An important question often asked by new car owners is, ‘How long do you have to insure a new car?’ The answer is immediately after the purchase. Regardless of whether you are financing or paying cash, you will have to get car insurance before driving the car out of the dealer’s lot. The amount and type of coverage you will need is defined by the state you live in and if you are financing.
Insurance Requirements for Purchasing a New Car
When financing a new car, the lender mandates you to have comprehensive and collision coverage for the life of the loan. Your state requires liability coverage to cover any damages or injuries caused by an at-fault accident. To protect yourself if your vehicle is totaled in an accident, Progressive suggests getting the optional coverage known as gap insurance. Also referred to as loan/lease payoff coverage, gap insurance pays the difference between your vehicle’s actual value and what you owe.
The required coverages you will need on your new car are:
- The minimum liability coverage your state requires
- Comprehensive
- Collision
If you are paying cash, you can still consider getting comprehensive and collision regardless. Without these coverages, your insurance company does not pay if your car is:
- Vandalized
- Stolen
- Damaged in an accident
How Long Before You Can Add a New Car to Your Insurance Policy
You are required to have car insurance to drive in the United States most major car insurance companies are open for business 24/7, in some capacity. This allows you to contact your insurance provider anytime you are purchasing a new car. Dealerships won’t let you leave without proof of insurance. Suppose you are trading in your current vehicle. In that case, that vehicle’s policy may temporarily cover your new ride if you can’t contact your insurance agent, as long as you have your policy information on hand.
Under your collision coverage, you’ll be covered for the fair market value of the vehicle. When you owe more than your car is worth, you may want to purchase gap insurance (also called loan/lease payoff coverage), which will help pay the difference between the car’s worth and what you owe on your loan.
Temporary coverage satisfies the dealer and lender for you to drive off the lot. Still, most temporary policies expire or, at the very least, will need to be updated to reflect coverage for your new ride. This fact makes it prudent for you to contact your insurance agent to set up an official policy for the newly purchased vehicle.
When you have temporary coverage on a recently acquired car, this coverage may have limitations that make it different from a full policy, according to Policygenius. Your current car insurance will also have an impact on your temporary coverage, depending on if you already have comprehensive and collision. If not, it’s likely your temporary coverage won’t have these coverages either.
It’s a great idea to check with your insurance provider about extending temporary coverages for a new vehicle. You will also need to know how long you will have to add the new car and make it official. If they don’t extend that coverage, you will need to have the new vehicle added to your policy before leaving the dealership.
Tips To Get the Cheapest Car Insurance
1. Shop around to find the right insurance company for you.
Regardless of claims made in commercials, no one insurance company is the cheapest. With different discounts and levels of coverages, there is no one size that fits all when it comes to car insurance. Though one insurance company may be right for the next person, it doesn’t mean it’s right for you. Factors such as location, age, and driving records may cause prices to vary for every individual.
2. Don’t overlook local and regional insurance companies.
Allstate, GEICO, Progressive, and State Farm may control over half of the car insurance business nationwide. Still, local and regional insurers such as Erie Insurance and Auto-Owners excel over big-name companies in customer ratings. These smaller companies also tend to have lower insurance rates for you to take advantage of.
3. Inquire about available discounts.
There are various discounts available that can result in lower insurance rates when you:
- Bundle other policies such as your homeowner’s insurance with your car insurance.
- Have multiple cars under one policy.
- Keep your driving record clean.
- Pay your annual or six-month premium in one lump sum.
- Let your insurance bill go paperless.
- Have a vehicle with specific safety and anti-theft features.
- Explore discounts available to members of certain affiliate groups or professional organizations.
4. Keep your bills current.
Insurance companies use your credit score to help determine your insurance rates, so keeping your credit in check can help get you the best rates. Every state except California, Hawaii, and Massachusetts uses your credit score in this way. Insurance companies justify using a customer’s credit score to gauge how likely they are to file claims.
Buying Car Insurance for Your New Car
Car insurance is a requirement for you to drive, even when you are purchasing a new car. Automobile dealers won’t let you drive your new car off the lot without having your state’s minimum required car insurance coverages, so making arrangements with your insurance agent before buying is always a good idea. It’s also prudent for you to have an idea of the monthly premium of insurance on a new car before making the purchase. Car insurance is part of the overall expense of owning a new car.
What Insurance Do You Need When Buying a New Car
When purchasing car insurance, there are two requirements you will most likely need for a new vehicle. One is the minimum insurance coverage mandated by your state. This minimum requirement is to cover property damage and bodily injury and is known as liability insurance. Some states require you to have a personal injury protection policy and uninsured motorist coverages as well.
Secondly, you will need to have collision and comprehensive coverages as a requirement of the loan or lease company you are financing with. These coverages pay to repair any damage to the new car, helping the lender protect its investment in the new car.
Doing your due diligence is important when obtaining insurance for a new vehicle. Insurance rates are ever-changing and being up to date on current trends is important. Knowing what coverages are needed for your new car will help you expedite the purchasing process.
Sources Used:
https://www.progressive.com/answers/new-car-insurance/
https://www.caranddriver.com/research/a32620181/does-insurance-cover-stolen-car/#
https://www.policygenius.com/auto-insurance/do-i-need-car-insurance-before-i-buy-a-car/
https://www.caranddriver.com/research/a31962185/do-you-need-insurance-to-buy-a-car/
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