Do I buy a car first or insurance?
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UPDATED: Mar 19, 2020
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- When you’re buying a car, you don’t buy your car insurance policy until you become the legal owner of the vehicle
- You can’t insure a vehicle until you have an insurable interest in it
- While it’s not possible to start your policy until you’ve signed a bill of sale, you can price the cost of coverage for specific vehicle models by soliciting quotes before you go shopping
- After saving your insurance quote, plug in the VIN and other vehicle information to bind your coverage while you’re in the finance office
- If you have existing insurance, your coverage will be extended to a new vehicle for up to 30 days
What comes first, the car or the insurance? Many first-time car buyers ask this question when they are trying to prepare themselves for the process.
You might not be able to drive off of the car lot without insurance, but you also can’t buy a standard policy without a vehicle, which poses problems for consumers who fail to research.
The key to having a pleasant experience when you’re buying a car is to research. You should know lending requirements, current interest rates, market values, and insurance premium estimates. You can easily price the cost to insure one of the cars you’d like to own by soliciting a quote with your information.
Start comparison today if you’re thinking of purchasing a vehicle. Just enter your zip code above to get started!
Why can’t a prospective buyer purchase insurance on a car before they buy it?
It might seem like it would be much more convenient for your insurer to bind your coverage before you visit the dealership, but that doesn’t make much sense from the insurer’s perspective. There are a few reasons why you can’t purchase insurance before you purchase a car.
The first reason is that you don’t have an insurable interest in the car. Insurable interest is a requirement for all personal policies.
Most indemnity contracts states you must have something to lose to be able to protect property. If you have no financial stake in the vehicle, the insurer isn’t going to sell you a policy.
The insurable interest requirement isn’t the only reason why you can’t get insurance on a car that you don’t own. In order to bind coverage, you need to have the exact VIN and vehicle specifications so that the policy can be rated properly.
Since most buyers don’t get this information until after they’ve started negotiations, it would be a waste of the company’s time to modify a policy with accurate information after the paperwork has been processed.
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How do you insure a new car if you don’t already have coverage?
If you’ve never owned a car, you don’t have an existing insurance policy to lean back on when buying a new car. In most states, the dealer will need proof of insurance before you can drive away, which is required in states where insurance is compulsory.
If you’re financing the car, the company will ask for proof of full coverage as well. Since you need to show that you have insurance before you leave the dealer, the best bet is to get your quotes ready a day or two before you plan to go car buying.
You can plug all of your personal information into the quote then enter the year, make, model, and VIN into the form when you have detailed information. Having detailed information about the vehicle will provide the most accurate quotes.
Will my existing insurance extend to the new car?
If you already own a vehicle, the coverage that you currently carry will help you satisfy your insurance requirement for a limited time. If you have liability-only, you may not satisfy your lender’s requirements.
In most states, you will have four days of automatic comprehensive and collision coverage if you don’t have full coverage already.
Coverage will extend to the new car for 14 to 30 days. You need to contact your insurer to find out how long the coverage extends and if the broadest form of coverage applies. You may be asked to provide a copy of your insurance before you leave the finance office.
Do you have coverage for the car if you’re a driver on a policy?
If you’re currently listed as a rated driver on the policy, it doesn’t mean that you will have coverage for a new vehicle. The newly acquired vehicle coverage extension only applies when a named insured on the policy will be a legal owner of the newly purchased car.
If you are the only one purchasing the car, coverage doesn’t extend. Now that you understand your duties as a consumer, it’s time to start shopping. Before you venture out to test drive cars, get quotes.
Use our FREE online rate comparison tool and you can easily see which models have low-priced insurance rates.