purchasing a newer model vehicle signals to your insurer that you’re a good driver. This is because they have state-of-the-art safety features that older models don’t. State-of-the-art technology like this provides more protection in an accident, helping you avoid costly personal injury claims. Offering a new car discount is a no-brainer for many insurance companies.

Insurers also lower insurance rates for specific safety features like anti-lock brakes and anti-theft devices. These are factory-installed in many current models, so your chances of qualifying are very good. Take a look at the spec sheet before you buy to make sure you see the safety equipment you desire.

How to Qualify

While it varies by state and insurance company, you can typically qualify if your car is one to three years old. It’s a good idea to double-check how recent your model year must be for you to qualify.

Also, it’s important to note that not every provider offers this discount. Some top insurers offer it, while many others don’t. Your rates may even go up after purchasing a car. Let’s face it, the latest models are worth more than the older ones. That’s going to add up to a higher premium. At least until the value depreciates. If that’s the case, you could always try switching to a provider that offers it.

Companies Offering New Car Discounts

Five major insurers offer lower rates to customers with new cars.


Allstate has a new car insurance discount that reduces your premium when you’re the first owner of a vehicle that’s no more than two years old. They don’t say exactly how much you’ll save because it varies by driver and situation. Contact your Allstate agent for more details.


GEICO also lowers insurance rates of customers with recent model-year vehicles. Listed on GEICO’s website as the “New Vehicle Discount,” they say you can save up to 15% for models no more than three years old.


USAA offers a new car discount to customers with vehicles three or fewer years old. How much you save isn’t posted on the website, so talk to your USAA agent to find out more.


Travelers provides a new car discount to policyholders when their vehicle is no more than than three years old. Not available in California.


NJM offers customers a new car discount when their vehicles is no more than two model years old. The savings aren’t published on the website, so. you’ll need to contact NJM to learn more. Only available in the states of CT, MD, NJ, OH, and PA.

Note that these aren’t the only insurance companies with a new vehicle discount. State or local insurers may also offer this perk. It’s worth contacting your provider to see if you qualify.

New Car Insurance Discount by Company

Insurance CompanyMax Vehicle AgeMax Savings
Note: table data found on the above insurers’ websites.

Frequently Asked Questions

Does buying a new car lower your premium?

Yes and no. Contemporary models are worth more, so the increased value can also raise your rates. However, prices could go down if you qualify for new car or safety discounts. So, it really depends on factors including the value of the vehicle as well as how well it rates in terms of safety.

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

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

  • Try to get a new car discount. Many top providers have one for the most recent model years. Sometimes, you can qualify with a three-year-old vehicle.
  • Look for other discounts. Every insurance company provides these to customers to help generate business. You can usually find rewards for 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 insurer with better prices. Consider comparing quotes between top companies if you think you’re paying too much.

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