Does Auto Insurance Cover Me When I First Buy a New Car?

Life is good. Maybe you've just gotten married or you've finally landed that dream job. Regardless of the reason, the time has come to buy a new car. It may even be your very first brand new vehicle. Before you drive that shiny new machine off the lot, you should have an understanding of how and when your current insurance coverage transfers to your new baby.

TL;DR (Too Long; Didn't Read)

Most existing auto policies will cover a new car for a certain length of time.

Existing Coverage Transfers

Your car dealer won't let you drive your new car off the lot unless you can show proof of insurance coverage. Fortunately, if you already own a car and have insurance your current coverage may automatically transfer to the new vehicle. You may not even need to inform your insurance company about your new purchase right away (although you should). Depending on your carrier and your state of residence, you will have anywhere from 14 to 30 days to let your agent or insurance company's customer service department know about the change.

Comparing Insurance Coverages

If you're trading in an old clunker for a new vehicle, you'll want to be sure of what coverages you currently carry before you drive the car off the lot. If you didn't carry physical damage coverage on "Ole Bessie," you won't have it on the new car either until you add it to your policy. As a result, you'll be on the hook for any damages to the car. If you're financing the vehicle, this probably won't be an issue because the lending institution will require that you have physical damage coverage as a condition of approving the loan.

Don't Forget to Contact Your Agent

It's always a good idea to call your agent as soon as you complete the transaction. If you forget and don't report your new purchase within the allotted time, you run the risk of having a claim denied in the event of an accident. This means that you'll have to pay for repairs or replacement out of your own pocket. More importantly, you run the risk of driving without insurance, which is illegal in many states.

It Pays to Prepare

If you know what car you're buying before you go to the dealership to complete the transaction, it pays to let your agent know ahead of time. Not only can you avoid any possible coverage issues, you'll also have an idea of what your new premium will be. You can even shop around beforehand to see if you can find a better rate from another insurance company.

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