Do you need proof of insurance to buy a car?

Buying a car can be an exciting adventure. However, a vehicle is an important investment, and there’s a lot you’ll want to consider before finalizing a purchase.

 

Before you go to the dealership, you may be curious whether you need to purchase car insurance. While it’s important to have car insurance for your newly-purchased vehicle before driving it off the lot, you have some work to do regarding which insurance company to choose.

If you’re buying a used car, you may want a simple liability auto insurance policy. However, if you’re buying a new vehicle, you may need full coverage. Regardless of the coverage you’re looking for, you should have plenty of options.

Do I need proof of insurance if I want to buy a car?

In most cases, you’ll need to show an individual or dealership proof of auto insurance before buying a car. Having proper proof of insurance to buy a car is a requirement in virtually every state, so you must take your time to find the right policy before buying a vehicle. 

When considering auto insurance options for your newly-purchased vehicle, you should take the time to decide what you want in terms of coverage.

Do I need insurance if I buy a used vehicle?

You’ll need proof of insurance regardless of whether you’re buying a new or used vehicle. If you’re buying a used car, that car must still have proper insurance. The benefit of buying a used car is that you may have a simple auto insurance policy offering your state’s minimum liability coverage.

In most cases, minimum coverage policies are helpful financially because they cost less than a full coverage car insurance policy. So while you’ll likely have to carry full coverage with a new car you lease or finance, a used car you purchase outright could help you save money in the long run.

It’s important to note that a full coverage policy, while more expensive, offers more protection for you and your vehicle. So, if it’s feasible to buy full coverage with your budget, you should consider it.

If you’re buying a car from an individual seller, this doesn’t mean you don’t need auto insurance. While the person selling you the vehicle may not ask to see proof of insurance, you’re still responsible for carrying proper car insurance on the vehicle before you ever drive it.

Do I need proof of insurance for a trade-in?

You need proper auto insurance if you trade your car for a different make, model, or year. You should have had a policy for the old vehicle, and many insurance companies allow a few days to inform them that you have a different vehicle. 

It’s a good idea to let your insurance company know immediately that your car has changed. This could impact your auto insurance rates, but it may not make a big difference unless the car is much newer or more expensive.

When you inform your car insurance company of the shift, you can check with other insurance companies to see how much they would charge you for coverage. It’s a good idea to find and compare auto insurance rates from several insurance companies before making a final decision on your auto insurance coverage.

Whether you buy a new or used vehicle, you can save money on your car insurance if your car has safety technology like anti-lock brakes, air bags, and passive restraint systems. Many insurance companies also offer auto insurance discounts on coverage for different reasons.

Can I drive uninsured if I just purchased a vehicle?

You can’t drive without proper coverage. So even if you just bought a car, you must ensure you have the right auto insurance before driving. 

If you buy a vehicle from a dealership, the person selling you the car will probably ask to see proof of insurance before handing you the keys to the vehicle. If you’re buying a car from an individual seller, they may not ask to see proof of coverage, but you’re still required to have car insurance meeting your state’s minimum car insurance requirements before you drive.

You can still buy a car without an insurance policy, but you won’t be able to drive it home until you can prove you have a car insurance policy.

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How soon after buying a car do I need car insurance? 

You must have car insurance before you drive the car off the lot. Ideally, you want to buy auto insurance before finalizing your purchase at the dealership. However, some people speak with a broker beforehand to start the process, while others buy car insurance the same day they buy their car.

If you have an existing car insurance policy on a different vehicle you’re selling or trading in, your insurance company may offer a grace period. Some insurance companies allow policyholders 30 days before they can make changes to their auto insurance policies.

However, if you have a policy on a vehicle you’ll still be driving, and the new car won’t replace that vehicle, you’ll need an entirely new policy before driving away from the dealership. Otherwise, you’d be driving without insurance in your state.

Can I get car insurance the same day I buy a car?

You can purchase a car insurance policy the same day you buy your car. The process of procuring an insurance policy is quick and simple with many major insurance companies in your area. However, smaller insurance companies may take longer to issue a policy.

If you want to buy car insurance the same day you buy your car, use an online quote tool to find and compare the best car insurance rates in your area. Once you find a company offering cheap auto insurance rates, you can purchase the policy. Most companies allow you to buy car insurance in monthly, six-month, or 12-month increments.

To get car insurance, you’ll need to provide information to the insurance company, like:

• Your birthday
• Your license number
• The birthdays and license numbers of anyone else on the policy
• The car make and model
• The car VIN
• The coverage you want

If you can, take the time to research any company you’re considering. Look into the company’s financial standing and read customer reviews to learn about each company and see which option might work best for you.

Why do I need to provide proof of insurance?

Proof of insurance is mandatory in almost every U.S. state. If you get pulled over by law enforcement, you must provide proof of insurance to avoid getting in trouble. However, you may also need to provide proof of insurance to an insurance company.

Many insurance companies require proof of insurance from your previous insurance company. You may pay higher rates if an insurer sees a coverage gap. In some cases, an insurance company may deny coverage altogether if you have a gap in your auto insurance coverage.

Keep a copy of your previous car insurance coverage to show any future company you maintained proper coverage on your vehicle the entire time you owned it to help you pay lower coverage rates.

What happens if I can’t show proof of insurance?

You must have proof of insurance to drive legally in the U.S. A few states allow people to prove financial responsibility in other ways. However, most residents still choose to purchase an auto insurance policy.

If caught driving without insurance, you may have to pay fines and fees, go to court, and serve jail time. Some officers may understand if you tell them you just purchased the vehicle and didn’t have time to buy car insurance, but that’s a gamble. 

Legally, you must have car insurance on your vehicle before you ever drive it off the lot. Find out what happens if you don’t have car insurance.

If you have insurance but don’t have proof with you, an officer could find your insurance policy using an electronic insurance verification system. However, you’ll still need to go to your local department of motor vehicles within 72 hours to show proof of insurance, including the policy’s purchase date.

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Do car dealerships require proof of insurance?

Most car insurance dealerships require you to show them proof of auto insurance. If you don’t have proper coverage when buying the car, a dealership may tell you to come back with proper coverage before you can drive your car home.

Your best bet to avoid disappointment is to purchase proper auto insurance coverage ahead of time. This way, nothing will stand in your way when you buy the car and want to drive it home. 

Proof of Insurance to Buy a Car: The Bottom Line

You must have proper car insurance to buy a car. Whether the vehicle is new or used, you’re responsible for carrying proper coverage.

If you buy a new car, you may need a full coverage policy that includes comprehensive auto insurance and collision coverage. However, if the car you’re buying is used, you may find that a minimum coverage policy that offers liability is enough to meet your needs.

As you consider auto insurance for your vehicle, find and compare quotes from several companies before making any final decisions. When you compare quotes, you’ll learn which companies offer the coverage you want at a price that works for you.

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