Auto(matic) coverage for new cars
In most states, car dealerships will require you to have insurance for your new vehicle before you drive it off the lot. If you already have car insurance for your current vehicle, your existing policy will temporarily cover your new car. Even though you are not required to inform your insurance company before buying a car, you don't want to wait too long after your purchase.
In most cases, you will have 14 to 30 days to inform your car insurance company that you purchased a new vehicle. As long as you're not buying a vehicle that's going to be used for business, you'll likely have coverage under your existing policy. It's important to inform your insurer about buying a new car within the grace period. Otherwise, you could be driving without insurance entirely and not even know it.
If you've dropped collision and comprehensive coverage 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 of buying your new car.
Here are examples of how some major insurers handle transfer of coverage to another car. Your state may have a law that dictates a minimum timeframe.
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 coverage and deductible that your other car carries.
Progressive: You have 30 days to notify Progressive after you purchase a new car. If the new car replaces your old insured car, it will have the same coverage as the car it replaced for 30 days. After that, if you previously carried collision and comprehensive coverage, it won't apply to your new vehicle. Only your liability coverage will still be in effect for the remainder of the policy term. If you buy an additional car that doesn’t replace an existing vehicle, it will have the highest coverage you currently have in your policy -- but only for 30 days and as long as all your vehicles are insured by Progressive.
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.
But "if the state laws require more, say 30 days, we would have to abide by that ruling," says Jeff McCollum, spokesperson for State Farm. "But the vast majority of states is 14 days for us."
Know your options
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 buy 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.