Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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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 26, 2020

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Key takeaways...

  • If you buy a new car, you need to insure that vehicle by the time that you’re ready to drive away as the owner
  • Car buyers who already have standard insurance on a vehicle will have automatic coverage on their new car
  • Automatic coverage on newly acquired cars will only afford coverage for between 14 and 30 days on the new car
  • If you don’t contact your insurer to add your car, coverage on your new car will lapse when the extension ends
  • You may also need to add a car to your insurance when you get married or you’re given a vehicle by a friend

You can never get car insurance quotes too early when you’re in the process of buying a car but you can get them too late.

If you’re ready to become a vehicle owner or you’re in need of a more reliable and fuel-efficient model, it’s your responsible as a consumer to compare auto insurance quotes.

If you don’t do this is in advance, you could be stuck paying car payments on a vehicle that carries astronomical auto insurance premiums.

If you buy a car, you have to time your insurance right to avoid some serious complications later down the line. Having an existing policy in place makes the entire process easier.

Compare car insurance quotes today by entering your zip code into the rate tool above.

Here’s what you need to know so that you’re prepared to get insurance on a new car right when you need it:

Know the Law in Your State

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Every state has its own vehicle code. Written into that vehicle code is a section that’s dedicated entirely to insurance requirements.

If you’ve never purchased insurance, the first task at hand will be to familiarize yourself with state law and what type of coverage is required.

If you don’t have minimum insurance limits, you can be penalized.

In most states, insurance is compulsory. You must have at least a minimum amount of coverage to pay for damages to third parties. This coverage is called third-party liability insurance and it consists of the following:

  • Bodily Injury
  • Property Damage

Some states will also require Medical Payments and Uninsured Motorist Coverage, but that’s not common.

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What state should you buy insurance in?

If you’re about to start comparing insurance premiums and you’re currently living in between states, you need to solicit quotes in the right state so that you can prepare an accurate budget.

Every state has their own basic rates, and in some states, insurance costs are way higher than others.

You can’t just decide to buy insurance in the cheapest state you’re living in. Instead, you have to buy your insurance coverage from a carrier that’s licensed to sell insurance policies in the state where your vehicle will be registered.

In most cases, your vehicle has to be registered in the state where you spend the most time.

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When do you need to have insurance on the vehicle in your name?

You can’t actually buy insurance on a car before you buy it. If you’re certain that you’re going to buy a car on a specific date, you can prepare a quote and get your application ready, but you can’t bind the coverage until the car is officially yours.

This is because of the contractual requirement that says you must have an insurable interest in the car.

You may not be able to buy insurance on a car that you buy until you buy the car, but you must buy insurance on the car as soon as you become the owner. That doesn’t leave you a lot of wiggle room if you don’t already have insurance in your name.

In fact, if you don’t have insurance, the dealer can deny you the right to drive off with your car.

How much coverage you need to have to leave the dealership depends entirely on how you pay for the car. If you buy your new car outright, you only have to show evidence that you have the state’s minimum requirements.

If, however, you’re financing the car, you need the state minimums and also comprehensive and collision coverage to protect the car.

If you already have insurance will your new car be covered?

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If you already have insurance on a private passenger car, you might have a bit more time to get insurance on the new car that you buy. Before you assume the policy that you have will cover the new car, make sure you’re a named insured on the car and not just a driver.

The car that has to be registered and insured in the same name or it will pose issues.

Your insurance company is nice enough to extend coverage to a new car, but your carrier isn’t going to cover the new car forever. There’s a limited period of time that your policy will extend automatic coverage to the recently purchased car.

Here are the common coverage extension time frames that you should be aware of:

  • An additional car will have between 14 and 30 days of the broadest level of coverage on the policy
  • A replacement car will be covered until the end of the term with the same coverage as the vehicle it’s replacing
  • You will receive four days of automatic comprehensive and collision if you don’t have full coverage on any old vehicle

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The Importance of Adding Your Vehicle in a Timely Manner

If you fail to add your vehicle to your auto insurance policy within a few days, you could have to answer to the DMV or your lender. Even though your car has automatic coverage, it’s not on the policy until you contact your insurer.

Coverage can’t be verified through the DMV and the lender until you’ve added the car. Since the coverage can’t be verified, you could be penalized by the DMV and also by your lender. These penalties can cost you time and money.

It’s very important to shop around for low-cost premiums. Some companies charge a lot less than others, and it’s your job to find these companies.

If you want to compare premiums for the new car before you add it to your policy, get comparison quotes online and see if they are lower than the rates you’ve been quoted through your insurer.

Compare now and see if you could be saving money on car insurance!