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...

  • Auto insurance is legally required of drivers in almost every state in America
  • Not getting auto insurance can have heavy legal and financial consequences
  • You should be sure to get auto insurance on your new vehicle before driving it off of the lot
  • Check with your current auto insurance company to find out if you have a grace period on your policy for new vehicle purchases and with your dealership to see if they honor those grace periods
  • Be sure to get the coverage you need to protect your new investment

Buying a new car is an exciting time of life. However, do not get too carried away in your excitement that you forget to purchase a car insurance policy on your new vehicle.

You can be sure you are getting the best rates by using a price comparison tool online. These tools make it easy to compare several policies and quotes all in one place. Use our free tool right now!

Legally Mandated Car Insurance

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No matter where you live, you are most likely required to have certain amounts and types of auto insurance on your vehicle.

Although the policies and limits can vary by state, you will need to obtain auto insurance as almost every state in America mandates auto insurance coverage for drivers. Vehicles that have just been purchased are included in the auto insurance requirement.

There is no legal exception made for people who have just purchased a car.

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What are the consequences of not having auto insurance?

While it may be expensive or inconvenient to get auto insurance on your new vehicle, not doing so can put you in a lot of legal and financial hot water.

Legal penalties can also vary by state but, in general, you can expect the following if you forgo insurance and get caught:

  • Vehicle impoundment
  • Large fines
  • Suspension or revocation of your driver’s license
  • Suspension or revocation or your car registration and license plates
  • Jail time
  • SR22 auto insurance requirement
  • Community service

Outside of legal consequences, you could be solely responsible for damages that you cause to other people.

Your responsibility can include payment for their medical bills and the repair or replacement of their property.

Once all is said and done, this amount could be in the six-figure range or more, depending on the severity of the damages you caused and how many other parties were involved.

Insurance coverage protects you from being responsible for these expenses if they occur. Without this coverage, you could be found liable in a civil lawsuit. The plaintiffs and the court could then seize your assets or garnish your wages to help pay for the damages you owe.

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Preparing to Purchase Your New Vehicle

Just as you make preparations to buy a new car, you should also be making plans to have your new vehicle insured. Preparation for purchasing a vehicle includes:

  • researching vehicles
  • finding >dealerships
  • applying for a loan
  • listing your old car for sale or getting it ready to trade it in

If you have auto insurance on your current vehicle, you may be temporarily covered under a grace period when you purchase your new vehicle.

However, the best course of action is to call your auto insurance company prior to making your purchase to find out if this is true of your policy. If so, this will give you some time to get coverage on your new vehicle after you purchase it.

It is also important to note that even if you do have a grace period with your auto insurance carrier, your dealer may not accept it as an active insurance policy, especially if you have used their bank to finance your new vehicle.

If you do not already have auto insurance coverage on another vehicle, you will need to do some research prior to coming to the dealership. In some cases, you will not be allowed to drive the vehicle off of the lot without the proper proof of insurance coverage.

Call around to get quotes prior to making your purchase if you know the type of car you will be purchasing and details about it such as the:

  • Vehicle Identification Number (VIN)
  • Mileage
  • Purchase price
  • Safety features

With most insurance companies, you can get a quote started so that when the vehicle is officially yours, you can pay your premium, have the policy activated and get on the road.

Doing your homework ahead of time will save you time and hassle when you are ready to take your first spin in your new car.

Unfortunately, it is possible to be pulled over and cited or even get into an accident while on your way home from the dealership. Thus, there is no legal grace period for new vehicles on the road.

What types of coverages do I need for a new vehicle?

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With a new vehicle, especially a leased or financed one, you will likely need more than just a basic or bare-bones auto insurance policy.

In addition to property damaged and bodily injury liability insurance, you will also need to strongly consider the following coverages:

Collision

If you are in an accident, collision coverage will help pay for your damages. Drivers need to remember that liability coverage only pays for damages they cause to other people or their property.

It does not cover damages they cause to their own vehicle, making collision coverage very important on a new vehicle.

Comprehensive

With collision and comprehensive coverage, you choose a deductible amount and your policy limits. However, comprehensive coverage is different in that it covers other situations outside of getting into an accident.

Situations covered by your comprehensive including hitting wildlife, natural disasters, floods, fires, vandalism, and theft.

GAP

Since cars can quickly lose their value, there is often a difference between what you still owe on your loan or lease and your car’s actual market value.

If you are in an accident, your auto insurance company is only required to pay up to the actual value of your car, regardless of what you still owe on it. GAP insurance will pay this difference.

Getting auto insurance on your new vehicle is an important step in making your purchase. Not having auto insurance can leave you open to a lot of liability.

You can be sure you are getting the best deal on your auto insurance policy by using an online price comparison calculator. Use our comparison tool today.