Yes, you need insurance before you buy a used car from a dealership, or else you will not be allowed to drive it off the lot. You technically don’t have to show proof of insurance if you’re purchasing the car outright from a private seller, but you would be risking serious consequences if you choose to drive uninsured.
If you already have car insurance, your insurer likely has a grace period during which your newly purchased used car will be covered, which gives you time to officially add the vehicle to your policy. This grace period typically ranges from 7 to 10 days, so check your state’s laws and insurer’s rules in order to make sure you’re following the guidelines.
If you don’t have an existing policy, you should get quotes prior to purchasing your car. Even without a specific vehicle identification number (VIN), you can give your personal information to an insurance agent and then officially activate your policy once you know the car’s details. However, if you’re buying the car on the weekend when most insurance offices are closed, you will have to either wait to drive your new car or purchase the policy online while you’re at the dealership.
No, you do not need insurance to buy a car, but you will need insurance to drive the car home. Most dealerships require proof of insurance before allowing you to leave with a car, since almost every state requires drivers to have car insurance coverage whenever they are behind the wheel.… read full answer
If you currently have a car insurance policy, most insurers will cover a new car up to your existing policy limits for 7-30 days. However, state laws and company policies differ, so you should ideally communicate with your insurer before you go car shopping. And if you’re leasing or financing a car, be sure to check the lender’s or lessor’s insurance requirements, since you might need to adjust your policy details accordingly.
On the other hand, if you are purchasing a car and do not have an existing auto insurance policy, it’s best to buy insurance before going to the dealership or private seller. If you know the exact car you’ll be purchasing, you can ask the seller for the vehicle identification number (VIN) in advance and use the VIN to purchase a policy tailored to that car. Otherwise, you can get insurance quotes for multiple car models beforehand and buy a policy before you actually drive off the lot.
No, you cannot drive a car without insurance even if you just bought it because driving without insurance is illegal. Whether you bought the car from a dealership or a private seller, you will need insurance coverage to drive it home legally.
If you have an existing car insurance policy for another vehicle, however, you may have a grace period that allows you to drive the new car home without having it explicitly listed on your policy yet.… read full answer
New-Car Insurance Requirements by Situation
You already have a car insurance policy for another vehicle: Your existing policy may have a grace period in which you can drive the new car home without having coverage for the car itself. You will typically need to add the new car to your existing policy within 7 to 30 days.
You don’t have car insurance at all: You will need to get coverage to be able to drive home legally.
If the dealership has in-house insurance brokers, they will make sure you are all set with coverage. Otherwise, you can quickly get car insurance online or over the phone. Using the vehicle’s identification number, your driver’s license number, and some other details about yourself, you may be able to get coverage in under an hour depending on the insurer.
You may have anywhere from 2 to 30 days to tell your insurance company that you bought a new car if you are already insured, depending on financing and coverage details. If you don’t have car insurance already, you’ll need to get a new policy before you can legally drive your new car. Most car dealerships require … read full answerproof of insurance to drive off the lot, so you’ll have to do some planning.
Either way, it’s wise to get car insurance quotes for different vehicles before buying one. That way, you’ll have a sense of which make and model is likely to increase or decrease your premium the most. At the very least, it’s something to take into account when picking your new car.
If you have an existing car insurance policy, there are two common grace periods for getting insurance on a new car:
2 to 4 days is common if you are adding a new car to an existing policy. Most car insurance companies will extend coverage to the new car in good faith, since it is usually required to get a loan. Such policies are designed to allow you to drive your new car home and make a call to your insurer quickly thereafter.
7 to 30 days is common if you are replacing a covered vehicle with a new car you purchased outright. In these cases, you can probably expect to have the same level of coverage as before. If you had liability-only coverage on the car you’re replacing, your new car would also have liability-only coverage.
Your policy term will transfer to the new vehicle in most cases, so you won’t have to start over with a new six-month or one-year policy.
If you are financing or leasing a new car, you may also want to consider adding gap insurance to your policy. Gap insurance will help pay the difference between the car’s market value and what you owe on your loan. Although collision coverage will pay fair market value for a totaled car, that may end up being less than you owe if you total your new car right away.
No matter how much time your insurance company gives you to get insurance on a new car, it’s best to reach out as soon as possible. Coverage specifics vary widely depending on state laws, insurance company rules, and individual policy provisions. If you miss a deadline, you could end up driving uninsured, which could result in legal fees, higher car insurance premiums, loss of your driver’s license, and more.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.