What Is the New Car Discount?

Buying a new 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 a new one can be a big and exciting change. This is especially the case if it’s nicer than your current or previous vehicle. However, it can also present an opportunity to save money. Some insurance companies will knock a certain percentage off your premium 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 rewards to their customers for practicing good habits like safe driving or customer loyalty. They’re also one of the best ways you can lower your rates, even if you don’t qualify for a lot of them.

Most auto insurers offer discounts including:

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 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 safe driver. This is because they have state-of-the-art safety features that older models don’t. New technology like this provides more protection in an accident, helping you avoid costly personal injury claims.

Insurance companies also lower rates for specific safety features like anti-lock brakes and anti-theft devices. These are factory-installed in many newer 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 insurer, 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 new ride. 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 the New Car Discount

Five major auto insurance companies offer lower rates to customers with new vehicles.


Allstate 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. It may vary by driver and situation. Contact your Allstate agent for more details.


GEICO also lowers the premiums 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 model years three years old or newer.


USAA reduces the premiums of drivers with vehicles three or fewer years old. However, they don’t mention how much you’ll save. It may be a good idea to talk to your USAA agent to find out more.


Travelers provides savings if your ride is less than three years old. Not available in California.

NJM Insurance

NJM offers customers a break for vehicles two model years old or newer. 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 companies with this discount. State or local insurers may also offer it. It’s worth it to contact your provider to see what you qualify for.

New Car 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 insurance?

Buying a new vehicle can lower your premium. But since newer models are worth more, the increased car value can also raise your rates. However, your rates could go down by a certain percentage if you qualify for safety discounts.

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

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

  • 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 insurer 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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