Do You Buy a Car First or Insurance?
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Do You Buy a Car First or Insurance?
If you’re in the market for a new car, you may wonder, which comes first, the vehicle or the insurance? Ultimately, whether you buy the car or insurance first, you’ll need your vehicle insured before you drive it off the lot.
In most states, driving a car without car insurance is illegal, meaning you should purchase at least the minimum liability insurance required in your state. However, if you are not buying your car outright and will be obtaining a loan from a bank or lending company, they will require you to purchase an auto insurance policy that includes comprehensive and collision coverage in addition to the state minimum liability coverage requirement.
How Do You Get Car Insurance Without a Car?
Want to buy car insurance before you secure your vehicle purchase?
You can easily get the process started by getting car insurance quotes to see how much you can expect to pay. This process is broken into two scenarios.
You know the car you want to buy
In this case, you know the exact vehicle you want to buy – year, make, model, the whole enchilada. The best way to get an accurate auto insurance quote is to ask the dealer for the vehicle’s vehicle identification number (VIN). Once you have this information and find the insurance company that works for you, you can secure the policy and set the start date as the day you plan to purchase the car and drive off the lot.
You have a few vehicle options in mind
Let’s say you’re car shopping and considering different vehicle options. You might have a few cars you’re interested in, but you haven’t narrowed it down yet or you don’t yet have a vehicle identification number (VIN) on hand.
In this case, you can still get insurance quotes as long as you can provide the year, make and model of the vehicle you’re considering. If you can’t provide the year, make and model, it’s going to be challenging to get an accurate quote for your auto insurance.
How Soon After Buying a Car Do You Need Insurance?
Since you’ll need to be fully insured before you drive your vehicle off the lot, you need car insurance coverage in place by the time you’re ready to head home. The good news is you don’t have to wait until you’re at the lot to find your insurance. It’s actually a great idea to shop around to compare insurance rates before you finalize your car purchase to see which company would be a good fit for you.
If you already have an insurance policy and you’re adding your car to it, you’ll likely have a short grace period in which your vehicle will have the same coverage as other vehicles on your policy. It’s not the best idea to rely solely on this though. If your current vehicle is paid off and only has state minimum liability coverage, and you’re buying a car with a loan, you won’t have the proper coverage needed for your new vehicle. That means if you’re in a car accident in the 15 minutes it takes to get home from the car lot, you won’t have the protection needed to cover repairs needed for your vehicle.
That’s an expensive mistake!
Can You Get Car Insurance Instantly?
Yes, It is possible to secure car insurance coverage the same day you apply for it. It is typical for most national insurance companies to write auto policies that can go into effect immediately (within a few minutes or hours) after your application is finalized. This allows you to drive your new car off the lot knowing you have the proper insurance coverage in case you are involved in an accident.
If you’re looking for the cheapest car insurance available, get quotes from multiple companies to compare rates and coverage levels.
What Information Do I Need to Get Same-Day Car Insurance?
If you need insurance in a hurry, it’s best to be prepared and have the necessary documentation to expedite the process. Here are a few things you should have available when you apply for same-day car insurance:
- Personal Information. Make a list of the name, date of birth, social security number, and driver’s license number of every driver you plan to add to your auto policy.
- Vehicle Information. Have the vehicle’s year, make, model, miles, color, and vehicle identification number (VIN).
- Physical Address of Vehicle. Inform the insurance company if your vehicle will be kept or garaged in any location other than your home address. For example, if you have a college student who will be driving the car and lives away from home.
- Previous/Current Insurance Information. Provide any current or previous car insurance policies you’ve been on.
- Driving History. Write down information on any car accidents or traffic tickets you’ve received. If you can’t recall, you can get a copy of your driving record at your local DMV or via their website.
- Payment. When your application is approved, the insurance company will require you to make your first month’s payment, sometimes known as a deposit, before your coverage is active. Most insurance companies accept electronic payments via credit card, debit card, checking, or savings account.
After gathering your information, the next step is to compare rates from different insurance companies using Compare. We make it easy to shop for the cheapest, most comprehensive car insurance available and drivers save an average of $720/month when they use our auto insurance comparison tool.
Get Your Auto Insurance Quotes
Can You Ever Buy a Car Without Auto Insurance?
In some cases the insurance company will allow you to buy your car, but they still won’t allow you to drive off the lot without showing proof of insurance. Since we’re sure you don’t want to buy a vehicle and have to leave it at the lot because you don’t have insurance, you want to be sure you’re prepared to insure your car with the proper insurance when you make your purchase.
Do Car Dealerships Require Proof of Insurance?
Yes, any reputable car dealer will require you to show proof of your vehicle’s active auto insurance policy before you drive off the lot.
You can show proof by showing your insurance card or having your insurance company fax or email proof of your policy to the dealership.
Keep in mind that depending on the type of vehicle you’re driving – are you using financing? – you will likely have additional insurance requirements that must be secure,
How to Choose the Right Auto Insurance Policy for Your New Vehicle
The good news is your state sets a minimum auto insurance requirement for you to drive legally. That will help give you a starting point for your car insurance coverage. You can choose to add higher limits or additional policies beyond liability coverage as you see fit.
Typically, when you lease or have an auto loan for your vehicle, your lending company will require additional insurance coverage to include collision and comprehensive policies. Having this extra coverage helps to protect their financial liabilities.
While there’s no one way to determine what insurance you should get, it often comes down to determining how much risk you feel comfortable taking. The more insurance you have, the more expensive your policy will be, but the more protected you’ll be in case of an accident.
Here’s a quick overview of your auto insurance options.
Liability Car Insurance
Liability auto insurance is required to drive a vehicle in most states legally. If you’re in an accident that you caused, your liability coverage will pay for the injury caused to the other driver and their personal property.
However, there is a limit to how much your insurance company will pay for the injured parties’ expenses on your behalf, based on the policy limits you choose.
Collision Car Insurance
If your car is involved in an accident with another vehicle or object, collision car insurance helps cover the cost of repairing or replacing your vehicle.
Comprehensive Car Insurance
Comprehensive car insurance pays for damage to your vehicle caused to your car by non-collision-related incidents out of your control. Your comprehensive insurance kicks in when you file claims related to fire, theft, vandalism, cracked windshields, etc.
Uninsured and Underinsured Motorist Car Insurance
Believe it or not, some motorists drive their cars without insurance. If you have an uninsured policy on your plan and hit someone without insurance, your policy will kick in to cover damages to their vehicle. And if you’re involved in an accident with someone who doesn’t have enough insurance to cover damage, underinsured motorist car insurance will kick in.
Keep in mind that underinsured/uninsured motorist insurance is only liability protection, so it won’t cover damages done to your vehicle. If you don’t have collision coverage on your vehicle you’ll have to pay for repairs out-of-pocket or sue the other driver for damages.
Medical Payments (MedPay) Insurance Coverage
MedPay provides supplemental medical payments for accident-related expenses due to a car accident. It covers a full range of medical costs, including ambulance fees, ER visits, x-rays and more.
Personal Injury Protection (PIP) Insurance Coverage
Like MedPay, PIP insurance (called reparations benefits in some states) covers you against unexpected and costly medical expenses, funeral costs, and nursing home care fees when you’re involved in an accident, regardless of who is at fault.
However, unlike MedPay insurance, it provides an additional layer of support for required services outside of those that are medical-related such as lost wages or hiring a housekeeper to perform household tasks that you are unable to do.
How to Save Money on Your Car Insurance Policy
So you know you have to get car insurance, what’s the best way to save on your policy? Here are a few tips.
Shop Around for Cheaper Car Insurance Rates
Once you have purchased your car or have an idea of the type of car you want, shop around for the cheapest car insurance rates available to you. Insurance companies quote insurance rates based on internal factors they’ve created; each company is different, and so are the quotes you receive.
The more quotes you obtain from competing companies, the greater your chances of getting the cheapest insurance with the best coverage options to suit your needs.
While cheaper insurance may be your goal, pay close attention to the coverage limits, deductible amounts, and the type of insurance you’re being quoted. It’s also a good idea to get quotes from reputable insurance companies to avoid mishaps when needed.
Take Advantage of Car Insurance Discounts
Most insurance companies incentivize doing business with them by offering discounts to reduce your car insurance premiums. Here’s a list of a few common car insurance discounts that are often available for drivers.
- Safe Driver Discount
- Defensive Driving Course Discount
- Good Student Discount
- New Vehicle Discount
- Anti-Theft Discount
Clean Up Your Credit
Did you know that insurance companies factor in your credit score when determining car insurance rates? Insurance companies believe the more stable and responsible you appear based on your financial patterns, the more likely you are to pay your insurance premiums on time and go claim-free. There are, however, a handful of states that no longer factor in your credit score when determining auto insurance rates.
Increase Your Deductibles
You can immediately reduce your car insurance costs when you increase your deductible. A deductible is an amount you must pay when filing a claim before the insurance kicks in. Deductible amounts vary depending on the policy and coverage type, but you can choose to increase them to the max to lower your car insurance costs.
The downside to increasing your car insurance deductibles is if you file a claim for damage to your vehicle and do not have the money to pay your portion – the deductible. In this case, the insurance company will not cover your costs and expenses until your deductible obligation has been paid in full.
Frequently Asked Questions
Do dealerships require proof of insurance?
If your new car is still at the dealership, you will need to provide them proof that you’ve purchased insurance before you can drive your car off the lot.
I already have car insurance. Do I have a grace period before I need to add my new vehicle?
It all depends on your insurance policy. If you have existing car insurance, your new car purchase may fall under the grace period, which means your car is “automatically” covered under the same terms as your current vehicle.
Do I need insurance to purchase a vehicle?
No, you do not, but you do need insurance to register it. Also, if your car is financed by a bank or lending institution, they will require you to have insurance coverage.
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