Whether you're trading in or trading up for a new vehicle, you have to insure it in most states. Car dealerships are likely to require you to have insurance for your new vehicle before you drive it off the lot. If you already have auto insurance, you can use that policy to temporarily cover your new vehicle.
| If you already have car insurance, you can use that policy to temporarily cover your new vehicle. |
Generally speaking, you have 30 days to get your new car registered and your title squared away, and auto insurers provide a window of time for you to inform them about your new vehicle. (An industry-wide rule is that as long as you're not buying a vehicle that's going to be used for business, you'll have coverage under your existing policy for at least 14 days. However, many insurers allow 30 days.) It's imperative that you tell your insurer about your new car within the grace period: You could be driving without insurance entirely if you don't.
If you've dropped collision and comprehensive coverages on your old car and carry only liability, that's all that will carry over to your new car until you inform your insurance company of the change. If you're financing your new car, your bank will probably require you to add collision and comprehensive before you can complete the transaction.
Here are examples of how some major insurers handle transfer of coverage.
Allstate: You must inform Allstate within 30 days of buying a new vehicle; after that, there is no coverage.
If you add an additional car, you also have 30 days to tell Allstate. Within that time frame the new vehicle will have the same coverages and deductibles that your other car carries.
Progressive: Progressive gives you 30 days to notify them of a new car. After that, if you previously carried collision and comprehensive coverages, they won't apply to your new vehicle, even though you're still paying for them. Only your liability coverage will still be in effect.
If you add another car without telling Progressive, none of your auto insurance applies to it.
State Farm: You have 14 days to let your State Farm agent know that you've bought a new car. After 14 days there is no coverage for the vehicle.
If you don't already have insurance and you're buying your first car, you're going to have to get an insurance policy before you can tool around town in your new auto. In states that require auto insurance, dealers need to see proof of insurance before they can let you drive off the lot.
If you're already insured and the dealer asks to see proof of insurance before you can burn rubber, show your current insurance card. You're covered. If you're leasing a vehicle and need to upgrade your coverage, generally your insurer can get you the coverage you need within 24 hours.
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