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Ask the Car Insurance Expert

How long do I have to buy insurance on a car I just purchased?

If you don't have car insurance on another vehicle, you'll need to buy a policy before you drive the new car off the dealer's lot. In fact, in states that require drivers to have car insurance, the dealer will need to see proof of insurance before you drive away.

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If you already have car insurance on a vehicle, the current policy will likely cover the new car temporarily. Usually you have 14 to 30 days to let your insurance company know you purchased a new car. The time period varies by company. Some states also have rules for how long the grace period must be. Don't put off calling the insurance company. You'll end up driving uninsured if you don't buy coverage before the grace period ends.

Keep in mind that during the grace period, only the existing coverage carries over to the new car. If you don't have collision and comprehensive insurance on your old car, the new car won't have that coverage either until you purchase a new policy. That means you will have no insurance to cover damage to the car. If the vehicle is stolen or totaled in an accident, for instance, you will have to pay out of your own pocket to replace the car.

Although most states require you to buy liability insurance -- which covers damage and injuries you cause others -- no states require collision or comprehensive insurance. But if you get a loan to buy the car, the bank will likely require you to buy those optional types of coverage.

When financing a vehicle purchase with a car loan, you might also consider gap insurance. This coverage pays the difference between the amount you owe on the car and the amount the insurance company pays if the car is totaled. New cars depreciate as soon as you drive them off the lot. Car insurance companies generally pay for the actual cash value of a vehicle if it's damaged beyond repair. Without gap insurance, you could still owe money on a destroyed car, even after the insurance company has compensated you for the vehicle's value.

For more, see Auto(matic) coverage for new cars.

 

Last updated: Mar. 19, 2012
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