Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • If you buy car from a dealer, you need to have auto insurance in place before you leave
  • Buyers who pay for a car in full only have to prove they have the insurance required by the state
  • If you’re taking out any type of loan to buy a vehicle, you need to show you have full coverage
  • Not only do you need full coverage, but the deductibles that you select must also be acceptable to the lender
  • You can’t drive off of the lot when you don’t have existing insurance with the right coverage in place

You need to be prepared before you ever walk into a car dealership. No matter how excited you are to buy a new car, letting your excitement guide your car buying decision is what will wind up costing you extra money long term.

Compare car insurance quotes today to find the best rate for the coverage you need. Enter your zip code above to begin.

When you do your research ahead of time, you can get the lowest interest rates and also the lowest insurance rates.

Consumers who want a hassle-free car buying experience should compare rates and apply for financing before they step foot in a finance office. When you’re pre-approved for a loan, you have more negotiating power.

You’re also better equipped with the financial tools and knowledge that you need to stay on budget. Auto loans aren’t the only thing to price. You should also price the cost of auto insurance before you even pick a dealer or model:

Do you need insurance right away?

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Negotiating with a salesman can be an exhausting endeavor. You have to play hardball in hopes of knocking thousands off of the sticker price. If you’re successful, you could be in the dealership office for hours writing down numbers and adding up the numbers.

After you’ve spent all of that time to settle on a number the last thing that you want to do is spend time haggling with an insurance agent.

Unfortunately, you can’t avoid or postpone getting insurance if you want to leave with your new car. You must have insurance right away when you own a car. If you don’t, you’ll be in violation of the vehicle code right as you become a car owner.

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How do you know what’s required by law in your state?

Vehicle code and other legislation vary by state. The laws of the land may be similar from region to region, but what’s deemed mandatory is dictated by state officials.

You must determine where you’re going to register the car before you even start to do a compare and contrast session on rates.

If you don’t know what’s required by law in your state, finding the requirements isn’t too difficult. You can visit the DMV and get a manual that lists all the laws in detail or you can access the information online.

It’s best to reference information on requirements that are posted on the official state website for the most up-to-date information.

Why am I required to buy more insurance than what’s required by law?

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If you already have a quote saved that provides you with mandatory limits, it can be frustrating when the finance manager says that your coverage won’t satisfy the terms of your contract.

If you’re going to pay cash for the car, you technically only need mandatory coverage to leave. If you’re financing the car, it’s a different story.

Consumers who are financing a car don’t just have to comply with the requirements set by the state; they also have to comply with the terms set by their lender. Essentially, they have two different authority figures to listen to.

Car insurance follows a car, but it might also follow a driver. This means that you’ll be covered to drive other cars that you don’t have on your policy or you don’t own.

You don’t realize how beneficial this provision is until you need to buy a car on the weekend and you can’t contact your favorite agent.

You can’t buy a car and then rely on the fact that your insurer offers some type of automatic coverage for long. The new car will be covered, but there are time limits and coverage restrictions.

You need to know all of the limitations of you could find yourself between a rock and a hard place.

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What is a newly acquired auto?

If you own a car or you’re trading in your car, your policy that you currently have will cover claims made when you’re driving a newly acquired auto.

A newly acquired auto is a private passenger auto used by the policyholder for personal reasons that was purchased or transferred to the insured after your policy term took effect.

The definition of newly acquired auto is specific for a reason. If the carrier didn’t define what the term meant, you could claim that all of your cars were newly acquired for one reason or another. The definition protects the company from being liable for covering car you already owned.

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What are the limitations of your existing coverage?

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Newly acquired vehicles are only as protected as other cars on the policy. This is why you need to look over your insurance to see what the broadest limits are. These limits include:

  • your liability
  • medical payments
  • physical damage
  • uninsured motorist limits

Coverage will apply to the new car for up to 30 days.

If you don’t have any type of comprehensive or collision coverage on the policy, you’re lucky. You can let your financier know that your carrier will give you comprehensive and collision coverage with $500 deductibles for four days.

You don’t want to get stuck paying too much for a car or high-interest rates for a loan. Doing your research is what’s going to protect you in the long run. Start by finding a low-interest loan and then continue by comparing insurance rates.

Shop around online, get instant quotes through a comparison platform, and save the quotes for later. Use our free rate tool right now!