Auto Insurance

Do I Need Car Insurance Before Buying A Car?

Before buying a vehicle, it’s important to have the right type of car insurance so you know you’re covered as soon as you drive off the lot.

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Getting your ducks in a row before buying a new car will have you asking a lot of questions. One very important question to consider is whether you need car insurance before purchasing a car. The short answer is yes, you need car insurance before buying a car, but you might already have it.

Why Buy Insurance Before Your Car

Almost everyone has a story of someone they know who drove their new vehicle off the dealer’s lot and immediately got into an accident. That’s reason enough to make sure you’re covered before the deal is done, but it’s not the only reason.

Most states require car insurance, and even the states that do not, such as New Hampshire, have other ways of approaching liability and injury protection. Even though insurance is not required in this state, it’s still highly recommended.

Every other state mandates that you need insurance before you drive your new vehicle on public roads. The levels of insurance that are required vary by state, so it’s important to know what is required where you live. Even then, many people opt to have more insurance than the minimum requirement because they feel better with more coverage and protection just in case something happens.

Because insurance is required almost everywhere when you buy a vehicle, most dealerships will ask for proof of insurance before they finalize the paperwork, which applies to both new and used vehicles. Private sellers often don’t ask for this information, but you still need insurance before driving.

If you’re financing through the dealership or any other institution, your insurance needs to be on file before your financing is approved. Which is another important reason to connect with an insurance company before picking out a vehicle.

How to Buy Car Insurance Without a Car

Buying insurance for a vehicle you don’t own yet isn’t as tricky as it sounds. If you have an insurance agent, give them a call and let them know you’re looking at a new vehicle, supply the information you have, such as the make and model, and then call to finalize the paperwork when you’re at the dealership and have the other necessary information, like the vehicle identification number (VIN).

If you’re buying a new vehicle and not trading one in, then it pays to do your research beforehand and narrow down your options. Bring a computer, tablet, or phone to the dealership so you can select a policy there and make the purchase. This way you can secure a policy before you drive away.

For people who have lapsed insurance, you’ll be in the same boat as someone who is purchasing a car for the first time. Doing research and looking at all of your options will help you select the right policy. Remember, there are significant discounts for bundling, so you might want to see if your homeowners or renters insurance carrier has auto insurance, too.

How to Choose the Best Policy

Selecting the right level of coverage for you and your new vehicle can be a little complicated. The following are key data points as you shop around and look for adequate coverage and a good price:

  • Who will be driving the vehicle (age can affect coverage rates)?
  • Legal requirements in your state
  • Financing requirements for a loan or lease
  • What coverage do you want/need?
  • What vehicle are you buying?
  • What is the premium?
  • Are there deductibles and how much are they?

After you have an estimate of the charges and coverage available for several companies, you can start to make some adjustments to see how the coverage fits your budget. In many situations, you can adjust the deductible levels and that will affect the premiums. You can also add and subtract some optional coverages to fit your driving habits and where you live. Doing this will ensure you find the right policy for you, so you get the coverage you need at an affordable price.

Is Non-Owner Car Insurance the Same Thing as Buying Car Insurance Early?

Non-owner car insurance is not the right coverage for someone who is buying a vehicle. This type of auto coverage is for a person who does not own a vehicle but drives one.

As an example, Steve does not have a vehicle but borrows his roommate’s car, his grandma’s truck, and sometimes drives a work van. If he carries non-owner insurance, then he’ll have the required coverages in his state. He can also select additional coverage to add more protection. Non-owner’s insurance usually does not have a deductible and it will not include collision or comprehensive insurance, as those policies are held by the vehicle’s owner.

Can You Buy Insurance at the Dealership?

If you’re at the dealership ready to buy a car that caught your eye, you might be wondering if you can purchase insurance right then and there. Most likely, the answer is yes. The dealership can’t sell you insurance, but they’ll help you get on a computer or phone to connect with an agent and make that purchase. Everyone needs coverage to drive off the lot so buying insurance at a dealership is common.

Car Insurance for Your Second Car

If you already have insurance and you’re trading in your old vehicle for a new one, you already have coverage. Double-check with your policy, but most carriers understand that selling one vehicle, buying another, and switching coverage can be complicated, so they extend your coverage from your current vehicle to the new one for a few days. That means you can trade in your old vehicle for a brand new one, drive it home, and call your insurance agent the next day to iron out your policy details. If you choose to use your trade-in vehicle’s insurance for your new one, be sure to bring proof of active insurance for that car with you to the dealership.

It’s also important to note that if you’re using your old car’s insurance grace period, the current coverage is still in effect. This means if you had an old car and only had minimal coverage, you might not have enough insurance for the new vehicle. You might be required to have full coverage, including comprehensive and collision, especially if you’re financing the purchase. You also may prefer to add extra insurance before you drive away to protect your new purchase.