Do You Need Insurance
before You Buy Your Car?
|-You should have auto insurance on any vehicle you buy before you can drive it off the lot.|
|-Most lenders require that you keep full coverage on the vehicle for the duration of your loan.|
|-If you don't keep full coverage on the car until you pay it off, the lender can purchase very expensive force-placed insurance that you'll end up paying for.|
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When do you buy insurance for a new car? Many drivers wonder, do you need to have insurance before you buy your car? If you do not already have auto insurance, the world of insurance can seem a bit confusing.
In fact, even if you have been dealing with auto insurance for years, the entire process can still seem and feel frustrating and even overwhelming. Knowing how to buy auto insurance and getting the best rates are different things.
There are questions like these as well as dozens of others to be answered. Not all of the mystery can be taken out of the equation when it comes to answering your auto insurance policy questions, but you can hopefully make some sense of the questions that you do need answered.
Let’s talk about when to get car insurance when buying a car.
If you’re interested in insuring a car before you buy it, we can help. Enter your ZIP code in our free tool to get quotes from multiple insurers and get insurance before or after buying a car.
You Need Auto Insurance To Drive Your New Car Off the Lot
Do you need insurance to buy a car? The truth is it can depend on the situation. The key is to realize if you are walking onto a car lot and getting your very first automobile ever and have never had an insurance policy, you will need to get auto insurance coverage first.
Can you buy a car without insurance? Most lenders will require full coverage auto insurance if you’re getting a loan for a vehicle.
Why do car dealers need proof of insurance though? You need proof of insurance before buying a car to protect the lender, especially if you are getting your loan from the car dealership itself.
So, now you may be wondering how you would go about doing this?
Here’s the general scenario:
- You have a few options before buying that car and driving off the lot. You may want to browse the car lots and get some ides of the cars you are interested in and do some figuring in your spare time.
- Usually you would then use a handy online site to use your zip code and the data about your potential new car choices to get an idea of rates for auto insurance.
This can be a very useful tool because too many drivers do not get an idea of what their insurance will be until too late, only to find out for that flashy new convertible the monthly car insurance rates could be as much as the car loan payment.
- You can also usually check on auto insurance rates while you are at the dealership. If you are planning on doing this, it is a good idea to allow yourself enough time to browse cars as well as possible insurance rates. The dealership should allow you access to the internet so you can shop quotes and secure a policy online in order to get your car.
Either way, if you do not already have any type of auto insurance coverage, you will need a policy before you can finish the deal. The bottom line is you usually need to have proof of insurance sent over to satisfy the lender before you can drive off the lot with your new vehicle.
However, if you already have an insurance policy on your current vehicle, you may be able to use this to at least drive off the lot. From there you will have to make immediate changes to make sure you car is insured for regular driving and use.
Some insurance companies allow a 5-day or even 30-day grace period for a new car purchase. Whenever possible though, it is a good idea to get coverage for your new car before you get it.
- This helps protect you, but also helps you avoid rate surprises. If you are a young driver around 18 years old, have problems with your driving record or are considered a high risk driver for some other reason, you could be quite shocked by your potential coverage rates.
- If you do not bother to find out ahead of time how much they can be, you could end up spending most of your monthly income on your car loan and insurance premiums.
- You can usually call and adjust your current policy from the dealership in order to cover the car until you get home. From there you can still shop around for and buy online auto insurance coverage for your new car.
What if these rates are higher than you can afford?
First of all, if you are concerned about your rates potentially being steep because of your lack of driving experience, checkered driving or insurance past or due to the type of vehicle you are financing, it is very important that you shop for auto insurance before you sign on the dotted line and lock yourself into the new car payment. If you call your current car insurance policy provider and do not like the quotes you get, keep a few things in mind.
- It may just be your current car insurance policy provider. By looking to buy online car insurance, you can browse plenty of competitive quotes for auto insurance rates.
- In fact, this is the best way to ensure that you get the cheapest and most affordable rates possible. You mau even be able to get no down payment car insurance.
- If the general costs from the quotes you get are still too high, you may need to reconsider your automobile choice. Obviously the flashier, faster and sportier the car the more your insurance rates are bound to be. See if there is any difference in a different trim level for the same car. Or try a slightly watered down and less sporty version of this model.
You may even find that between two different cars from different manufacturers the rates could be different based on safety ratings.
- Finally also try to opt for safety features versus fancy whistles and bells. The extra side airbags instead of the sun roof could make a huge difference in your auto insurance rates. Not to mention the sticker price may be lower as well.
- If there is a certain car you have your heart set on, the trick is to try to make sure you find the safest and least flashy version possible to help reduce the risk as well as the auto insurance rates.
Keep in mind, the dealership may have a policy provider they recommend, but often they arrange to get referral fees. Always check by shopping around for rates yourself instead of assuming their policy provider will be the most affordable. If you aren’t sure which company you want to go with, you could also look into temporary car insurance while you decide.
Frequently Asked Questions: Do You Need Insurance Before You Buy Your Car?
Still have a few questions? We’ve got more answers.
Do I need insurance before I buy a used car?
Should I get car insurance before buying a used car? Just like a used vehicle, you’ll need to keep full coverage until the loan is paid off.
Do you need to keep full coverage on a financed vehicle?
Most lenders require you to keep full coverage for the entirety of your loan. After it’s paid off, you can choose to drop that to your state’s liability coverage limits. The Insurance Information Institute has compiled these requirements, as you can see in the table below.
|State||Insurance required||Minimum liability limits|
|AL||BI & PD Liab||25/50/25|
|AK||BI & PD Liab||50/100/25|
|AZ||BI & PD Liab||15/30/10|
|AR||BI & PD Liab, PIP||25/50/25|
|CA||BI & PD Liab||15/30/5|
|CO||BI & PD Liab||25/50/15|
|CT||BI & PD Liab, UM, UIM||25/50/20|
|DE||BI & PD Liab, PIP||25/50/10|
|DC||BI & PD Liab, UM||25/50/10|
|FL||PD Liab, PIP||10/20/10|
|GA||BI & PD Liab||25/50/25|
|HI||BI & PD Liab, PIP||20/40/10|
|ID||BI & PD Liab||25/50/15|
|IL||BI & PD Liab, UM, UIM||25/50/20|
|IN||BI & PD Liab||25/50/25|
|IA||BI & PD Liab||20/40/15|
|KS||BI & PD Liab, PIP||25/50/25|
|KY||BI & PD Liab, PIP, UM, UIM||25/50/25|
|LA||BI & PD Liab||15/30/25|
|ME||BI & PD Liab, UM, UIM, Medpay||50/100/25|
|MD||BI & PD Liab, PIP, UM, UIM||30/60/15|
|MA||BI & PD Liab, PIP||20/40/5|
|MI||BI & PD Liab, PIP||20/40/10|
|MN||BI & PD Liab, PIP, UM, UIM||30/60/10|
|MS||BI & PD Liab||25/50/25|
|MO||BI & PD Liab, UM||25/50/25|
|MT||BI & PD Liab||25/50/20|
|NE||BI & PD Liab, UM, UIM||25/50/25|
|NV||BI & PD Liab||25/50/20|
|NJ||BI & PD Liab, PIP, UM, UIM||15/30/5|
|NM||BI & PD Liab||25/50/10|
|NY||BI & PD Liab, PIP, UM, UIM||25/50/10|
|NC||BI & PD Liab, UM, UIM||30/60/25|
|ND||BI & PD Liab, PIP, UM, UIM||25/50/25|
|OH||BI & PD Liab||25/50/25|
|OK||BI & PD Liab||25/50/25|
|OR||BI & PD Liab, PIP, UM, UIM||25/50/20|
|PA||BI & PD Liab, PIP||15/30/5|
|RI||BI & PD Liab||25/50/25|
|SC||BI & PD Liab, UM, UIM||25/50/25|
|SD||BI & PD Liab, UM, UIM||25/50/25|
|TN||BI & PD Liab||25/50/15|
|TX||BI & PD Liab, PIP||30/60/25|
|UT||BI & PD Liab, PIP||25/65/15|
|VT||BI & PD Liab, UM, UIM||25/50/10|
|VA||BI & PD Liab, UM, UIM||25/50/20|
|WA||BI & PD Liab||25/50/10|
|WV||BI & PD Liab, UM, UIM||25/50/25|
|WI||BI & PD Liab, UM, Medpay||25/50/10|
|WY||BI & PD Liab||25/50/20|
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This video from Allstate talks about liability coverage which is required in nearly every state.
If you do not keep full coverage on your vehicle, your lender may purchase force-placed insurance for your car.
If you’re looking for the right coverage before you go to buy a car, enter your ZIP code in our FREE tool. You’ll get quotes from multiple insurers.
Ready to go car and auto insurance policy shopping? You can begin by using nothing more than your zip code to get the ball rolling. Soon you will have answers for your car insurance rate questions and be able to drive off the lot in your new car.