Do I need to purchase car insurance before I buy a new car?

car off the lot and drive legally.

If this is your first car and you don’t already have car insurance, you’ll need it before you drive the new car off the lot. In addition, if you’re financing the vehicle, your lender will likely require you to have insurance at the time of the purchase.

If you already have car insurance and you’re replacing your car, you generally have anywhere between 7 to 30 days to notify your insurance company of the purchase. However, some policies do not extend your coverage at all, you must call immediately to add your new vehicle to your policy.

With an existing policy that contained comprehensive and collision, your auto insurance premium for these coverages will be adjusted based on the new vehicle’s make and model. Your liability premium will also be affected. You should inform your insurance company about the new car within the appropriate window, if you are given a grace period to add it, or you could be driving without coverage.

Rules vary by the insurance company with regards to adding a new car to an ongoing auto policy. For example, some insurers provide automatic coverage for the additional car but you must still notify them within 30 days, while other insurers provide no automatic coverage for additional cars.

When you’re shopping for a new car, you really should also shop around for car insurance. Even if you have an existing auto policy, it may be cheaper to insure your vehicles with a new car insurance company. Use our car insurance comparison tool to find the average cost of car insurance on new vehicles.

​IRDAI has decided to scrap the three year long term motor insurance comprehensive package for four-wheelers and a 5-year package sold for two-wheelers. With these changes being implemented a person buying a car after 1st August will be paying less. According to the latest rules by the Insurance Regulatory and Development Authority of India, these changes will only be on long term motor insurance policies offered on the liability of own damage for 3 and 5 years.

According to the Indian rules, every motor vehicle owner must have a third-party liability insurance cover whereas having an own damage cover is not necessary. Even though third-party liability is mandatory very less amount of people follow the rule and there is a huge challan each year on vehicles for not carrying insurance. To compel this decision in August 2018 Supreme Court of India had directed to make the long-term third-party insurance compulsory with every purchase of the motor vehicle. This included a 5 year long-term package for two wheeler insurance, a 3-year plan for car insurance​ and a bundled cover with own damage for both.

Now IRDAI has decided to scrap this plan and with these changes, the vehicles will be available at a much lower price than they were previously.

Do I need insurance to buy a car? 

Yes. One of the most important things to consider when purchasing a car is car insurance. If you do not have an existing car insurance policy, you need to purchase one before you can take the car off the lot. 

But if you already have a car insurance policy, then you don’t need to get a new one. Simply add your new vehicle to the insurance by getting in touch with your insurer. 

A car insurance policy helps to protect you financially in the event of an accident and is required in most states. The amount of coverage you need will depend on a number of factors, including your car’s value, your driving record, and your state’s minimum requirements. 

How to get insurance before buying a car
Here are the steps to buying auto insurance coverage before purchasing a car:

Choose the car you are going to purchase
Gather the required information about the car like the model, make, and vehicle identification number (VIN)
Compare car insurance quotes from multiple car insurance companies
Finalize the policy based on your budget and coverage needs
Submit the vehicle details and make a payment for your insurance policy

How long do you have to get insurance after buying a used car?
The number of days to get insurance for your newly purchased used car depends on whether you have an existing auto insurance policy or not. If you have a policy for another vehicle, you will have seven to thirty days before you add your new car to your policy.

But, if you buy a used car and do not already have insurance coverage, you need to buy a policy before you can take possession of your car. Driving a used car without insurance is illegal in most states by law, so it is important to get insurance before buying a used car.

How long do you have to get insurance after buying a used car? 

The number of days to get insurance for your newly purchased used car depends on whether you have an existing auto insurance policy or not. If you have a policy for another vehicle, you will have seven to thirty days before you add your new car to your policy.

But, if you buy a used car and do not already have insurance coverage, you need to buy a policy before you can take possession of your car. Driving a used car without insurance is illegal in most states by law, so it is important to get insurance before buying a used car.

How long can you drive without insurance after buying a car? 

Most people who already have an insurance policy are required to report any new car they get, to their insurers within 7-30 days of getting it. But if you don’t have auto coverage, you need to have car insurance even before you buy the car.

The grace period of seven to thirty days varies from one state to another, so it is important to check your state’s requirements.

How to transfer old insurance to your new car

If you’ve decided to replace your old car with a newer model, you’ll also need to transfer your old insurance to your new car and verify that you have all the right coverage.

Picking out a new car is the fun part of the equation. Transferring your auto insurance isn’t necessarily fun, but it’s just as important. And timing is critical.

The transfer itself doesn’t cost any extra money, but having a new loan or lease on the vehicle may require an increase in coverage, depending on what you already have. The cost and needed coverage levels will depend on the make and model, whether you finance it, and anything that might have changed on your driving record.

Below we’ll break down the steps for transferring car insurance.

Steps to transferring your insurance to your new car

Before you go car shopping, make sure you know what you need to do to transfer the insurance coverage. If you find the perfect car, you’ll want to know how to get it covered quickly.

Call your insurance company as soon as possible

Let your insurance company know as soon as you can about your new purchase and ask how long you have to transfer your policy. Companies have different grace periods to insure the new vehicle, which also depend on the state in which you live. This period can range from a few days to nearly a month.

“Typically, drivers have about 30 days to switch their insurance from their old vehicle to a new vehicle,” says Lauren McKenzie, an agent with A Plus Insurance in Liberty, South Carolina. “However, keep in mind if you are needing different coverage on the newer vehicle, it may not be included in your policy.”

There is no reason to wait, as you want to avoid the potential costs of an accident or other damage during this time to protect your investment. Also, the insurance company will backdate any new charges to the time of your new purchase, so waiting doesn’t save you any money.

Review your old policy

Read through your old policy carefully to see which coverages you currently have. Keep in mind that if you financed your vehicle, your lender will require you to purchase full coverage including comprehensive and collision.

“If you own an older vehicle which just has liability, only the liability will transfer to the new vehicle. You will need to add full coverage to that new vehicle as soon as possible in order to be properly covered,” McKenzie says.

A new model or “high-theft” vehicle is more expensive to protect, and your premiums will go up. If you’ve had any traffic violations or your address has changed, your rates can also shift. If you currently have only the state minimum, your old policy may not be enough coverage, especially if you are taking out a loan or lease.

“If you had dropped down to liability coverage only on your old car, expect to pay a good $500-$1,000 more per year on your insurance,” says Christopher J. Marquette, a Grover Hermann Professor of Business at Millikin University.

This is an excellent time to shop around for the best deal and ask about discounts.

Your agent can often bundle your home and auto together for savings if they haven’t already. Or, you can use a reliable online auto insurance rate comparison tool and buy policies online.

If you’re taking out a loan, find out what’s required

If you’re taking out a loan, the financing company will require comprehensive and collision coverage. Your new vehicle is collateral for the loan, so most lenders require full coverage insurance. The same goes for leased cars.

The financing company, whether it’s the car dealership or your local credit union, will tell you what’s needed before allowing you to drive the car off the lot.

The insurance company will want specific details on the vehicle, its safety features, where it will be garaged and the loan details from the lienholder.

 “Other important facets are knowing the VIN number, the names of all family members who may be regular drivers and any special driving circumstances you have such as using your vehicle for ridesharing,” says Marquette.

Understand your coverage options
Every state has a legal minimum amount of car insurance, but that doesn’t mean you should choose the rock bottom coverage option. Legal minimums don’t protect your car from damage– they only pay for damage to another person’s vehicle, property or medical bills. And they are rarely enough coverage for even a moderately serious accident.

Be sure to consider the out-of-pocket costs of an accident or other damage without comprehensive and collision coverage. What seems like savings now can end up costing you much more in the event of an accident.

Some policies provide a rental if your car is in the shop, and some have roadside assistance options. You can investigate these features if you’re already reviewing your coverage.

Types of coverage refresher:

Minimum coverage (different in each state): Liability for bodily injury and property damage to another party
Comprehensive: Weather-related damage, vandalism, theft, glass damage, hitting a deer
Collision: Repairs or replacement of vehicle after a collision with another car or object
Other insurance required in a handful of states: PIP, MedPay, uninsured motorist coverage

What if this is my first car purchase?
If this is your first car purchase and the title will be in your name only, you will need your own insurance policy.

“If you’ve been on an insurance policy for at least six months, switching to a policy all on your own will be a little cheaper since you will have a continuous insurance discount applied on the new policy,” McKenzie says.

If a parent or guardian is the owner or co-owner of your new vehicle, you may be able to retain the same policy.

“Most family plans are multi-vehicle, usually covering up to 5 automobiles per family,” Marquette says.

You can contact the same insurer that handles your family’s plan or spend a little extra time in the dealership’s finance department – they often have an insurance agent who can help you right then and there. You will need all the same basic info.

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