Auto insurance is a non-negotiable requirement in most states. It does not matter whether your car is 10 minutes old or 10 years old. The fact remains, you need insurance to drive a car. This requirement presents an issue for many consumers looking to purchase a brand new vehicle.

These are the burning questions for those who want to purchase a new ride.

If you fall into this category, below is a detailed overview of insurance requirements when purchasing a new car—including a step-by-step guide to get insured quickly and some useful tips to get the most out of your new policy.

Buying a New Car: Am I Insured?

In short—it depends on your situation.

In most cases, if you are replacing your old car with a new model then you will be temporarily insured to drive the new vehicle under your current policy. This is called a grace period.

Grace periods vary depending on the policy in question, with some spanning up to 30 days and others expiring after just 24 hours. The good news is you can usually add your new car to an existing policy in a few minutes by either calling up your provider and discussing it with them or by accessing your online account.

Either way, drivers that decide to purchase new cars without notifying their insurance provider will be OK to drive their new car for at least 24 hours without insuring it, as long as they bring along proof of coverage under their old car’s policy.

Note: The industry standard for grace periods is 3-4 days, however many policies have shorter or longer grace periods depending on when you purchased your policy.

Caveats to the Grace Period

New or previously uninsured drivers will not be covered when purchasing a new car for the simple reason that there is no existing policy to cover them. So, if you are buying a new car and do not currently own an insurance policy, you will be required to insure the new car prior to driving it off the lot. If you want to get an instant quote from multiple different providers, Online Auto Insurance compares rates for your specific situation.

Insurance Requirements When Buying a New Car

Most dealerships will not sell or lease a car without proof of insurance. So, if you are considering purchasing a new or used car, you need to determine how you will insure it in advance to be eligible to take home the car from the dealership.

Buyers typically have three options here:

  • Option 1: Purchase a new insurance policy before buying a new car or add it to your existing policy prior to purchase.

  • Option 2: Use the grace period under your previous policy and deal with your new car’s coverage after you have purchased the new vehicle.

  • Option 3: Buy the new car without any insurance coverage (you will not be able to take the car home until you prove you are insured).

In most circumstances, employing option 2 will be your best bet, allowing you to drive your new car home immediately, while also providing you with the opportunity to shop around for a better deal on a new auto insurance policy.

Step-by-Step Guide to Insuring Your New Car When Using the Grace Period

Now that you are aware of your options for insuring a new car, let’s take a look at the steps to guarantee that it is properly insured when using the grace period.

Step 1: Check how long your old insurance will cover your new car

As mentioned, buying a new car and the insurance grace period will vary depending on your policy. The first step in getting your new ride properly insured is checking how long you have to complete the process.

Once you are aware of the timeline, you can begin checking out policy and types of car insurance.

Note: If you are leasing a car and your previous policy did not include comprehensive and collision coverage, you will not be covered by the grace period and must purchase this extra coverage first.

Step 2. Check what’s covered under your old policy

Since you are purchasing a new car, you might want to consider whether your current policy is sufficient for your new vehicle. Most policies allow you to either replace your old car (if you are selling it) or add your new car as an additional insured vehicle quickly and easily. However, in both of these cases, you will typically be getting the same coverage as your initial policy.

Step 3: Verify whether you want to continue with your old car’s policy

Even if your old policy seems good, it is always a good idea to take a quick look at the market to see if you can get a better deal.

The verification process can be completed in a few easy steps:

  1. Enter your zip code below

  2. Select your current insurance provider

  3. Enter the new car’s make, model, and year

  4. Answer some quick questions about yourself

  5. Compare coverage across providers instantly

You also have the option of speaking to a dedicated insurance professional that can guide you through the process. They will be happy to give you a call to help you get the best rate and coverage possible.

Step 4: Add Your Car or Purchase a New Policy

If you have verified that your current policy offers you the best coverage and rate combination, go ahead and call up your provider or visit your online account to get your new car added to your policy.

Remember to remove your old vehicle from the policy if it no longer requires insurance.

Tip: Most auto insurance providers want to avoid losing customers at all costs. If you find a better car insurance quote through Online Auto Insurance, call up your insurance carrier and see if they will match or beat that offer. You might end up getting an even better deal and avoid expensive car insurance.

Step 5. Start paying for your policy

Now that you have the best possible coverage for your new car, all you need to do is make those monthly payments and enjoy your new car.

Tips for Avoiding Problems when Insuring a New Car

Buying a new car is exciting. To avoid any issues with your temporary car insurance coverage, reference the following quick insurance tips for insuring a new vehicle.

Tip 1: Never Lapse on an Insurance Payment

Remember that if you miss auto insurance payments, your coverage will be lost. In this case, you will be required to pay a lapse penalty.

To be safe, set up a direct deposit or automatic transaction for bill pay.

While some states require auto insurers to provide a grace period for missed payments, others do not. Driving uninsured can result in huge fines and a major lawsuit if you were to get in an accident. Be safe and prioritize insurance payments over other bills.

Tip 2: Add Comprehensive and Collision Coverage

While most states only require liability coverage to drive a car, dealerships have their own individual requirements.

You will be ineligible for a car lease without comprehensive and collision coverage, so adding these extras to your current policy will put you in a great position if you decide to upgrade in the near future.

Tip 3: Add Your Car Before You Finalize the Deal

Most insurance providers will be relatively flexible when adding your new car to your insurance policy. If you can, it is always a better idea to finalize coverage for your new vehicle prior to making the final purchase.

Plus, getting the process completed early will shed light on your financial obligations before you agree to terms:

  • It will allow you to project your monthly insurance payment

  • It gives you a better idea about how much your new car is actually going to cost you

If the deal were to fall through, your insurance provider will have no problem canceling the added car.

Tip 4: Do Your Homework Before Selecting a Provider

Comparing car insurance company rates online through Online Auto Insurance is the best way to ensure that you are getting a great deal on car insurance. By comparing insurance company rates and coverage levels across providers, you can make certain that you are fully covered when you need it most. Before you choose your car insurance, see our guide on how to lower car insurance rates.

Learn More Through Online Auto Insurance

If you’re curious about how to cancel car insurance or how to suspend car insurance temporarily, consider reaching out to the experts today, or look through our blog. We have answers to all the most common questions, from do you need insurance on a car that doesn't run to what kind of insurance policy is right for your car.

Sources:

AAA. CA Car Insurance. https://calstate.aaa.com/insurance/car/articles/california-car-insurance

Auto Technician. New Car Insurance Grace Period in California (Important for CA Drivers). https://cartreatments.com/new-car-insurance-grace-period-in-california/

Demuro, Doug. Buying a Car: How Do You Add Insurance If You Buy Over the Weekend? https://www.autotrader.com/car-shopping/buying-a-car-how-do-you-add-insurance-if-you-buy-over-the-weekend-225720