Purchase of a new car can be thrilling, but before driving off the lot you should secure both comprehensive and collision coverage as well as possibly gap insurance.
Many lenders require that you carry this form of coverage when trading in a car; your current policy typically offers protection for an indeterminate time period after trading it in.
It’s Not Expensive
There’s no reason to pay more for auto insurance when buying a new car; chances are your existing policy should cover it depending on how the insurer classifies vehicles. Transferring coverage to a new vehicle typically requires calling your insurer and providing some details about it – usually, this should be simple! Reevaluating your policy options on the new car can also be beneficial, since your former selections may no longer suit its type. Shop around for lower premiums or more cost-effective policy solutions such as lowering deductibles, expanding collision coverage amounts or bundling policies with other types such as home or life coverage.
Finding the appropriate auto insurance for your new car is vitally important to both you and your financial investment. When choosing coverage, take into account its value as well as any extra features such as roadside assistance or rental car reimbursement that might come in handy. Furthermore, determine whether gap insurance (which covers any disparity between what your insurer pays out if your vehicle is totaled/stolen and what remains outstanding on loans) might be needed in case something unexpected should happen to it.
Although it’s technically possible to drive off with a new car without insuring it, doing so should never be done. Most states have laws against driving without auto insurance and you could face fines if caught without coverage. Furthermore, should an accident occur with such a vehicle while uninsured, your lender could require you to carry additional liability coverage or even cancel your loan agreement according to Policygenius.
If you require coverage before taking your new car off of the lot, purchasing it at either the dealership or before purchasing may be available to you. Temporary policies may cover you while waiting to add your new vehicle onto an existing policy; however, these temporary policies may not include comprehensive or collision coverages as per Policygenius.
It’s Easy
Assuming you don’t plan to buy only one vehicle and already have coverage on other vehicles in your household, your current policy should provide at least temporary coverage for your new purchase. Depending on the policies of your insurance provider, this may enable you to drive away after providing proof of coverage at the dealership and signing a lease or financing agreement in which you promise to insure it later.
The dealership should inform you how long your existing coverage extends for, though in most cases this should only last four days. At that point, contact your insurer and add your new car into the policy.
As with most aspects of car ownership, providing your insurer with information about your new ride – its make and model, VIN number and mileage is often sufficient to get covered by an insurer. Furthermore, shopping around can often save money; many sites like NerdWallet’s auto insurance comparison tool allow drivers to compare quotes from multiple providers.
Mark Fitzpatrick is an experienced property and casualty insurance analyst, having studied the P&C insurance market for more than five years. Currently leading content production on MoneyGeek’s P&C section and being quoted in numerous industry publications.
To discover your specific insurance needs when buying a vehicle, speak to an independent agent or Travelers representative. Also if leasing or financing the new car, review the terms of your lease/finance contract to make sure you’re meeting all requirements, such as required minimum coverages and types and limits of comprehensive and collision coverages. In certain instances, such as when trading in your current car for another one with loans attached, lenders may insist that higher collision and comprehensive coverages be carried than required by state law – in such an instance it would be best practice to buy new policy on the one planned.
It’s Legal
Many states mandate car insurance for all drivers, and most dealerships won’t let you drive off the lot without proof. Even if paying cash for your new vehicle, comprehensive and collision coverage are important considerations if financing or leasing your vehicle; comprehensive can cover repair or replacement if it is damaged in an accident and lender requirements may include this coverage as part of financing agreements or lease contracts. Also consider optional coverage such as roadside assistance or rental car reimbursement as additional coverage options.
If you already have auto insurance on another vehicle, extending it to your new purchase could be as easy as purchasing it; many insurers offer grace periods of up to 30 days for adding it officially onto the policy. As each car’s coverage varies greatly, be sure to speak with an independent agent or Travelers representative as soon as possible about what specific coverage might apply to you.
Addition your new vehicle to an existing policy may be cheaper than purchasing separate car insurance coverage, depending on your state and car make/model. However, its value will change after being added, and could become more costly should you increase or decrease coverage amount accordingly.
Mark Fitzpatrick has spent five years conducting original research and producing targeted content for drivers at MoneyGeek, leading P&C insurance content production. Featured in numerous financial and insurance publications like CNBC, NBC News and Mashable as a financial expert; moreover he’s frequently been quoted in publications like Insurify to compare car insurance quotes & save time and money – simply enter your zip code!
It’s Timely
Most new car dealerships require drivers to have insurance before driving off the lot, and even if they don’t it’s best to secure coverage as quickly as possible. Timing may differ depending on your state and provider; usually within 30 days should suffice; any longer and you could face serious penalties from driving without proper protection.
Regarding coverage needs and amounts, your needs will depend on whether or not you’re leasing or financing your new vehicle. Lenders may mandate certain coverage types and limits – including collision and comprehensive. When communicating with your insurance provider about how you intend to use the new car, be sure to share details that could impact both rates and eligibility for discounts.
Your new vehicle’s make and model will also have an effect on its premiums, since vehicles with multiple losses tend to be the costlier ones to insure. But other rating factors must also be taken into account, including value, repair cost, special features and theft risk.
Typically, when trading in an insured vehicle at the dealership and trading it in, your current policy will transfer to your new one. If you had comprehensive and collision coverage on your current car, these coverages should transfer across. However, only liability will transfer over. According to The Zebra.
As soon as you make a major purchase, be sure to contact your insurance provider so they can update your policy with accurate details. This will help avoid any coverage gaps that could prove costly in case of an accident or claim.
Contacting the car insurer that handles your family policies is usually best; many insurers offer 24/7 customer service hotlines or live chat features as an alternative. If calling directly is too intimidating, request a quote while at the dealership with one of their agents present and have them assist with that quote immediately.