The Michigan new-car insurance grace period is 2 to 30 days in most cases. The new-car grace period is how long insured drivers are allowed to drive a newly purchased vehicle before adding it to an existing car insurance policy. If you don’t have a current policy, you’ll need proof of personal injury protection, property protection insurance, and liability coverage before you can legally drive or register your car in Michigan.
When you buy a new car in Michigan, the time you have to notify your insurer can vary because there are no state laws guaranteeing how much time insurance companies must give you to switch your existing policy to a new car. Each insurance company sets its own grace period. That’s why it’s important to find out how much time you have to contact your insurance company and how much coverage your new car will have according to your specific policy details.
When You Need Insurance to Buy a New Car in Michigan
If you’re financing a car, you will probably be required by your lender to have proof of insurance before driving off the lot. You can get the information you need for a policy, like the car’s VIN, from the dealership before completing the purchase. If you do have an active policy, your current proof of insurance should be all you need.
If you’re paying cash or buying a car outright from a private seller, you probably won’t be asked to provide proof of insurance to take possession of the vehicle. Either way, you still have to meet minimum financial responsibility requirements to drive legally in Michigan. The state requires drivers to have at least $50,000 in bodily injury liability coverage (up to $100,000 per accident), along with $10,000 in liability coverage for property damage and $1,000,000 in property protection insurance. Most drivers must buy personal injury protection (PIP) as well, though there are some exceptions for policyholders with Medicaid or Medicare.
If you’re leasing or financing a car, you’ll probably also need collision and comprehensive coverage to protect the lender’s investment. Because you have to provide proof of insurance before you can take possession of a newly financed car, some insurers extend comprehensive and collision coverage to existing customers in good faith, regardless of whether their current policy has those types of coverage. If that’s the case, your grace period will be shorter—2 to 4 days instead of 7 to 30.
How the New-Car Insurance Grace Period Works in Michigan When You’re…
- Replacing your old car with a new car. Most insurance companies offer a 7 to 30 day grace period if you replace a covered vehicle on your policy. The same type and amount of coverage that applies to the car you’re replacing will apply to the new one. If you have multiple cars on your policy, Michigan requires that your new car is covered by the highest level of coverage on the policy.
- NOT replacing your old car with a new car. If you aren’t replacing your car when you purchase a new one, you should confirm that you have at least minimum liability coverage for the new vehicle. Not all insurance companies automatically extend coverage when you increase the number of vehicles on your policy—going from two to three cars, for example. If they do, it might be for a shorter time, usually 2 to 4 days.
Although you probably have a grace period if you’re already insured, it’s best not to depend on it. Contact your insurance company as soon as possible to let them know about changes to your policy, especially when it comes to confirming coverage for a new car.
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