Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 20, 2020

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Things to Remember...

  • Extending your current insurance policy to a new car depends on the type of coverage you have
  • If you allow your car insurance to lapse, you may have to start over as a new driver with a new policy
  • If you have to buy a new policy because of moving to a new state, your insurance rates should stay the same

Buying a new car can be an experience fraught with questions, including things like whether or not you can extend your auto insurance after your purchase.

The answers to most of these questions are pretty straightforward. Government regulation and a lack of education make things a little more complicated than they really need to be.

Technically when you buy auto insurance, you are really insuring that the driver more than the car itself.

A car is an inanimate object which can do no damage in and of itself, nor can it be damaged apart from some external influence exerted upon it.

So while you’re protecting the value of your car through an auto insurance policy, rates are determined more by the person who drives it. You can begin your search for affordable auto insurance rates by entering your zip code now!

Can I extend the exact same policy to my new car?

Extending your current policy to your brand-new car, with no changes, depends heavily on the type of auto insurance coverage you currently have.

For example, if your current policy covers minimum liability, collision, and fire & theft, you could simply extend the very same policy to your new car in most states.

By most state laws you’re simply required to carry enough coverage to protect those parties involved in an accident. Many banks will also require the additional coverage to protect them while your loan is outstanding.

So between all three types of coverage, you should be okay.

On the other hand, if your current policy covers state minimum liability only then you probably won’t be able to extend the exact same coverage if you’re taking out a loan to purchase your new car.

Your bank needs to be covered against its own investment as long as your loan is outstanding. Therefore, they might require you to add collision and fire & theft coverage to your policy or purchase a separate policy from them.

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What if I allow my auto insurance to lapse between cars?

Sometimes there is a period between the time we dispose of an old car and purchase a new one.

If that period is going to be a short one, many people will simply continue paying on their insurance policy anyway.

But if it’s long enough, and you choose to allow your insurance to lapse, you’ll need to start all over again with a brand-new policy.

Depending on your state, insurance lapses may require the surrender of license plates and registration forms.

In a state like New York for example, if you dispose of a used vehicle and allow your insurance to lapse, you are required to surrender your license plates to the state within a certain time frame – and that time frame is very short.

If you fail to surrender the plates your license could be suspended and your record tarnished, leading to higher insurance rates for the next couple of years.

What if I’m buying a new car because I’ve moved to a different state?

As long as your insurance carrier is licensed to do business in your new state, you shouldn’t have any difficulty extending your insurance policy to your new car.

The policy might be slightly different in terms of its value in your new state, primarily due to the fact that different states require different levels of liability coverage.

This may change your premiums somewhat but everything should remain relatively the same.

If your current insurance carrier is not licensed to do business in the state you’re intending to move to, you will need to find a new insurance carrier for your new car.

While starting over with a new insurance carrier may be a hassle, this might be a golden opportunity to find lower rates and better coverage.

Whether you extend your auto insurance after buying a new car or purchase a new policy, the carrier is going to look at your driving record on an annual basis to determine how much you’ll pay.

If you want the lowest insurance premiums possible, be sure to drive safely and legally at all times.

If you’re looking for auto insurance quotes for your new car, get the ball rolling by entering your zip code right now!

References:

  1. http://www.naic.org/state_web_map.htm
  2. https://www.allstate.com/tools-and-resources/car-insurance/liability-car-insurance-cover.aspx
  3. https://www.nationwide.com/car-insurance-lapse.jsp
  4. http://blog.esurance.com/out-of-state-car-insurance-everything-you-need-to-know/
  5. http://www.iii.org/article/what-determines-price-my-auto-insurance-policy