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.

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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.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 13, 2020

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Key takeaways...

While one might think that you would get a little bit of leeway when it came to getting insurance on a new vehicle, the reality is you must have insurance as soon as you take ownership of it. This is because, unfortunately, accidents can happen at any time.

Although you may not be able to control this requirement, you do have some control over how much you spend on your car insurance premiums. Try using our price comparison tool to decrease how much you pay.

Compulsory Auto Insurance

All drivers need to know that auto insurance is a form of financial responsibility.

In fact, it is so important that nearly every state in America requires drivers to have at least one type of insurance. Auto insurance protects the following:

  • You as a driver
  • Other drivers
  • Passengers
  • Bicyclists
  • Pedestrians

Unfortunately, having just purchased a car makes no difference as to whether or not you are required to have the legally mandated amounts of auto insurance in place. Accidents can happen at any time, even on your first drive home from a dealership.

This is why the law mandates insurance even from day one of ownership. In fact, in some cases, you will not be allowed to drive your new car off of the dealership lot without proof of proper insurance coverage.

While this may seem like a hassle or like it could be confusing, obtaining auto insurance for a new car is really quite easy. If you already have an auto insurance policy, you should be able to call your carrier right from the dealership.

After getting some information from you, they can begin coverage for your new vehicle that day and stop coverage on another vehicle if you are trading it in.

If you do not already have an auto insurance carrier that you do business with, it is a good idea to do some research before going to a dealership to purchase a car.

Once you have done so, you will know who you need to call for insurance coverage when the time comes. Taking this step prior to making your purchase will save you time, hassle, and even stress at the dealership.

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Consequences for Not Carrying Auto Insurance

It can be tempting to not purchase auto insurance coverage right away on your new vehicle, especially if insurance is expensive or if you weren’t planning on purchasing a new vehicle.

However, taking this chance is not worth the risk it presents.

If you get pulled over by an officer of the law or are in an accident without the minimum amounts of insurance coverage you may face the following penalties and consequences:

  • Jail time
  • Fines
  • Mandatory court appearances
  • Community service
  • Mandatory SR22 insurance requirements

This can vary depending on the number of offenses you have had and what state you live in. Additionally, if you are even partially at fault for an accident you may also be responsible for paying damages sustained to the other parties.

In severe accidents, your liability could be tens of thousands of dollars. If you refuse to pay, you may be sued in civil court which could lead to wage garnishment and seizure of your assets.

Types of Auto Insurance Coverage

Purchasing a new car is an ideal time to examine your car insurance policy to ensure you have the coverage that meets your state’s legal standards as well as your own unique needs.

Each auto policy has several different branches that cover different circumstances. Here is an overview of each policy type:

Liability

This type of coverage is the type legally mandated by most states. Property liability covers damages you cause to someone else’s property such as their vehicle or home, while bodily injury liability will provide for medical bills or funeral expenses.

The minimum amount required by each state varies.

Medical Payments

Also known as med pay or personal injury protection (PIP), this coverage type will pay for your own lost wages, medical expenses, and even for required assistance in the home related to physical injuries from an accident.

Although not required by law, this coverage is important, even if you have health insurance.

Uninsured/Underinsured

Even though every driver needs to be legally covered by an auto insurance policy, some just don’t do it. If you are hit by a driver who does not have insurance, having coverage to protect you from uninsured drivers will help pay your expenses.

Uninsured motorists coverage also applies if you are a pedestrian, bicyclist, or the victim of a hit-and-run driver.

If the other driver is responsible and does have insurance, their policy limits may still come up short. In this situation, underinsured motorist coverage would pay the difference up to your policy limits.

Collision

If you are in an accident, keep in mind that your basic liability coverage will not provide for your own damages. This is where collision comes in. It pays for damages to your car resulting from a collision with another vehicle or object such as a light pole or tree.

Comprehensive

Although many drivers may think they are fully protected with liability and collision, it is also a good idea to get comprehensive coverage.

This type of insurance protects against hitting wildlife, theft, vandalism, floods, fires, and natural disasters.

Gap

Drivers who lease their vehicle are required to have gap insurance and may even already have it written into their contract and pay for it. Drivers who are financing their cars may also want to consider gap coverage.

This is because gap insurance pays the difference between what is still owed on your loan or lease and what your auto insurance company considers to be the fair market value of your vehicle immediately prior to an accident.

Even if you just bought your car, in nearly all states, you need to have insurance coverage on it. Not paying for this financial protection, even for a short period of time can have serious consequences.

You can decrease the amount you pay for your premium by using our online price comparison tool.