A Guide to Buying a New Car Insurance Grace Period

A Guide to Buying a New Car Insurance Grace Period

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Everyone knows that you need to have insurance on any car you drive, no matter what state you live in or where you drive the vehicle. But what happens when you replace your car, buy your first vehicle, or add a second vehicle to your home? Do you buy insurance first, even though you don’t have a car yet? Do you add the vehicle after you buy it and risk driving around without insurance? We have the answers. Here is your guide to buying a new car insurance grace period.

Adding a Second Vehicle or Replacing Your Current Vehicle

If you already have a car, you likely have auto insurance on it. Your policy may do more than cover your current vehicle – it may also cover your new vehicle, though only temporarily. This temporary extension usually lasts between seven and 30 days. It’s important to know the exact length of the coverage, though. Check your policy and if you’re not sure, call your agent to ask.

During this grace period, you can purchase your new vehicle without worrying if it’s covered. Don’t wait too long to add the vehicle to your policy, though, or you may pass outside of the grace period without realizing it and no longer be covered.

It’s also important to know exactly what is covered under the extended coverage. Your policy on your existing vehicle may cover accidents and other damage, but the same incidents may not be covered under the temporary coverage for your new vehicle. Make sure you know what is covered and address concerns with your agent. Even if you are comfortable with the coverage, the finance company helping you purchase your new car may want more comprehensive coverage. They may require you to add this coverage immediately.

Some insurers will provide automatic temporary coverage for a new vehicle for a very short period. This coverage typically only lasts a few days, so make sure to call your agent as soon as you get home with your new car.

Not all policies offer a grace period or extended coverage. Some may only cover a vehicle that is replacing the vehicle covered in the policy. Additionally, the policy may only offer the same type of coverage that was provided for the old car. In this case, you will need to add the new car to your policy before you can drive it off the lot. If your finance company requires more comprehensive coverage, you will need to add this as well.

Buying Your First Car

If this is your first vehicle and you don’t have existing insurance, the scenario is a little different. You’ll need to have insurance set up before you buy your new car. You’ll then need to call your agent from the dealership in order to activate the policy and give your vehicle identification number (VIN) to your agent.

Providing Proof of Insurance

The dealership will likely need to see and document proof of insurance before they can sell you the car. Usually, an insurance card is sufficient if you have a grace period on your policy. In other situations, you can call your agent and have them email or fax proof of insurance.

Leasing Considerations

If you are leasing your new vehicle, you may need to alter your policy. Leasing companies require higher levels of insurance – typically, it’s at least $100,000 for bodily injury and $50,000 for property damage. Your insurer can usually increase your coverage within 24 hours, but make sure to call your agent and have this taken care of ahead of time.

Know Your Requirements and Options

It’s important to know exactly what your policy provides, what your finance or leasing company requires, and the steps you need to take to achieve appropriate coverage. If you fail to be aware of your insurance situation, you could end up missing your grace period’s deadline or not having a grace period to begin with. This will cause tickets for lack of insurance, penalties from your finance or leasing company, and liabilities should you get into an accident. Make sure your policy is up to date, so you can avoid these nightmare scenarios.