Whether you're buying a new or a used car, you'll need auto insurance before you drive it away. The minimum you'll need is the amount of liability car insurance required in your state. Here's what to know.
If you're trading in a car:
The auto insurance coverage on the car you're trading in will generally transfer to the new car, sometimes for up to 30 days. For example, if you had liability, collision and comprehensive coverage on your previous car, that coverage will likely apply to the new car for a month. It's a good idea to call your car insurance agent ahead of time to find out:
- How much the cars you're considering will cost to insure, to avoid surprises.
- The deadline for notifying the agent of the new car and getting an insurance policy on it.
If you don't call your agent ahead of time, make sure to inform them of the new car as soon as possible after the purchase. If you forget and the deadline to inform the insurer passes, you could end up driving without car insurance and facing penalties.
Only the types of coverage you had on the previous car will extend to the new one temporarily. For example, if you had only liability insurance, that's all that will extend to the new car. If your new car is stolen the next day, you'll lack the right insurance because you didn't have comprehensive auto insurance, which covers car theft.
If you're buying a car without trading one in:
Whether you're buying your first car or adding one, you'll need an auto insurance policy in place before you drive it home. It's a simple process: Call your insurance agent with the VIN of the vehicle. It's good to know the types of car insurance you want when you call. The agent can set up the new policy to start the day you intend to get the car.
If you're buying a brand-new car or a newer used car, you may want comprehensive and collision coverage. (If you're taking out a car loan the lender might require it.) That way, if your car is stolen or damaged in an accident you cause, you can make an insurance claim. Without comprehensive and collision, you're on your own if your car is stolen or you accidentally damage the vehicle.
Some insurers will extend existing coverage to an additional vehicle that you buy. But don't count on it -- read your policy or call your insurance agent to verify. For example, in California, Alliance United will cover an additional car with the broadest coverage that any vehicle on the current policy has, for 30 days. You need to ask them to insure the vehicle before the deadline, or the car will be without coverage. But to make a collision or comprehensive claim, you must have informed them of your intention to insure the extra car.
Top ways to save money on car insurance when buying a car
- Get a "bundling" discount by buying your auto insurance from the same company as your homeowners or renters insurance company.
- By a vehicle that's cheap to insure. Here are the cheapest cars to insure.
- Ask your insurance agent to go over possible car insurance discounts to make sure you're getting all the ones you're entitled to.
Can you buy a car without insurance?
You can buy a car without insurance, but in most states (except New Hampshire) you won't be able to legally drive it on public roads and highways. Car dealerships generally won't let you leave the lot without having insurance first. If you're buying a car in a private sale and intend to drive it home, you'll want to make sure you have auto insurance in place. Driving uninsured can lead to fines, license suspension and even jail.
Do you have to register a car before getting insurance?
Typically, you can't register a car before buying insurance. Your state's DMV likely requires proof of insurance before you can register a vehicle.
Do I need car insurance if I don't own a car?
You generally don't need car insurance if you don't own a car. If someone else owns a car that you drive regularly, like a parent's car, you should be listed on the auto insurance policy.
In some situations people buy a non-owner car insurance policy. This is typically done when a person doesn't own a vehicle but rents cars frequently. Or when people are required to have proof of auto insurance such as an SR-22 form.