If You Buy a New Car, How Soon Do You Have to Insure it?

Get coverage for your new car to protect its value.
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When you buy a new car you're taking on a valuable piece of equipment, so you need an insurance policy to protect you, the vehicle and others. When you purchase a new car and borrow money to pay for it, the lender commonly requires full insurance coverage as a condition of the loan. To avoid issues, make sure you understand your state's car insurance requirements before you even visit the dealership.

At the Dealership

In many cases, you must secure car insurance when you're at the new car dealership. The dealership's financing unit usually requires you to insure the car before you're allowed to drive it off the lot. If you received financing from your own bank, the lender will commonly ask for proof of insurance before closing the loan. This protects the dealer and the bank from unexpected issues that could occur after you take possession of the car.

Possible Exceptions to the Rule

The only possible exception to the new car insurance requirement is if you pay for it in cash, in which case you own the title to the car and it's your responsibility. Even then, the dealership may require you to show proof of insurance before issuing you temporary tags. Check your state's Department of Motor Vehicles (DMV) website to determine the exact rules—they may vary depending on your location.

Registering the Car

In most states you must show proof of insurance when you register the car. The dealership issues you temporary tags for about 30 to 45 days, until you can visit the DMV. When there, the DMV representative will ask for your valid insurance card before issuing you permanent tags and registration documents.

Getting Insurance

You can get insurance quotes online or by calling the insurance company from the dealership once you know the exact car that you want to buy. Still, it's a smart idea to get car insurance quotes from insurers well before you visit the dealership. You can estimate the amount you'll have to pay each month for the new car. Don't wait until you're about to put pen on paper at a car dealership to discover that you're going to have an issue getting affordable car insurance.

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