Whether you're buying a new or used car, you'll need auto insurance before you pick up the car. The minimum you'll need is the required amount of liability car insurance in your state. Here's what to know.
If you're trading in a car:
The 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 now apply to the new car. You don't necessarily have to call your insurance agent ahead of time, but it's wise to anyway 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 it on the policy
If you forget to tell your insurance agent about the new car and the deadline passes, you could end up driving without car insurance and facing penalties.
Only the coverage you had on the previous car will extend to the new one temporarily, unless you call your agent to adjust coverage. For example, if you only had 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 coverage.
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If you're buying a car without trading one in:
Whether you're buying your first car or adding one, you'll want insurance in place before you drive it away. It's a simple process: Call your insurance agent with the VIN of the vehicle. 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 your own vehicle.
Top ways to save money on car insurance when buying a car
- Get a "bundling" discount by buying your auto and homeowners or renters insurance from the same company.
- Know the cheapest cars to insure, such as small SUVs and minivans.
- Ask your insurance agent to review possible discounts to make sure you're getting all the ones you're entitled to.