Buying car insurance for a new car can be a tricky situation. While all states require drivers to have some type of auto insurance coverage for their vehicles, you’re probably curious about whether state laws and regulations provide a new car insurance grace period to ease the purchase and transition. However, the truth is that state auto insurance rules don’t grant any grace period by law, but most insurance companies (e.g. State Farm, GEICO, Progressive, Mercury, AAA, etc.) do give drivers buying a new car 30 days to get their vehicle registered and insured.
Understanding when to get insurance on a new car is critical to protecting your purchase. Obviously, this can help to ensure that you won’t have to pay a large sum out-of-pocket for liabilities, repairs, medical costs, and damages if your involved in a car accident after driving away from the dealership.
Below, we’ll discuss whether a new car is insured or not, how soon after buying a car do you need insurance, how much that coverage will cost, and all the details you need to know about this getting new auto insurance.
When Do You Have To Insure A New Car?
When to get insurance coverage on a new car can actually depend on a couple of factors, starting with whether or not you currently have a policy on your existing vehicle. For instance, in many cases, if you have insurance on a vehicle that you traded in for a new one, your existing policy may provide coverage on the new car – but only temporarily.
Typically, this temporary coverage will last from 7 to 30 days. This is called the new car insurance grace period – a time where you are technically covered but you need to quickly buy coverage as soon as possible to avoid potential issues with your insurer.
But even so, while you may not need to inform your insurance carrier immediately of the change in vehicles, it is important to do so sooner rather than later. That way, you’ll have coverage that matches up to the specific vehicle in case of an accident.
New Car Insurance Grace Period – How Much Coverage Do You Have?
In addition to the grace period for coverage, there are also some other key pieces of information that you should be familiar with when it comes to transferring your auto insurance to a new car.
For instance, you should check on how much coverage you will have during the transition period. As an example, depending on the insurer and your state of residence, the replacement coverage could be the same as the coverage you had on the vehicle that you sold or traded in for you new car.
For instance, Texas insurance companies only give a newly purchased car the same amount of coverage as the vehicle on your policy with the most coverage. This means that if one vehicle has liability only and another has full collision and comprehensive coverage, then the third car will have full insurance as well.
However, in some states, your new car will automatically be provided with comprehensive and collision coverage (for a certain number of days), even if your other vehicle only had liability coverage. This can make a major difference in protecting you since liability insurance pays out other drivers if you are at-fault, while full coverage auto insurance also protects and pays you for injuries, damages, and repairs.
Buying Car Insurance For A New Car
Getting new car insurance is really easy if you already have coverage. To buy insurance on a new car, simply call your company or agent and let them know you’ve purchased a vehicle. Make sure to know the new car’s make, model, trim and year as well as any safety features that may lower your auto insurance rates.
Policyholders should also make sure to remove the car that was traded-in or make it absolutely clear that no trade-in occurred and to keep the other vehicle on the policy.
If you’re buying your first car and you don’t currently have insurance with any company, you may need to shop around, compare rates, and line up coverage before visiting the dealership to complete the transaction for a new car. While you don’t already need to buy insurance before you purchase your new car, knowing which company you plan to use and calling from the dealership while filling out paperwork is the best way.
Nevertheless, we recommend you do your research before getting to that point. It’s very important to combine the best insurance company and coverage with the cheapest rates to avoid overpaying.
How Much New Auto Insurance Coverage Should You Buy?
The kind of car you buy can often dictate the type and amount of auto insurance coverage that you need. For example, it may make sense for older vehicles to have only the state-mandated amount of liability coverage. This can help with keeping your premiums low.
However, if you have purchased a brand new car, then a policy that includes collision and comprehensive coverage is generally recommended. In fact, if you have taken out a loan in order to finance your new car, then the lender will oftentimes require that you have full auto insurance coverage. This additional protection ensures the lender gets their money back, even if the vehicle is totaled or heavily damaged in an accident.
How Much Is Insurance For A New Car?
When you purchase a new car, your insurance coverage can vary so it’s important to be familiar with the grace period and the type of protection that will transfer, based on your specific situation.
In any case, it is always a good idea to compare auto insurance quotes before you commit to a more permanent policy. That way you can take a closer look at various coverage options, as well as comparison shop quotes from different companies to choose the one that best fits your needs and your budget.
If you want to know exactly how much is insurance for a new car, enter your zip code, pick an insurer, and get a price quote. After going through the process with a few providers, compare rates and types of coverage, and call the one offering the best deal to ask about additional discounts. While buying new car insurance may seem like a hassle, doing it right and finding lower rates can save you hundreds, if not thousands, of dollars each year.