How long does your insurance cover a new car?

An existing auto insurance policy will cover a newly purchased car. Most policies will provide coverage for a new car until the current policy term expires.

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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...

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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...

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Reviewed byDaniel Walker
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UPDATED: Apr 21, 2020

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Here's what you need to know...
  • Knowing how long your coverage term will last requires you to carefully manage your car insurance policy
  • When you are purchasing a new car, your existing auto insurance policy will extend to the new vehicle for a limited period of time under the newly acquired auto provision
  • If you don’t already own a vehicle or have insurance, you must buy a policy for your new car immediately when you take over ownership
  • Existing personal auto insurance policies have provisions written into them that say that the policy will automatically provide coverage for a new car for between 14 and 30 days
  • If the new car is replacing a car listed on your policy, the same exact coverage options and limits will cover the new addition
  • If you have a basic liability-only policy, you will receive four days of full coverage on the new car

Believe it or not, an existing auto insurance policy will cover your new car before you even add the car with your agent.

While insurance policies do have special provisions that help you stay protected when you make a new purchase, there are some limitations.

Knowing these limitations is a must when you are thinking of purchasing a car.

Complete your research by conducting a thorough auto insurance comparison. Enter your ZIP code into our FREE tool above to get started!

Understanding Your Auto Insurance Contract

Auto insurance policies are contracts. As with any valid contract, there must be an offer, acceptance of the offer, and consideration for an auto insurance policy to take effect.

You make the offer when you apply for coverage, the insurance company accepts the application when they agree to insure you, and you pay the premiums for coverage, which is called consideration.

Contracts must be clearly defined with a legal purpose.

Insurance companies invest a lot of money to lay out the terms and conditions of their indemnity contracts.

Contracts include multiple sections, some that define the policy language used throughout the contract, and others that describe limits of liability and exclusions.

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How does your auto insurance company define a covered auto?

If you were to skim through your Personal Auto Policy (PAP) booklet, you would see that the contract includes a section specifically dedicated to defining insurance language.

Covered autos are defined as more than just cars that are listed on your policy. This definition allows for newly-acquired cars and other substitutes to be covered.

Here is how a PAP defines a covered auto:

  • A vehicle that’s listed on the declarations page
  • A trailer registered in your name
  • A temporary substitute vehicle that’s being operated while the insured vehicle is being repaired or serviced
  • A newly acquired private passenger vehicle that you purchase during the policy period

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What does the contract say about newly acquired vehicles?

It’s nice to know that a substitute and a trailer that you own are covered under your policy, but the fact that newly acquired vehicles are defined as covered autos is why coverage automatically extends.

Even though you have some protection, coverage won’t extend forever.

How long you have the automatic coverage depends on the situation.

How does your existing coverage cover a new car when you replace your old car?

If you are planning to trade you existing car in, there are only a few limitations concerning how long your coverage will extend.

If the new car is replacing a car that’s on the declarations page, your policy will provide the same amount of coverage on the new car for as long as the term has left.

When the term expires, you must add the new car immediately.

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How long does your coverage extend to an additional car on your existing policy?

Your existing coverage will only temporarily cover a new car when it’s being added to the policy in addition to your other vehicles.

For a period of 14 to 30 days, you will receive the broadest level of protection that you have on the policy at the time.

After the time frame elapses, you must add the car for there to be coverage.

Remember that your auto insurance policy will provide four days of automatic comprehensive and collision insurance if you have a basic policy.

After four days, you will only have 14 to 30 days worth of basic coverage before you must contact your agent.

The Dangers of Procrastination

If you fail to notify your insurer that you’ve purchased a new car, you could face civil penalties assessed by the state and monetary penalties assessed by your lender.

Your insurance may provide automatic coverage for a replacement car for the entire term, but it’s hard to verify coverage on a car that’s not listed on the policy declarations page.

Since most states now have electronic insurance verification systems in place, having your new car on your policy is imperative.

Covering your new car is the only way to ensure that your carrier will verify that your new car was insured from the moment you bought it.

Carriers can’t verify coverage for cars that you haven’t added.

If you are not happy with your premiums on your new car, it’s time to start soliciting quotes with other carriers.

Since every company has its own rating system, some carriers charge less than others for even the most luxurious models.

Use our FREE online comparison tool to get instant quotes and cover your new car today.

 

References:
    1. https://www.nh.gov/insurance/consumers/documents/nh_auto_guide.pdf

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