Is There a Grace Period for Getting Insurance on a New Car ?

January 31, 2023

Key Takeaways

  • Most car insurance companies offer a grace period of seven to 30 days for getting coverage when you buy a car.
  • You must show proof of insurance before leaving the dealership with your new car.
  • Having a lapse in coverage raises your car insurance rate.

Before taking your newly purchased car home, you’ll need to get it insured. Many insurance companies offer a grace period — often lasting seven to 30 days — to add the vehicle to a policy. In this article, we at the Guides Auto team will tell you about new car insurance grace periods and what they mean for you. We’ll also recommend top car insurance providers to help you decide the best car insurance for your new vehicle.

New Car Grace Period Insurance: Overview

The grace period for getting new auto insurance is the amount of time you’re legally allowed to drive your new car before adding it to your auto insurance policy. This grace period varies depending on the state and insurance provider, but it’s usually 30 days at the most.

It’s best not to rely on this grace period, though. If the car still isn’t insured after the grace period ends, there could be major consequences.

Can I Drive Off the Lot Without Insurance?

Since having car insurance is a legal requirement in every state except New Hampshire and Virginia, you can’t drive off the dealership lot without it. If you already have a car insurance policy on another car, your provider might cover your new vehicle for a specified amount of time before you add it to the policy. Just be sure that coverage meets your new car insurance needs too.

If you get into a car accident before adding the new vehicle to your policy, you’ll likely be covered under an existing policy. Check with your provider to be sure.

If you’re leasing or financing, your lender will probably require full coverage, not just your state’s minimum coverage. Full coverage typically includes liability, collision and comprehensive insurance. A lender may also require gap insurance, which covers the difference between the loan balance and the insurance payout if a car is totaled or stolen.

Source: Progressive

Proof of Insurance

Before leaving the house to buy a car, have your proof of insurance ready. This is the insurance card or paper your provider issues. You can usually access it through your account on your insurer’s website or mobile app.

Whether you’re leasing, financing or paying cash, car dealerships can’t legally let you take the keys to a car without seeing proof of insurance. The dealer can help you get coverage if you don’t have an existing auto policy.

What Happens If Your Insurance Coverage Lapses?

If your new vehicle is uninsured after your provider’s grace period ends, that’s considered a lapse in coverage. This is a misdemeanor in most states, and you could face penalties such as paying a fine, having your driver’s license and registration suspended and possibly serving jail time. You’ll also be flagged as a high-risk driver, so your insurance premium will increase once you have coverage again.

Getting Into a Car Accident While Uninsured

Being uninsured means you’ll have out-of-pocket expenses if you’re at fault for an accident or the other driver doesn’t have enough insurance. A lapse in car insurance coverage could leave you responsible for property damage and medical expenses, as well as your car’s repairs.

It’s best to stay off the road if your car is uninsured. However, depending on your state and insurance provider, even that might not be enough. You may need to consider getting a less expensive new policy rather than not getting any coverage.

Insurance Coverage 101

Nearly every state requires you to carry car insurance, with two exceptions: New Hampshire and Virginia. Otherwise, you need either minimum-liability insurance or full-coverage insurance.

Standard Types of Insurance

There are plenty of insurance coverage options, but here are the ones you’ll likely be required to purchase:The six standard types of car insurance coverage that typically make up a full-coverage policy

Liability Coverage

This is legally required in 48 states. If you cause a car accident, liability car insurance pays the property damage and bodily injury expenses for the other driver and their passengers. You can stick with the minimum liability coverage, but paying for higher coverage limits will give you more financial protection.

Collision Coverage

Collision insurance is often optional but worthwhile. It helps you pay for damage to your vehicle from an accident regardless of who’s at fault.

Comprehensive Insurance

Comprehensive coverage protects your car for damage that isn’t caused by a collision with another car. This includes:

  • Weather damage
  • Flood
  • Fire
  • Theft
  • Vandalism
  • Hitting an animal

Uninsured and Underinsured Motorist Insurance

Despite state laws, it’s still possible to get into an accident with an uninsured motorist. The other driver may just be underinsured and unable to cover all of your medical or car repair bills. Underinsured/uninsured motorist coverage protects you in those instances. Some states require this coverage.

Personal Injury Protection (PIP)

Depending on your state, PIP insurance may be required. It covers items like income loss, medical bills and funeral expenses.

Medical Payments Coverage (MedPay)

MedPay covers your medical and funeral expenses (similar to PIP), but not lost wages or other costs related to an accident. The policy limits on MedPay are usually a lot lower than those for PIP.

New Car Grace Period Insurance: Conclusion

When you buy a car, it’s best not to rely on a grace period before insuring your vehicle. You could face penalties such as getting higher insurance rates and paying fines for not buying coverage or adding your new vehicle to your current policy before the grace period ends.

Top Auto Insurance Recommendations

It’s important to compare quotes to find cheap car insurance. State Farm and Geico are two of the top providers in our review of the best car insurance companies.

State Farm: Editor’s Choice

State Farm offers discounts for many types of customers. One of its usage-based programs, Drive Safe & Save™, gives drivers up to 30% off their premiums for avoiding behaviors like speeding. You can also benefit from other programs, including discounts for people who take defensive driving courses, good students and students who are away at school.

Read more: State Farm insurance review

Geico: Affordable for Most Drivers

Geico has an extensive range of car insurance options. The company’s average car insurance rates for good drivers tend to be lower than the national average. Geico also offers high policy limits and a discount for safe drivers enrolled in its usage-based insurance program, DriveEasy.

Read more: Geico insurance review

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

In this article, we selected companies with high overall ratings and cost ratings. The cost ratings were informed by auto insurance rate estimates generated by Quadrant Information Services and discount opportunities.


*Data accurate at time of publication.

Source link

Copyright © 2023 Keep Driving. All Rights Reserved.
DMCA.com Protection Status
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram