When Should Insurance Be Purchased when Buying a New Car?
The timeframe in which to purchase auto insurance on a new car is dependent on a few different circumstances. If an individual is currently uninsured, the automobile dealership generally will not let the vehicle be driven off the lot without proof of a policy; in this case, coverage would need to be purchased before the transaction is complete.
Consumers may have another option because some dealerships or financial institutions will provide daily coverage until proof of insurance is purchased and provided, but this usually comes at an inflated rate. If a consumer does choose to go this route, they should inquire whether or not this policy covers the owner's liability; many lenders will only provide Comprehensive and Collision to protect their investment for physical damage.
Tips for Buying Auto Insurance on a New Vehicle
It is always a good idea to obtain coverage on one's own rather than from the lender due to the fact that it can save a significant amount of money since the lender's rates are usually based on a daily basis and can be quite expensive; these policies usually do not cover the interest of the buyer and may leave them liable for any damages or injuries they cause prior to obtaining a Liability policy.
Before purchasing an automobile, many individuals make a very common mistake and do not complete a quote comparison based on the vehicle that they are looking into buying. Although, consumers set out to buy automobiles with a certain price range in mind, many automatically assume that the cost for coverage will be similar to all vehicles in that price range, only to find out that their premiums will be much more than anticipated.
The reason that premiums can vary on models that are in similar price range is due to the fact that some may be much riskier to insure. For example, most financial institutions will require the borrower to maintain Comprehensive and Collision coverage throughout the term of the loan as part of the agreement; if the automobile being financed has a high theft rate or is statistically shown to have a higher chance of being in traffic accidents, the premiums for coverage for physical damage can be much higher than a vehicle of similar value.
Since individuals usually know about how much they plan on spending and the type of vehicle they are interested in, it may be a good idea to obtain quotes on the automobile before making the purchase. By doing so, the consumer can avoid the need to have to obtain coverage at a price that they cannot afford or feel is unreasonable. In addition, since a price range has already been established, individuals may want to compare rates of different models in order to determine which would fit their budget best.