Do I need proof of insurance when buying a used car?

When purchasing a used vehicle, there are many things to consider. One of them is proof of insurance. You'll need auto insurance on a used car to drive it legally and register it.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Written by Mathew B. Sims
Editor-in-Chief Mathew B. Sims

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 (BBB A+). 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 and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: May 21, 2022

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Things to Remember

  • Liability coverage is the minimum coverage amount drivers in almost every state must meet to drive a new or used vehicle off the lot
  • You may have to purchase more insurance coverage if you finance a used car or your state has additional requirements
  • A loss payable clause might also be required to get a loan to purchase your used vehicle

Buying a used car — especially your first one — can be exciting. Though you may be eager to finalize the deal and get on the road, you’ll have to consider the purchasing process.

If you’ve never purchased a used car before, you may be wondering if you need insurance to make the purchase. Let’s dive into the answers in detail, so you understand everything you need to know before purchasing a used vehicle.

Looking to buy auto insurance for a used car? Enter your ZIP code in our free tool to compare auto insurance rates from multiple companies, so you have the used auto insurance coverage you need.

Do you need insurance to buy a car?

While it’s not required to make a purchase, you’ll need insurance to drive the car home from the lot, essentially meaning you really can’t buy a used car without insurance. If you buy from a dealer instead of a private party, they will require it since they’ll register the vehicle for you.

Anyone looking to buy a car — new or used — has to purchase their state’s minimum auto insurance before registering the vehicle and getting license plates. Depending on whether you’re financing the purchase, you’ll also need other documentation, such as proof of income, identity, residence, and similar documents.

The first requirement is insurance. If you’re financing your vehicle, you’ll likely need full coverage — if not, you may only need liability or your state’s minimum coverage.

If you purchase your car from a dealer, be prepared to provide proof of insurance. You’ll also need to give them a copy of your driver’s license, financial documents, and a filled-out registration form, among other documents.

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Why is full coverage required on financed cars?

Full coverage is usually required when financing a car, whether new or used. When you take out a loan to buy your vehicle, the lender is the car’s legal owner until you pay off your loan.

If you owe money on the car, you’ll need comprehensive, collision, and possibly uninsured motorist coverage. Essentially, your lender wants to protect its interest in the vehicle if the car gets damaged or totaled while you still owe money on it.

To get an idea of what this might cost you, we pulled the National Association of Insurance Commissioners (NAIC) average rates for various core coverages that you may be required to carry to purchase a vehicle.

Average Auto Insurance Rates by Coverage Type Across the Country
Auto Insurance Coverage TypeAverage Annual Auto Insurance RatesAverage Monthly Auto Insurance Rates
Liability$516.39$43.03
Collision$299.73$24.98
Comprehensive$222.86$18.57
Combined/Full$954.99$79.58
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Do I need a separate policy for my used car if I already have insurance?

If you already have insurance on a different car, you don’t need to add coverage for your used car before purchasing. Your existing coverage will apply to your used car for a brief period — check with your insurance company and state law to see how long you have.

Once you complete the purchase, you should contact your insurance provider immediately to set up a new policy for your vehicle. Your insurance rates may increase when you add your used car, depending on whether or not you are replacing another car.

Do I need proof of insurance when buying a used car?: The Bottom Line

Getting proof of insurance to buy a used car isn’t difficult. Once you buy the policy, you can go to your insurance company’s website, log in, find your insurance ID cards, and print them out.

You might also be able to use an app on your smartphone to access your ID cards. Print them out and bring them with you to the dealership or submit them online if the option is available. You’ll also usually receive cards in the mail.

Whichever method you use, ensure you have proof of coverage handy before buying a used car.

Ready to buy auto insurance? To make sure you have the coverage you need to purchase your used car, enter your ZIP code now to compare used auto insurance rates in your area. Which auto insurance company is for you? Find out now.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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