Do you need insurance coverage to drive your new car off the lot?
One of the more common — and often misunderstood — concerns arising from the purchase of a new car is the auto insurance grace period. The insurance grace period is the time during which you are allowed to drive a new vehicle before adding it to your car insurance policy.
Here’s the quick answer: you must always carry auto insurance when you drive. However, the issue is nuanced, depending on your insurance company and current insurance status. Read on to find out more about car insurance grace periods and how to ensure you're properly covered when driving your new car.
Whether or not you have an insurance grace period for a new car depends on your current insured status and your insurance company’s individual policy. If you currently have an active insurance policy, you may be allowed a short period of time (typically two weeks) during which you can add the new car to your policy. Most car insurance companies will extend coverage to your new vehicle during this period in good faith.
If you purchase a car from a dealership, expect the dealer to confirm your insurance status before you drive off the lot. This is especially true if you lease your car, as your dealership is still technically the owner of the car.
If you are not currently insured, you will need to acquire insurance before getting behind the wheel. Finding a policy usually doesn’t take too long. A driver can typically get a new car insurance policy within an hour. Same-day car insurance is fairly common, and underwriters can put policies together with ease. This can even occur while you are at the dealership. Most companies only require you to put a down payment to start insurance coverage.
The auto insurance grace period usually lasts between seven and 30 days. This may vary by company. Progressive, for instance, has a grace period of 30 days. Some insurance companies, on the other hand, may not even offer a grace period. Regardless of how long your insurance company allows you to go without adding your vehicle to your policy, it’s still wise to add it sooner than later.
As long as the collision occurs within your insurance company’s grace period, you should be covered. Your coverage limits will be the same as they were on your previous vehicle. For instance, if your policy includes full coverage (collision and comprehensive), that coverage would extend to your new vehicle. You can expect your insurance rates to rise if you file a claim.
When buying a car from a private seller, the same rules apply. All drivers are required to have insurance. Again, if your insurance company allows a grace period, coverage will extend to you and the vehicle from the time you drive it home until the end of the allotted period.
Unlike a dealership, a private seller isn’t likely to require proof of insurance before driving off. If you don’t currently have a policy, it’s best to purchase coverage as soon as you decide to buy the vehicle. Remember: it doesn’t take long to get insured, so it’s best to compare quotes early.
It’s crucial you don’t allow your auto insurance coverage to lapse. If you go beyond the grace period without insurance coverage, you could face serious consequences. For one, you won’t be covered should you be in an accident. This can leave you personally liable for any damages that you cause. Secondly, once you reinstate your insurance, you can expect to pay higher rates.
Lapses in insurance coverage are among the many factors insurers assess when determining rates. A lapse may lead to you being defined as a high-risk insurance client, which could also lead to more expensive insurance premiums. For instance, a driver with five consecutive years of coverage history pays an average of $216 less per year than a driver with no recent insurance history. As such, it’s important to maintain coverage. To be on the safe side, begin searching for insurance quotes as soon as possible.
Getting a new car can be exciting. However, don’t allow your excitement to keep you from taking care of important details like securing insurance coverage. It’s vital to get coverage as soon as possible. A dealership won’t contact your insurance company for you. If you are uncertain as to whether or not your insurer will build in a grace period, contact your insurance agent or company before the purchase to make sure.
It’s always better to update your coverage than to rely on an insurance company’s grace period. Remember that getting insurance doesn’t have to be difficult or take too long.