When do I add a new car to insurance?

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Things to remember...

Any time you buy a new car, it’s important that you know how your insurance will cover the vehicle when you become the owner.

You may not have to pick up the phone and call your agent to inform them of your purchase right when you step foot out of the dealership, but you’ll need to contact the company within a reasonable amount of time.

It’s all about timing when you’re adding a new car to your current car insurance plan.

You have to legally insure a vehicle as soon as you’re the one with a financial interest in it, but almost all carriers have some sort of special provision in place that gives you time to add the car.

Make sure your coverage is adequate and that you’re not overpaying for it.

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Whose obligation is it to insure a new car?


You don’t have to buy auto insurance on a car when you don’t own it. If you’re test driving a car just to see how it drives or how quickly is accelerates, it’s not your legal duty to carry insurance on it.

If, however, you sign a contract and you’re the new legal owner of the car, you have to buy insurance to comply with your state’s laws.

When you’re test driving, it’s the person who’s legally liable for the car who must insure the vehicle. This means that it’s the person who would be sued if someone suffered damages or injuries that would have to technically buy insurance.

When you buy from a business, the dealer has special coverage. When you buy from a private party, their liability insurance will still protect them while you’re testing the car out.

Will your existing insurance cover you if you get into an accident?

If you’re one of the few people who are unfortunate enough to get into an accident on one of your few test drive excursions, it’s nice to know that you have some protection.

It’s most common for the car’s primary policy to pay first before you ever need to worry about dealing with your own carrier.

If you aren’t covered by the primary policy and the claim is denied, it’s then your turn to file a claim. This is only really necessary when the claimant is trying to compensate for the damages by suing you.

If they drop it and they decide not to pursue the claim, you don’t have to file a claim. It’s when you face a lawsuit that’s filed against you that you’ll have to use your coverage to protect you.

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When you buy the car, will your existing coverage extend to your new car?

Your existing coverage will even help to protect you for a short period of time after you buy the car that you like the most.

Within your indemnity contract, it says that your liability coverage, physical damage coverage, and other first-party coverage options will extend to cars that you buy in the middle of the term.

The coverage extension does make the process of buying a car easier, but it doesn’t last forever. There’s a major limit to how long your new car will have automatic coverage.

If you wait until after the coverage extension is over, you’re at risk of being assessed some major penalties.

Here’s how long you have coverage under the existing contract:

If you aren’t familiar with the coverage extension periods, you could be at risk of having a coverage lapse.

Your coverage lapses when you don’t contact either your agent or a representative of the company and tell them that you need to add a new vehicle before the four-, 14-, or 30-day period is over. A lapse will mean that no coverage is afforded.

Risks of Adding Your Vehicle Too Late

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Not only could you have a lapse of insurance, if you add your new car to your policy too late you could be fined by the DMV and also by your lender.

Many lenders will assess no insurance fees to the loan because they have to purchase protection to protect the company.

When you’re prepping to add a new car to your policy you’ll need some specific information to complete the transaction and make the endorsement. If you don’t have all of the details that you need the transaction could be delayed.

Here’s what your agent will ask for when you’re adding or replacing a car:

  • The date that you became the owner of the vehicle
  • The year, make, and model
  • The vehicle trim level
  • The Vehicle Identification Number
  • Alarm features and aftermarket safety features
  • The car’s odometer reading
  • The name of the lender and the loss payee clause if the vehicle is financed

Make sure that you price insurance premiums and compare rates before you buy a car. You can get quotes through your current carrier on your existing insurance and then you can get rate quotes from some other companies.

Use an online auto insurance comparison tool to get premium estimates and then make your final decision after crunching numbers.

Compare rates right now by entering your zip code below!

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