Do You Need Insurance to Buy a Car
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Do You Need Insurance to Buy a Car

By Autolist Editorial | April 27, 2020

Among the many questions you might have when going to buy a car is whether you need insurance or not. The answer is yes, you will need coverage to take your new car off the lot. It's a good idea to check into your car insurance options before you go in to buy a new vehicle.

When Do You Need Insurance to Buy a Car?

You must have auto insurance to drive any vehicle off the dealership lot after buying it. If you go to a dealer and buy a new car with cash, you still won't be able to drive it home without proof of insurance.

The good news is that it's easy to start a new insurance policy before you go into a dealership. In fact, that's the best time to do it.

How To Get Auto Insurance Without a Car

Suppose you don't currently own a car but are planning to buy one. You're probably wondering how you can get car insurance without having a car. If you've never owned a vehicle or held a car insurance policy, it might a bit confusing where to start.

To get accurate car insurance rate quotes from an insurance provider, you'll need some specific information about the vehicle you intend to buy. You can often get reasonably accurate quotes with information about the make and model, as well as the trim and the intended use for the vehicle (including how many miles per year you expect to drive).

If the car you're planning to buy has different engine sizes or comes in two or four-wheel-drive, you'll want to be sure which one you're buying as the rate quotes may differ.

If you're already lined up to buy a specific vehicle, then you can ask the dealer for the VIN and buy your insurance policy in advance. Ask for the policy start date to coincide with the day you intend to drive the car home.

Can You Drive a Newly Bought Car Without Insurance?

If you do not have an auto insurance policy already in force, then you should not drive your newly purchased vehicle home. Most states require a minimum amount of auto insurance coverage to drive. If you get stopped without it, the penalties are relatively severe, including having your license suspended.

If you get into an accident while driving without insurance, then you could be in even more trouble. It doesn't matter what the situation is either. Even if you get into a crash only a block away from the dealership when you just bought the car 15 minutes ago.

In states where insurance coverage isn't required, you'll still be financially responsible for any injuries or vehicle damage if the accident was your fault.

The other issue with not having car insurance is that you'll now have an insurance history gap. It prompts car insurance companies to consider you a more significant risk due to the lapse in coverage.

What Is Non-Owner Car Insurance?

To keep from having a gap in your insurance coverage history, you can get a non-owners policy. Perhaps you sold your current car and don't plan on buying another one for a couple of months or even longer. That is the exact type of situation that a non-owners policy can solve.

A non-owners policy would protect you in the case of an accident or damage that happens when you drive a car that you don't own. The average cost of this type of policy is less than $500 per year.

Several well-known car insurance companies offer this type of policy, including Geico and State Farm.

To get insurance quotes for this type of policy, you'll want to call the companies individually. Non-owners policy insurance rates are not usually available online.

What is Covered By Non-Owner Auto Insurance?

This type of car insurance coverage is also sometimes known as non-drivers insurance. It generally provides minimum coverage for bodily injury and property damage.

If you drive someone else's vehicle and get into an accident, the original insurance on the car applies first. If it's not enough coverage, then your non-drivers policy will apply next.

It also does not apply to the vehicle you're driving. It only applies to the other vehicle that you hit.

Optional insurance coverage like comprehensive and towing are not part of this type of policy.

When Should You Get Non-Owners Auto Insurance?

You're not required to have car insurance if you don't own a vehicle. However, if you rent or borrow vehicles regularly, you should have this type of insurance.

Also, as previously mentioned, if you've had insurance before and are now temporarily without a car, you should get this type of insurance to avoid a lapse in your coverage history.

When Do You Have to Get Insurance After Buying a Car?

As previously mentioned, if you have no car insurance and have never had car insurance, you need to get a policy ready before you buy a car.

However, if you have an existing policy or non-owners insurance, you might have a grace period when buying a new car. That means that your current auto insurance policy will extend for a certain period to cover your new car before you officially add it.

The grace period varies but can be somewhere between one week and 30 days. That essentially means that you won't have to be worried about driving your new car home from the dealership or for the next few days if you don't have time to call your insurance agent.

However, you must get it added as soon as possible. Temporary coverage may have limitations depending on your situation. The best policy is generally to get your new vehicle added before you drive it off the lot or very soon after getting it home.

Can Car Insurance Be Bought the Same Day as Buying a Car?

Believe it or not, buying a car insurance policy is quick and easy. The longest part is usually shopping around and comparing rates. Once you've done that and decided on a company, it's typically quick and easy to set it up. If you're new to car insurance, then follow the steps below to get started.

  1. Gather all information that you'll need for yourself and those in your household that will be driving, including birthdays, license numbers and vehicle identification number if applicable.

  2. Figure out how much coverage you will need for your vehicles and yourself, including in collision and comprehensive.

  3. Research various car insurance companies and compare their reviews and ratings to help you decide.

  4. Contact three to four car insurance companies and get car insurance quotes.

Will a Dealership Ask For Proof of Insurance?

Yes, they will. That's one of the main reasons that you need to get a policy in place before buying a new or used car.

If you've just bought insurance and don't have proof yet, you can ask your new insurance company to email or fax it to the dealership. You will also need proof of insurance to get financing for a vehicle. Banks usually require full insurance coverage on a financed vehicle.

If you don't buy it, they will buy it for you and charge you for it at usually a much higher rate.