“Do You Need Car Insurance to Buy a Car? Find Out Here”

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Do You Need Car Insurance to Buy a Car?

You’re excited about buying a car. You’ve saved for the down payment and spent months finding the perfect vehicle. Now, you’re ready to get the keys to your new car. But before you drive off, you need to consider auto insurance. Depending on your situation, you may need a new policy or an update to your current one.

What Insurance Coverage Is Required?

Nearly every state mandates a minimum amount of car insurance to legally drive. Therefore, you’ll almost certainly need car insurance to buy and drive a vehicle without breaking the law. Additionally, many car dealerships require you to be insured before you can drive off in your new car. Most dealerships can provide temporary insurance, but the coverage duration and details can vary. You may have from a week to a month before this temporary coverage expires and you need a long-term policy.

How to Get Insurance Before Buying a Car

If you already have car insurance, you can update your policy with information about the new car. Most insurers offer a grace period—typically up to 30 days—to add a new car to your existing policy. Coverage for your new car will be the same as your current policy unless you make changes. If you don’t add your new car before the grace period ends, you could face rate hikes or fines.

Required Coverage Types

Required coverage usually starts with liability insurance, which includes:

• Bodily injury liability: Covers medical expenses for treating people injured in an accident you caused.
• Property damage liability: Covers costs related to fixing a car or property damaged in an accident you caused.

Many states also require:

• Personal injury protection (PIP) or medical payments coverage: Pays medical expenses for your injuries and your passengers’ injuries in an accident, regardless of fault.
• Uninsured motorist coverage and underinsured motorist coverage: Covers injuries or damage caused by a driver without insurance or with insufficient insurance.

If you’re financing or leasing a car, you generally must buy collision and comprehensive coverage:

• Collision coverage: Covers repairs or replacement after a collision.
• Comprehensive coverage: Covers incidents other than collisions, such as theft, fire, or vandalism.

Trading in Your Old Car

When trading in your current car for a new one, you may transfer your insurance coverage. The buyer typically obtains their own coverage for your old car. Transferring your coverage involves applying your current policy to your new car. Ensure your existing coverage is adequate for the new car or make necessary changes. If you fail to transfer coverage, you may end up with no insurance after the grace period expires, making it difficult to obtain new coverage and leaving you financially vulnerable.

Buying an Additional Vehicle

Adding an additional vehicle to your current policy is similar to swapping out one car for another. You’ll need to provide details about the new car, such as its year, make, and model. You can often add a vehicle online or over the phone. Ensure the coverage meets your state’s requirements and check if your lender or leasing company requires collision and comprehensive coverage. Ask if you qualify for a multi-car discount.

Buying Your First Car

When buying your first car, you generally need to buy new car insurance. However, you may be able to add the car to your parents’ policy or share a policy with a roommate. An insurer may let a first-time buyer get coverage online, over the phone, or through an agent. If you can’t secure a policy before buying your vehicle, ensure the dealership provides temporary insurance so you can legally drive while searching for a long-term policy.

Can You Drive a New Car Without Insurance?

Nearly every state requires drivers to be insured to legally drive on public roads. Therefore, you generally must have insurance before driving a new car. If you’re caught driving without insurance, you may face fines or license suspension.

How to Get Insurance Before Buying a Car

Here are four steps for getting insurance before buying a car:

1. Settle on the car you want to buy: An insurer will need information about the car to provide a quote and issue a policy.
2. Confirm details with the seller: Ensure everything is in order for you to complete the purchase.
3. Shop for insurance: Compare quotes from at least three insurers.
4. Select an insurer: After comparing factors like pricing and customer service, get a policy from your chosen insurer. Pick your coverage types and deductibles.

The Bottom Line

It’s easy to get swept up in the excitement of getting a new car. But don’t let that excitement cloud your judgment when it comes to car insurance. Before you sit behind the wheel of your new car, find out whether your current coverage applies to the car or whether you need to buy new coverage. Ensure the coverage meets the requirements of your state and your lender or leasing company. After all, you don’t want the use of your new car to be stalled due to insurance issues.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you with all your mortgage needs!

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