How To Get Car Insurance Before Buying A Car
If you’re in the market for a new or used car, you may be wondering whether you will need car insurance before you drive your new ride off the dealership floor.
If you’re buying a car, you will need car insurance. Whether you are buying your car cash, or financing it, you will need proof of insurance before you can take ownership of your new vehicle.
Finding the best car insurance doesn’t need to be a stressful experience. In this article, we will show you everything you need to know about how to get car insurance before buying a car.
Why Do I Need Car Insurance before Buying a Car?
If you’re looking to buy a car, it’s necessary in most cases to have auto insurance. Here are some of the reasons why:
You could be legally required to have car insurance
In most states you will need to carry basic insurance, and in some states it’s illegal to drive without it. This basic insurance is referred to as minimum liability car insurance.
New Hampshire and Virginia are the only states where you will not need to carry this insurance.
- New Hampshire: You will only need to prove your ability to pay for damage following a car accident. The state may force you to get car insurance after an accident, or driving under the influence of alcohol.
- Virginia: You can pay an uninsured motorist fee of about $500 per year instead of getting car insurance, but the state recommends that you have a car insurance policy.
Minimum liability car insurance is the least amount of auto insurance coverage you need to have in place to pay for any damages you cause while driving.
This insurance is made up of three numbers:
- The first number refers to the bodily injury liability limit per person.
- The second number refers to the bodily injury liability limit per accident.
- The third number refers to your total property damage coverage.
These limits are the maximum that your insurance company will pay out and will be listed on your insurance document as 25/50/20, for example.
These numbers relate to the dollar coverage of your minimum liability insurance: $25,000/$50,000/$25,000.
Each state has its own minimum liability coverage requirements, so in Maryland, this would be 30/60/15, while in Indiana it is 25/50/25.
Most car dealerships will need your proof of auto insurance
Technically you can buy a vehicle without insurance. However, when you buy a new or used car, most dealerships won’t let you drive off with the car unless you are insured first.
Proof of insurance is a document that confirms you have a current and valid auto insurance policy which meets the minimum liability requirements of your state.
This document will provide details of your policy which may include:
- Insurance company’s name and address.
- Start and expiry date of the policy.
- Policy number and National Association of Insurance Commissioners (NAIC) number.
- Your first and last name.
- The insured vehicle’s make, year, model, and vehicle identification number (VIN).
If you have a specific make and model of car in mind, you can phone your car insurance company ahead of time, or shop around and ask for a quote.
Your bank or financial institution needs your proof of auto insurance
When financing a car, lenders will need documentation that proves your identity, income, residency, and proof of auto insurance coverage.
When you have found the perfect car to buy, you may also be making decisions about financing that car. At this point, you will likely need to approach a lender.
Once you have the make, model, and year of the car, including if possible the VIN, you can start shopping around for quotes on a new car insurance policy.
If you have already qualified for car insurance, you can choose the car insurance provider that you wish to use and pay your first insurance premium, and then approach a lender for financing.
Auto insurance protects you financially
Insurance can be a very important way to effectively manage your finances.
When you buy car insurance, you transfer the risk, or cost of an unexpected event, like an accident, to the insurance company.
Insurance companies take on this risk in return for a fee—which is your premium.
For example, if you have had an accident and the repairs to your car are going to cost $15,000, your insurance company will pay for most of that cost.
You may have to pay part of that cost—say $500—which is known as your deductible.
A deductible is an out-of-pocket sum that you agree to pay toward any claim with your insurer. This amount is agreed to up front when you take out your car insurance policy.
The higher the deductible that you agree on, the lower your car insurance premium and the lower your deductible, the higher your premium will be.
Even though you are paying a deductible and your car insurance premiums, repairing the typical kinds of damage to vehicles after an accident, cost a lot of money.
Having car insurance protects you from large out-of-pocket expenses that you would possibly be unable to afford.
How Do I Get Auto Insurance before Buying a Car?
Getting a new car is always exciting and finding insurance for it should be a hassle-free process. Let’s look at some of the steps that you can take to buy car insurance:
1. Choose your car
When choosing a car, whether new or used, it’s vital to set a strict budget.
This will help you avoid overspending by either depleting your cash reserves or getting you into debt you can’t afford.
Once you have set a budget and decided whether you’re going to pay cash or finance the car, you can start looking for a car that meets your needs.
Always consider the costs of owning a car. Some cars are cheap to buy but will cost a lot in the long run due to maintenance and repairs.
2. Get all the details of the car together
To get a quote and buy car insurance, you will need a few of the vehicle’s details for the insurer:
- Make of the vehicle.
- Model of the car.
- Year of manufacture.
- The car’s vehicle identification number (VIN).
3. Shop around and compare quotes
We would recommend trying our free quote generator at CheapInsurance.com.
This way you can get an immediate idea of how much you could be spending on car insurance. All you need is your zip code.
From here you can decide which insurer you would like to get a formal quote from.
4. Decide on the coverage you need
Most states require you to have minimum liability coverage in order to legally drive. If you are buying a car, this would be the most essential insurance coverage that you would need.
You can also decide to buy more insurance coverage that would help you get extra financial protection if you have an accident, or if your car is stolen or damaged in any way.
These options include collision, comprehensive, and personal injury protection (PIP) insurance.
5. Choose a car insurance policy and insurance company
Once you have narrowed down a few car insurance quotes from multiple car insurance companies, you’ll be ready to choose an insurance provider that best suits your needs and pocket.
6. Complete the purchase
You’ll need to contact the insurer who prepared your preferred car insurance quote and let them know that you have accepted their offer.
At this point, they will ask you for your first premium which you will need to pay before they will activate your car insurance for your new car.
What Information Will I Need to Get Car Insurance?
When getting a quote on car insurance and before you can buy car insurance coverage, you will need to provide some of your personal details. This includes your:
- Date of birth.
- Social security number.
- Driver’s license number.
- Home address.
- Address where your vehicle will park at night and during the day.
- Declaration from your current or most recent insurer.
Key Point: Declaration from Your Current or Most Recent Insurer
This declaration page is a quick overview of your driving and insurance history. It includes the following information:
Once you have given these details to the insurer, they will be able to prepare an accurate quote for you, which you can accept if you are comfortable with the premium.
How Soon after Buying a Car Do I Need Insurance?
Most states require you to have car insurance to be able to legally drive.
In those states, you will need minimum liability insurance at the very least and you can decide to get more comprehensive insurance if you need it.
Before you can drive your new car out of the dealership, you will need to have your car insurance in place.
Here are some of the instances that will impact how you obtain your car insurance:
You are buying a second car
If you do have car insurance already and are buying a second car, you will need to update your car insurance policy to include your new car.
You want to transfer your insurance to your new car
If you have car insurance and you’re simply buying a new car, your insurer will allow you a grace period to transfer your active car insurance policy to the new car that you’ll be driving home.
Instead of shopping around for new quotes, transferring your auto insurance will save you a lot of time and effort.
This option also helps you make sure that you have the correct coverage in place for your needs.
Transferring your insurance to a new car is not difficult to do. All it often takes is a phone call or an online transfer request to get it done.
Insurers typically allow one week to 30 days to update your policy and transfer your insurance to a new car. This gives you time to insure your new vehicle without a lapse in your policy.
You are buying a new car and car insurance at the same time
You will need to get car insurance and have cover in place before you take ownership of your new vehicle.
Some insurers will offer you same-day insurance so that you are able to take ownership of your car on the day that you buy it. This is sometimes referred to as ‘immediate coverage’.
There are many insurers that will let you get immediate coverage when you are buying car insurance for your new vehicle.
To get immediate coverage, you will need to:
- Have a clean driving record.
- A good credit score.
- A permanent home address.
You will also need to pay your first premium up front. Once this payment has cleared with the insurance company, your insurance cover will be activated.
Frequently Asked Questions about Getting Insurance before Purchasing a Car
Can I get a car insurance quote before buying a car?
It’s a good idea to shop around for insurance quotes before buying your car. This will give you a better idea of the total cost of owning the vehicle you are interested in buying.
Do I need insurance to buy a car?
It is illegal in most states to drive without minimum liability insurance. You will not be able to drive your car out of the dealership without car insurance in place.
What are the penalties for not having car insurance?
Driving without insurance is illegal in most states. Penalties can include hefty fines, driver’s license suspension, prison time, and a mandatory SR-22 filing with the state’s DMV.
Can I buy car insurance on the same day?
Many insurance companies will offer you car insurance on the same day if you pay your first premium immediately.
Get Cheap Car Insurance Quotes Today
Because it is illegal in most states to drive without insurance, you will need to buy car insurance in order to drive your new car out of the dealership.
Shopping around for car insurance before you buy your car is a good idea. This will give you a very clear picture of how much you will be spending on the vehicle in total every month.
Getting car insurance should be a stress-free process. With CheapInsurance.com we’ve got you covered.
Get instant cheap car insurance quotes with America’s top insurers and see where you can save today! Simply enter your zip code and start comparing quotes.