Are you thinking about purchasing a new or used car soon? Whether you’ve narrowed down your options or you’re just starting the search, there’s one very crucial thing you’ll need before you drive your new vehicle off the lot – car insurance. You need to have a policy in place to set off in your new car.
If you’re wondering how you’re supposed to have insurance before you’ve purchased a car, you’re not alone. After all, the thought of getting insurance when you’ve only just started the car buying process can be confusing. You might not even know what type of vehicle you’re looking for yet. How are you supposed to have a policy ready to go the same day you take your new car home? Here’s what you need to know about how to get car insurance before buying a car.
In short, yes, you can buy car insurance before you buy a new or used car. In fact, you should get a policy before purchasing a vehicle and driving it home.
There are a couple of reasons why you need to purchase insurance before purchasing a new car.
First, most dealerships require proof of insurance before completing the transaction. You may be able to have your insurance company fax or email that proof while you’re going over paperwork with the salesperson. Or, if your company has an app, you may be able to show your digital insurance card.
Another reason you need to buy car insurance first is if you’re getting the car with a loan. Your bank or other financial institution will require proof of insurance before they’ll provide you with financing. The lender may also have specific coverage requirements, so make sure that you keep these in mind when getting your policy in place.
Third, driving without insurance in place before buying the car means that you’ll have a gap in your coverage. When you do get around to applying for a policy, potential insurers will see a lapse in coverage. To those companies, you appear to be a higher risk, which means you’re likely to be charged higher premiums.
Finally, having auto insurance before driving off in your new car is essential for protecting you financially in case you get into an accident before you have an active policy in place.
Before settling on an auto insurance policy, it's important to understand the common components of car insurance and what it covers.
Liability Insurance: Liability insurance coverage pays for damage that you cause. For example, liability coverage will pay for any at-fault accidents to another person's vehicle, home, or property, and will pay for any injuries that may result from an accident. Most states require a minimum amount of liability coverage, but you can always purchase a higher amount to ensure you're well covered. Liability insurance will not cover damage to your vehicle.
Collision Insurance: Collision coverage pays for repairs to your vehicle in the event of an accident. This type of coverage is usually recommended for purchasing a newer or more expensive vehicle and is required if you finance your car. If your car is totaled in an accident, collision insurance will pay for the fair market value of your car.
Comprehensive Insurance: Comprehensive coverage pays for damage unrelated to a car accident. For example, if a tree falls on your vehicle, or if your car is stolen, comprehensive insurance will cover the losses.
Check with an insurance provider for coverage requirements in your state, and be sure to shop around for the best policy to help you save money.
If you can gauge your insurance premium, you will have a better idea of what you can afford when purchasing a new vehicle.
When shopping to find coverage for your new car, ask your agent about adjusting your deductibles to see if that lowers your monthly premium.
Oftentimes, if you are willing to pay more out of pocket for your comprehensive or collision deductible, it will lead to a lower monthly premium.
When shopping for an insurance policy, you can contact individual auto insurance companies, or you can go through an independent broker to compare multiple rates at the same time.
Regardless of which method you choose, you will need to provide some basic information, including:
Your name and driver's license number
The names and driver's license numbers for anyone else you add to the policy
Your birthdate, and birthdates for each other driver
The address where you plan to garage the vehicle
The car’s vehicle identification number (VIN)
The declarations page from your most recent car insurance policy
The types of coverage that you want for the vehicle
All of this information is vital for ensuring the most accurate car insurance quotes possible. If you’re calling individual insurance companies, be sure to provide them with the same information so that you can accurately compare your options. If you’re using a broker like PolicyScout, you’ll only need to provide the information once to see multiple auto insurance rates.
If you’re not sure which car you’re buying yet, you may be able to get multiple quotes using just the make and the model. Provide all of the other information, except for the Vehicle Identification Number (VIN) to get a policy ready to go once you finally decide on the exact vehicle you want.
If you know the exact car you want to purchase, ask the car dealership or seller for the VIN and provide all necessary information to the insurance company or broker.
You can choose the start date for your policy, which enables you to ensure that you’re covered starting on the day you buy the car and drive it off the lot.
You have a couple of options when it comes to buying a car without insurance. Your first option is to check with your current company to find out if you have a grace period. If you do, you make sure that you understand the specifics of the coverage.
Your other option is to buy the car, leave without it, and then come back for it when you do purchase an insurance policy.
You cannot drive a car (whether you purchase it from a dealership or an individual) without insurance on it. If you’re buying a car for the first time and don’t have insurance, you should not drive a car home until you have an active policy. Almost every state in the US requires some form of minimum insurance coverage. Getting caught without it could result in fines and the suspension of your license.
Keep in mind that, as mentioned previously, a dealership won’t let you buy a car without a policy. You also can’t get financing without one.
Fortunately, getting auto insurance is much faster than other forms of insurance, such as life, medical, or pet. You can apply for coverage and get it very quickly. In many cases, you’ll have insurance for the vehicle in less than 24 hours. It may even be possible to contact your insurance company and have everything ready to go before you leave the dealership, enabling you to get in your new car and take it home.
Even if you can get insurance quickly, it’s always a good idea to have it ready ahead of time. Select the date you plan to buy the car as the coverage start date, and you’ll be all set to go when you arrive at the dealership to sign for and pick up the vehicle.
Ideally, you want to have car insurance in place before you buy the car. As mentioned previously, you can select a specific start date so that your policy takes effect on the same day you make the purchase.
Having insurance in place when you buy your car is paramount to protect you, as well as other drivers on the road. If you get into an accident right after buying the vehicle and you don’t have an active policy, you may be left facing some significant financial consequences. Not only are you responsible for the cost of damages and injuries (especially if you’re the one at fault for the accident), but you’re likely to be faced with legal consequences as well.
Thankfully, many car insurance companies offer same-day insurance coverage so you are able to leave the lot with confidence knowing you are insured.
When you buy a new car, you have to register it in your name. You typically have 30 days to do so. In most states, you must have car insurance first to register your vehicle.
Other states don’t require you to have insurance to register, but you still need to have a policy on the car before you drive it. These states include Arizona, Mississippi, North Dakota, Tennessee, Washington, and Wyoming. New Hampshire is the only state that doesn’t require drivers to have liability insurance to drive, but proof of financial responsibility is necessary. Many drivers do this by purchasing an insurance policy even though they don’t have to.
If you already have an active car insurance policy for another vehicle, you may be able to get away without purchasing coverage for your new vehicle right away. Some insurance companies offer a grace period for new cars.
If your current policy offers a grace period for new cars, you typically have between one week to 30 days to officially add your new vehicle to your policy. During this grace period, you’ll be covered when you buy the car and drive it home, but you should notify your insurance company and add it as soon as possible.
You should also review the specifics of your policy’s grace period. Some auto insurance providers only provide it if you’re replacing your existing vehicle, which means buying a new car in addition to the one you already have covered wouldn’t qualify. The temporary coverage may also only include the bare minimum, and may not include comprehensive and collision. Make sure that you contact your insurance company or review your policy before you try to buy a new car without getting a policy in place for it first.
While it may seem convenient, purchasing car insurance from the dealer where you purchase your car might not be the best option. A dealer might be limited by the insurance providers that they work with.
Shopping ahead of time allows you to research the best auto insurance policy for your budget, without sacrificing coverage amounts.
When shopping for a car insurance quote, there are a few tried and true tactics to help you maximize your savings.
Shop Around. The best way to save money is by getting multiple quotes from different companies. A good number to keep in mind is to compare quotes from at least three companies, that way you can see how much your potential cost varies for each company.
Know your coverage amount. Most states have a minimum amount of coverage required when purchasing car insurance, but that might not be enough to cover you in the event of an accident. Being underinsured can be a huge financial risk while being overinsured might pose a financial burden on your monthly finances. Find a sweet spot that fits your state's insurance requirements while also not stretching your budget too thin.
Shop for discounts. Most insurers offer discounts for bundling home and auto, multi-driver discounts, discounts for students, and safe driver discounts if you have a clean driving record.
Auto insurance is an essential financial safety net that protects you in the event of an accident. You can’t legally drive your car without it. Even if you’re picking up a new car (whether it be from a dealership or a private seller), you need to have a policy on that vehicle.
If you’re currently shopping for a new vehicle, compare rates from multiple auto insurance companies to find the best deal on your monthly premiums. For more information, get insurance quotes, and to get the process started, visit PolicyScout today.