Is there automatic insurance coverage for new cars?

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Key takeaways...
  • At many car dealerships, you will need to show some form of proof of insurance before you are allowed to drive your new car off the lot
  • When you first purchase a new car, you may not be able to immediately add it to your existing auto insurance policy, especially if you make the purchase over a weekend
  • For many auto insurance policies, there is a provision that will allow you to be automatically covered for a new car purchase for a certain number of days after you buy the vehicle
  • If you are considering a new vehicle purchase, you should call your insurance agent and check to see how your policy provides for coverage for the new vehicle
  • Even if you are covered for a certain number of days after the initial purchase, you still need to follow up directly with your insurance agent to add the car to the policy


It is always important to make sure that you are covered under at least the state minimum auto insurance policy when purchasing a vehicle.

It is easy to forget about the insurance aspect of a new vehicle purchase when you are focused on getting the best deal on your new car and driving it off the lot.

For this precise reason, many auto insurance policies will offer a temporary extension of coverage to a newly purchased car until you have a chance to update your policy to add the car. Be sure to check your own policy for specifics.

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Before You Purchase a New Car

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If you are in the market for a new car, it can be a good idea to talk to your current auto insurance company to discuss coverage options for the vehicle.

While you may not always have the time or notice to be able to speak with an insurance agent beforehand, this can help to streamline the purchase process and to prevent any surprises in how the purchase may affect your auto insurance premium.

At some car dealerships, you will be required to show proof of insurance in order to be able to drive off the lot with your new car.

This is because each state has certain strict requirements for vehicles to be insured for at least a minimum level of auto insurance coverage. In fact, in almost every state you are not able to drive legally without auto insurance.

It may be possible to add a vehicle to your existing auto insurance policy if you know all of the exact details about the vehicle while you are closing on a deal.

In this case, you will want to be absolutely certain that you will be purchasing the car because you do not want to have to pay for coverage for a vehicle that you are not going to drive.

Along the same lines, when you buy a new vehicle you often trade in an old one or sell it to someone else.

If this is the case for you, make sure that you tell your auto insurance company right away so that you do not have to continue to pay for auto insurance on a vehicle that you are not actually driving.

This should only take a short phone call and could end up saving you some money on your car insurance premiums.

Before you purchase a car is also a great time to look into whether you are getting the best possible rate on your auto insurance coverage.

If you are able to speak with an auto insurance agent before purchasing your new car, you should ask about all of the discounts that are available to you.

For example, if the new car you are purchasing will be an additional car added onto an existing policy, you may be eligible for a multi-car discount.

This may also be a good time to check and make sure that you have adequate coverage from your auto insurance policy. You may want to check into supplemental coverage so that you do not have to pay out of pocket in a serious accident.

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Making Sure that You Are Fully Covered for Your New Car

Even if you have a provision in your auto insurance policy that allows you to be covered on a new vehicle purchase for a certain amount of time without formally adding it onto your policy, this can complicate matters for securing financing for the purchase of your new vehicle.

Some lenders will not accept this provision as proof of insurance.

For this reason, you may want to contact your insurance company and request something in writing for the lender that confirms the new car is covered while it has not yet been officially added to your existing policy.

If you are pulled over by a law enforcement officer or involved in a car accident before your new car is officially added to your current auto insurance policy, it is best to have a copy of your new registration or sale agreement from the dealership.

This shows that the car is under a grace period of coverage from your auto insurance policy.

While it may be very unlikely that you would get stopped by the police during this short window, having the proper documentation can save you the time and headache of having to face penalties for driving without proper proof of auto insurance coverage.

However, the best way to avoid this situation is to simply follow up with your auto insurance company immediately after the purchase of a new car.

You should not assume that your auto insurance company will reach out to you directly just because they received an inquiry from the lender or car dealership.

It is best to take matters into your own hands and be as proactive as possible in getting your new car added to the policy.

The Bottom Line on Car Insurance Coverage for a Newly Purchased Vehicle

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If you have any lead time before you must purchase a new vehicle, this is a good chance to check your current auto insurance policy to see if you have a provision for automatic coverage of a newly purchased vehicle for a short grace period.

If this applies to you, the car dealership may allow you to drive the car off the lot and add it to your auto insurance policy later.

It is always best to follow up with your insurance company as soon as possible after the purchase of a new vehicle to make sure that it has been officially added to your current auto insurance policy.

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