While you can buy a car without having auto insurance, no dealership will allow you to drive off the lot without adequate coverage. Auto dealers need to see proof of insurance before you leave. If you're just adding a vehicle to your current car insurance policy, a grace period should give you some time to do so. Otherwise, you'll want to get it covered immediately.
We'll go over:
Do you need insurance to buy a car?
You can buy a car without insurance, but no reputable auto dealer will allow you to drive it off the lot without at least the minimum car insurance coverage limits. All states except New Hampshire and Virginia require a minimum amount of car insurance to be in place in order to drive legally. Furthermore, you'll likely need car insurance before you can register a vehicle or get license plates for it.
You may have heard about a "grace period" for getting car insurance. To clarify, this only applies if you have an insurance policy in place for another car that you can add the new car to as well. Check with your auto insurer to find out how much time you have. This time limit will be the same whether you are buying a new car or replacing an old one. You can easily call your insurer to get this done. Some companies even allow you to do it online.
How do I get proof of insurance when I buy a car?
Auto dealers need to see proof of insurance before they can permit you to take a car home. This is true even if you're buying a used car. Most dealerships accept digital proof of insurance if you don't have a hard copy. You can also ask your insurer to fax your insurance binder to the dealership.
If you don't have car insurance already when purchasing the car, most dealerships will let you use their computer to find coverage online if you don't have your phone handy to do so.
You can call an insurer on the phone as well, but it may be difficult to reach someone if you're buying a car on the weekend. Fortunately, some insurance companies have weekend hotlines set up for this reason.
Some dealerships offer the opportunity to purchase car insurance directly through them, but keep in mind that your options will probably be based around their preferred carriers. This means you may not be getting the best, cheapest quote you can.
If none of these options work, buy the car and leave it at the dealership. You can then go home, get coverage and return to the dealership to pick up the car once you've shown proof of insurance. If you go this route, take the time to compare quotes from multiple insurance companies.
When you're buying a car insurance policy, have the following information from the dealership on hand so your insurance agent can quote you correctly:
- The car's make and model
- The vehicle identification number (VIN)
Make sure you complete the car purchase before buying insurance for it. You don't want to buy a policy for a car that you wind up not owning.
Do I need insurance to test drive a car?
As long as you have a current, valid driver's license, you should be able to test drive a car from an auto dealership. Until you complete the purchase of the car, the dealership owns it and their insurance will provide coverage in the event of an accident.
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How much does new car insurance cost?
The average cost of minimum car insurance is $87 a month nationally. Your final premium will be affected by factors including:
- Make and model of the car
- Age of car
- Where you live
- Your insurance claim history
Expensive cars tend to cost more to insure. Also, if you're a teen driver, you can expect higher rates.
You will need to get your state's minimum required car insurance limits to drive legally. However, If you're leasing or financing the vehicle, your lender will more than likely require you to purchase full-coverage car insurance for it.
There are other add-on car insurance policy types you might want to consider purchasing:
- New car replacement coverage: this insurance pays for the replacement of a totaled car with one of the same make, model and features. Cars lose their value quickly, so the benefit of this type of coverage is good for the first couple of years of owning the car. You can probably drop it after that.
- Repair provision coverage: this pays for repair costs beyond the car's actual cash value.
- Guaranteed asset protection: also known as gap insurance, this coverage pays the difference between the current actual cash value of your car and what you still owe on it if the car is totaled.
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