Buying a new car is an exciting time, but as you know, there are a few tasks that need to be done before you can complete the purchase. One of those tasks is making sure you have the proper auto insurance that your state requires in order to legally drive. Nearly every state has a minimum required level of coverage, which you can usually find on your state’s Department of Motor Vehicles website or with your insurance agent. Many insurance companies offer a grace period of 7 to 30 days during which you can use your old insurance towards your new car coverage. This gives you time to renew your coverage or buy new auto insurance. Bankrate has created this guide that explains new car insurance grace periods.
Is there a grace period for car insurance when buying a new car?
The answer to this question is probably. Not all insurance companies offer a grace period on new car insurance, but many do. If you’re buying a new car to replace a car you previously owned and insured, there’s a good chance you can take advantage of the grace period if your insurance company offers it. The grace period can be anywhere from 7 to 30 days and is meant to give you time to renew your insurance.
When you buy a new car, one of the first things you should do is contact your insurance company to cancel your old car’s insurance and update it to reflect your new purchase. If you weren’t insured before, it’s a good idea to collect quotes from insurance companies to find the company that offers the most affordable rate. In that case, you won’t be able to take advantage of the grace period because you weren’t insured before.
What happens to my car insurance coverage during the grace period?
If you have full auto insurance on the insured vehicle, the same coverage may apply to your new vehicle during the grace period. If you have liability-only coverage, coverage for your new vehicle may be significantly limited during the grace period on your new vehicle insurance. If you have multiple vehicles on your policy with different levels of coverage, the best coverage on your policy will usually apply temporarily to your new vehicle. The temporary coverage applies whether you buy your new vehicle from a dealer or a private seller.
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For example, let’s say you have two cars insured on your auto insurance policy: one with a $500 comprehensive and collision deductible, and the other with liability-only coverage. If you buy a third car, your new car will usually automatically have the highest coverage available on your policy — comprehensive and collision coverage. However, the length of the insurance grace period for a new car varies by insurance company, so it’s important to know the coverage limits that apply to your situation.
How long is the grace period for car insurance?
Auto insurance grace periods can last anywhere from 7 to 30 days from the date of purchase of your new car, depending on your auto insurance policy and current level of coverage. During the grace period, your new car’s coverage level may be limited and, in some cases, a deductible may apply if a claim is made. Checking with your insurer in advance can help you avoid gaps in coverage and the financial risks that come with it.
When does the grace period for car insurance not apply?
If you don’t have valid auto insurance when you buy your new car, the insurance grace period doesn’t apply. In this case, you’ll need to shop around for auto insurance and get new insurance for your vehicle. Depending on how long it will take you to drive your car from the dealership, it may be worth considering getting multiple auto insurance quotes to find the rate that best suits your needs. Rates can vary significantly from company to company, based on several factors specific to you and your vehicle.
If you have a valid insurance policy, your auto insurance grace period may not apply in some scenarios, such as if your insurance company doesn’t offer a grace period or if you’ve exhausted your grace period coverage. In either case, you’ll need to add the vehicle to your policy to be covered. If you don’t, you’ll be considered driving uninsured in the event of an accident, which could have serious consequences.
