Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

Full Bio →

Written by

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

Full Bio →

Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 21, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right car insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Car insurance comparison shopping should be easy. We partner with top car insurance companies. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Here's what you need to know...

  • Buying car insurance is required in almost all 50 states
  • As a car owner, you are required to comply with state laws
  • You may not even need to buy insurance on a new car immediately if you already own a car

In a perfect world, buying a car would be as easy as going on a test drive and negotiating a fair price the first time around.

Unfortunately, when you make one of the biggest purchases in your life, you need to consider more than just the color of the vehicle or what size engine it has.

It is important to buy a vehicle that is reliable and that your family will be comfortable in, but looking past the minor details can really cause a hassle as you are signing paperwork and completing the process.

As soon as you become a vehicle owner, you are required to comply with the same car insurance laws that all vehicle owners must comply with.

Start comparing car insurance rates now by using our FREE tool above!

Table of Contents

What are the laws surrounding car insurance and new cars?

adobestock_53669273-1600x1600

Buying car insurance is required in almost all states. You should be familiar with the coverage and limit requirements before you even consider buying a car.

No matter what limits of liability you are required to carry or coverage options you must pay for, it is the on the shoulders of the vehicle owner to buy insurance and maintain it.

No matter what limits of liability you are required to carry or coverage options you must pay for, it is the on the shoulders of the vehicle owner to buy insurance and maintain it.

As a car buyer, you become the owner of the vehicle as soon as you sign on the dotted line.

Before a car is sold, the vehicle will be insured under the dealer’s special commercial policy. If you want to drive the car off of the lot, the dealer must see that the car is insured.

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Why do dealers care about insurance?

Most car buyers know that dealerships have bad reputations. In fact, some buyers will actually buy from private buyers just to avoid dealing with a professional car salesman.

You might think that as soon as you sign your documents, the dealer has nothing else to worry about.

After all, whatever happens when you leave is not their responsibility.

While the insurer will not have to pay for the damages, they do have a responsibility to verify that you have insurance before you leave.

– Obligation when Issuing License Plates

One reason that the dealer cares about your insurance status is that the Department of Motor Vehicles requires that the commercial seller verify this before handing over the plates or a temporary permit.

Since dealers do actually fill out registration documents and issue plates as they are doing paperwork, they must do just what the DMV would do to ensure that the driver has state minimums.

– Dealers Are Required to Protect Finance Companies They Deal With

AdobeStock_53578392-1600x1600

When a vehicle is being purchased, the dealer may connect the buyer with loans from dozens and dozens of different lenders.

The finance manager will push a loan from the company first, but many times unqualified borrowers will be matched to other loans from lenders with more lenient underwriting guidelines.

The dealership needs to verify insurance coverage so that they know the borrower is compliant with the full coverage requirement.

One of your responsibilities when you financing or leasing a vehicle is that you will protect the car with full coverage as long as the financier has the title.

If you have a loss and the car is not insured, you must pay for the damages or even pay off the balance of the loan when the car is totaled.

Since the dealer is responsible for matching you to a loan, the company expects the dealer to verify that full coverage will extend to the new car immediately.

Compare Car Insurance Companies

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

How to Insure a Newly Purchased Vehicle

You may not even need to buy insurance on a new car immediately if you already own a car. If you have existing insurance, there are special rules that make insuring a car quick and easy.

However, if you do not have a car or you are only a driver on a policy, the process may be more involved.

Here are some of the situations that you need to know about:

–Buying an Extra Car

If you are buying a new car in your name and you already own a car, the coverage that you carry on your current vehicle will extend to the new car.

If you do not carry full coverage, some states do mandate that the insurer must give the policyholder 3 to 5 days of full coverage for the newly acquired vehicle.

After this period, the coverage drops down to whatever is listed on the policy. Remember, you only have automatic coverage for up to 30 days.

Final Words

adobestock_83053894-1600x1600-1

Remeber that you must be the named insured for coverage to extend. If you do not have insurance or you are only a listed driver, you must buy insurance before you drive off of the lot.

If you want to price the cost of insurance before you are trying to deal with negotiations, request quotes.

You can get quotes instantly through a rate comparison tool and see which vehicles are affordable to insure.

Start comparing car insurance rates now by entering your zip code in our FREE tool below!