When is the best time to purchase car insurance?

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Things to Remember...
  • If you’re buying a new car and don’t have existing coverage, you’ll need to buy insurance immediately when you sign the purchase agreement
  • If you have existing coverage and a newly acquired vehicle, coverage will extend for 14 to 30 days depending on the rules of the policy and the coverage options carried
  • If you’re switching carriers to reduce your premiums, you don’t contractually have to stay with your carrier until your term ends
  • If you switch carriers mid-term, be sure to check with your insurer to see if you’re charged a cancellation fee
  • If you’re moving out of state, you’ll need to purchase a new policy written in the state when you register it in that state

Car insurance isn’t just a necessity, in most cases it’s a requirement. If you’re in the process of moving or you’re planning on buying a car, it’s important that you learn just when is the right time to buy your auto insurance coverage.

Deciding to put off this less than exciting task for just a few weeks or even a few days can cost you time in court, your wages and even your assets.

It’s critical that you shop for coverage and select the effective date right from the start to avoid hassles or uninsured losses. Compare car insurance rates now by using our FREE quote tool above!

If you’re not sure how coverage works during a move, a car purchase or even when you’re switching carriers, read this guide and learn the ins and outs of what you need to know. As soon as you finish this guide, you’ll be ready to time everything just right.

Do you have to buy auto insurance coverage?

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Auto insurance isn’t just some financial product that you have the option to buy, it’s a product that almost all state officials require vehicle owners to purchase.

Since it’s the state’s responsibility to enact and enforce financial responsibility laws or compulsory insurance laws, you will need to review the requirements in your state if you’ll need to purchase coverage to avoid some of the strict legal consequences of driving without minimum coverage.

In most states, you’re required to carry the following:

  • Bodily Injury Liability – pays for the medical bills incurred after a third-party is injured in an accident you’re negligent for. Also pays for final expenses if a third-party driver, passenger or pedestrian passes away. This coverage is typically required in states with tort-based insurance systems
  • Property Damage Liability – pays for repair costs when someone else’s property is damaged in an accident that you’re negligent for. The limits apply to the total amount of repairs in a single accident
  • Personal Injury Protection – in no-fault states, Personal Injury Protection is a requirement. This coverage pays for the policyholder’s medical bills and every claimant will file a claim against their own policies when they are injured in an accident

When do you need insurance if you’re buying your first car?

Now that you know what’s required and how important it is to review state law, you might be interested in learning when you’ll need to start thinking about insurance as you search the market to buy your first car.

If you don’t currently own a vehicle that’s insured under your own name, you’ll need to have a policy ready to activate as soon as you sign documents and you’re the legal owner.

Failing to do this before you drive off the lot can result in an uninsured loss or in penalties enforced by the state. If you’re financing the car, you’ll also face penalties and payment inflation through the lender for failing to buy full coverage because it’s a condition of the loan.

How can you prepare your insurance before you buy a car?

Under state law where insurance is required, the legally registered owner is the one who must satisfy the law. As soon as there’s a transfer in motion, the responsibility, and insurable interest transfer as well.

It’s helpful that you request quotes through multiple carriers and then have these quotes saved before you visit a dealer or a private party to negotiate a deal.

Once you have the quotes saved, you’ll have a good idea of which carriers have the most competitive premiums for drivers in your risk class. When you’ve settled on a car, all you’ll need to do is update your quote with the VIN and the right effective date.

Once you’ve submitted your payment and activated coverage, you can drive off the lot with peace of mind.

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What happens if you’re buying a car and have existing coverage?

If you currently have insurance in your name, it’s not as crucial that you get insurance coverage right away. Instead, your Personal Auto Policy has provisions that are written into it that help make insuring a newly purchased car easy on you.

The policy will provide you with automatic coverage under the ‘newly acquired auto’ provision as a covered auto.

The extension will provide the broadest coverage on the policy to the new car for a period of 14 days until you notify the insurer to add the car.

If a new car needs full coverage but you only have a basic policy, most carriers extend comprehensive and collision coverage for only 4 days. It’s best to call your insurer as soon as you can to avoid any gaps.

If you’re switching carriers, can you cancel your coverage early?

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If you’re tired of paying high premiums and you’ve found a more affordable policy, make sure to check the fine print on your existing policy before canceling it mid-term.

Mid-term cancellations are allowed, but if you’re doing it voluntarily the company may short-rate your refund and charge you a cancellation fee.

This fee typically isn’t charged if you don’t own a car or you’re moving to a state that the carrier doesn’t service.

If no fee is charged, it’s wise to switch right away so that you can start saving. If a fee is charged, decide if it’s cost effective to wait until your term ends.

If you’re in need of coverage, it’s time to start pricing plans. You can use an online rate comparison tool to easily price the cost of coverage for a specific car or a specific amount of coverage. Once you know what costs you’ll pay, you can decide when to activate coverage and even submit your application for review online.

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