car insurance

Car dealerships generally won’t allow you to drive off the lot until you show proof of car insurance for your new vehicle. That’s because in nearly every state, car insurance is required by law. And dealers don’t want to risk a lawsuit should an uninsured driver cause an accident on the way home, leaving medical bills or damaged vehicle costs financially uncovered.

How do you drive a new car home without insurance?

You likely will not be allowed to drive your new car home without insurance. This is why you will need to make sure that your new car is insured before you go to the dealer to pick it up.

If you already have insurance for an existing vehicle, however, this step could be as simple as making a quick phone call to your agent. That’s because many policies will automatically extend your existing coverage to your new vehicle, at least for a few days. Some states, such as Texas, even require that insurers automatically extend the customer’s existing coverage to a new vehicle.

"It’s important to note, however, that there may still be limitations on the extent of the coverage."

Will my old car insurance cover a new car?

While your existing car insurance may very well automatically extend to your new car, the coverage may not be enough for a new vehicle.

For example, some policies only extend coverage to a new vehicle if the new vehicle is directly replacing a vehicle that the company already insures. And in that case the insurer may only extend the same amount of coverage that was on that vehicle. So if your old car only had liability coverage, which protects another motorist but not your own car, then your new car will also only have liability coverage. If you got in an accident on the way home, damage to your new car would not be covered.

What if I have more than one car?

If you have more than one car, some policies will automatically extend the highest coverage that you already have on any existing vehicle. So if you have one car with collision and comprehensive and a second car with liability and you are adding a third car, the third, new car will automatically have collision and comprehensive extended to it. But, again, if your other cars only have liability insurance, then under such a policy your new car would also only have liability insurance. If none of your other cars have collision and comprehensive, you will need to ensure that you add it before picking up your new car.

To make things even more complicated, rules vary by insurance company and and according to state law. For instance, while in Texas insurance companies are required to extend the same coverage as your car with the most coverage, they do not have to extend the most coverage if the new car is directly replacing another car on the policy. In that case, the law requires only that you receive the same coverage as the car that it is replacing.

Do you buy insurance before or after the car?

While policies that extend coverage to new cars typically give you anywhere from seven to 30 days to inform your car insurance company that you purchased a new vehicle, it is always a good idea to call your agent before picking up the car. For one thing, you will want to make sure that the extended coverage includes collision and comprehensive. If it doesn't, your finance or leasing company will require that you add the physical damage coverage to your new car before you drive it home.

In addition, the last thing you want to do is inadvertently drive home without any insurance, a crime that carries strict penalties.

How much is insurance for a new car?

Insurance for a new vehicle can cost substantially more than insurance on an older vehicle. After all, in most cases the insurer is agreeing to cover the costs of a higher-value vehicle.

To be sure you are comfortable with the new insurance costs, get car insurance quotes while you're still shopping to compare insurance rates by car model. You don't want to be in the middle of purchasing your new vehicle and discover you can't afford the insurance on it.

How do I buy insurance for a new car?

Once you’ve chosen the car model, you’ll need to shop for an insurance company, especially if this is your first car

Begin by deciding how much coverage to buy. You should buy more coverage than your state minimum liability levels if you are buying a new car and have a lot of assets. To help you find the best coverage for your situation, read “How much car insurance should you buy?” and try using the Auto Insurance Advisor tool. To get an idea of what you can expect to pay, use our average car insurance rates tool.

Insurers use different formulas for setting rates, so the price of a policy can vary by hundreds of dollars. That means you could overpay for your coverage if you don’t shop for the lowest rate. You should get quotes from at least three insurers when shopping for a policy.

Read “Tips for how to buy car insurance online” for more information on finding the most affordable car insurance or dial our call center at 1-844-252-4551 for an immediate quote on a policy for your new car.

If you want to drop your current carrier, learn how to switch insurance companies to be sure your coverage doesn’t lapse between the old and new policies. also provides a list of the best car insurance companies as ranked by policyholders.

Once you settle on the coverage amount and an insurance carrier, be sure you have the policy go into effect on the same day you are going to buy the car. Most insurance companies can email or fax proof of a policy on the spot at the dealership.

What is gap insurance?

Gap insurance pays out the difference between what you still owe on the car and the amount your insurer will pay if the car is totaled while relatively new. For example, let's say you bought a new car, financing it with a loan of $30,000. Two weeks later the car is valued at $25,000 when an accident totals it. Your insurer pays the value of the car, leaving you with a $5,000 bill. But if you've got gap insurance, also known as “auto loan/lease insurance,” that bill won't be coming out of your pocket.

How to transfer titles for a new car

The dealership and your lender will typically do the paperwork for the title when you buy a new car. The financer keeps the title until you pay off your loan. Once you own the car outright, the lender will mail you the title.

When you buy a car from a private seller, he or she signs the title over to you – you both sign the appropriate sections on the back of the title.

Once the title is transferred, you need to register the transfer at the Department of Motor Vehicles. Each state has its own requirements, but typically the documents and information you need include:

  • A bill of sale showing the purchase price
  • Proof the title has been signed over to you
  • The Vehicle Identification Number, or VIN (which should be on the bill of sale and title)
  • The current odometer reading

You may have to fill out a form to document the title transfer and so the DMV can reissue the title in your name.

How to register a new car

You can usually register your new car at the same time as the title transfer. When you register the car, in addition to the information you need to do a title transfer, you’ll likely need the following:

  • Proof of liability car insurance
  • Proof that you’ve paid sales tax on the car purchase
  • Certificates showing the car has passed safety and emissions inspections

Do I need insurance if I’m leasing?

Keep in mind if you're leasing a vehicle you may need to upgrade your coverage. Leasing companies require that you carry higher liability limits, of $100,000/$300,000 for bodily injury and $50,000 for property damage. Typically, your insurer can get you the coverage you need within 24 hours.