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

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Purchasing a new car is an exciting experience, but before you can hit the road, there’s one crucial step you can’t overlook: securing car insurance. You need to have insurance in place before you drive your new vehicle off the lot, ensuring that both you and your new car are protected from the moment you take ownership.

In fact, most dealerships and lenders require proof of insurance before finalizing the sale or allowing you to drive away. This is because, legally, driving an uninsured vehicle is prohibited in almost every state, and financially, it’s risky for both the car owner and the lender.

Even if you already have an existing auto insurance policy, you’ll likely need to inform your insurer of the new vehicle purchase to ensure adequate coverage is in place. 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.

Key Takeaways

If you are buying a car for the first time and don’t already have auto insurance, you must purchase a policy before taking possession of your new vehicle.
If you are replacing an existing car on your policy, you typically have from 7 to 30 days to inform your insurer of your new car. However, some insurers don’t provide automatic coverage so check before buying your new car.
Whenever you make any changes to your policy, such as adding a new car, shop around for car insurance to save.

When should you buy car insurance for a new car?

Timing is everything when it comes to buying car insurance for your new vehicle. Ideally, you should have your insurance ready before you even step into the dealership. This way, you’ll be fully covered the moment you take ownership of the car, ensuring you’re legally protected and financially secure.

Why you need car insurance before finalizing your new car deal

Before you drive off in your new car, it’s essential to have insurance in place. Without it, not only could you face legal penalties, but you might also encounter delays in the buying process. Many dealerships won’t allow you to leave the lot without proof of coverage, making it crucial to plan your insurance purchase ahead of time.

Additionally, if you’re financing your vehicle, most lenders require that you have full coverage insurance in place as a condition of the loan. This ensures that both you and the lender are protected in case of an accident or damage to the vehicle right after purchase. Taking care of your insurance needs before finalizing the deal can make the buying process smoother and help you avoid unexpected complications.

How to get car insurance before buying a new car

Here’s how to secure auto insurance coverage before you purchase 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

Read more about car insurance coverage for new cars.

Prachi Singh

Contributing Researcher

Prachi is an insurance writer with a master’s degree in business administration. Through her writing, she hopes to help readers make smart and informed decisions about their finances. She loves to travel and write poetry.