Is There a Grace Period to Get Insurance on a New Car?
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Many insurers offer a grace period that provides temporary coverage for a newly acquired vehicle. But this grace period can vary by auto insurance company and state — usually from seven to 30 days — so it’s important to understand your options and what’s covered when buying a new or used car.
Below, we outline how a grace period works when buying a new car, what happens if coverage lapses or you get into an accident, and the steps to getting car insurance for a new vehicle.
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Can You Get an Insurance Grace Period When You Buy a New Car?
If you already have an active auto insurance policy covering your old car, it will extend the same insurance coverage to a newly purchased vehicle in case you get into an accident before it’s added to your policy.
But this grace period is only available if you have an existing car insurance policy. If you don’t, you must buy insurance for your newly purchased car before driving it off the dealership lot. Luckily, most auto insurance companies offer same-day policies you can get in about an hour.
The new car grace period can vary by insurer, state, how you buy the vehicle, and what happens during the temporary coverage period. Let’s take a closer look at how this temporary coverage works.
How long is the grace period for car insurance?
The grace period varies by car insurance company. Most insurers offer a seven- to 30-day grace period. For example, GEICO and Progressive have a new vehicle grace period that’s 30 days, but State Farm allows only 14 days.
The state you live in may also have a law that dictates the period of time you have to add a newly purchased car. For example, in California, you have up to 45 days to add a new or used vehicle to your current insurance policy.
It’s important to understand how your insurer handles new car purchases and what its grace period is before you buy a car. Driving without insurance can have severe consequences in many states, including fines, jail time, and license suspension. This can even make it harder to find affordable auto insurance when you shop for a new policy.
Do all companies offer a grace period?
No. Different companies offer varying grace periods. Some insurers offer a 14- to 30-day grace period, but others might not provide a temporary coverage extension to newly acquired vehicles at all. The grace period can also differ depending on if you’re replacing a car on your current policy or adding a new one.
Whether you’re in the market for a new or used vehicle, check with your insurance company before completing the purchase. That way, you’ll know how long the grace period is and can ask specific questions about any scenario you could run into when buying a car.
What happens if you get in an accident during the grace period?
The same car insurance coverage on your current policy applies to your new vehicle if you get into an accident during the grace period. For example, if you’re the at-fault driver, your liability coverage can pay for others’ injuries and any property damage you cause. If you have collision coverage, it can cover damages to your new car.
But if you have a liability-only policy and are at fault, there’s no physical damage coverage for your new car. If your existing policy only has liability insurance and you want or need full coverage for the new car, it’s a good idea to add it to the policy as soon as you purchase the car to ensure you have sufficient coverage in place in case of an accident.
Is there a grace period when you buy from a private seller?
Although a private seller won’t ask for proof of insurance, you still need to have your state’s minimum amount of car insurance coverage to legally drive it. Fortunately, the grace period should also extend to a private seller purchase if you have an active policy. But some insurers may offer a shorter grace period if you add the vehicle rather than replacing an already insured car on the policy.
Driving without insurance is illegal in almost every state. And you’d be financially responsible for any accidents you cause if you drive uninsured. Most states also require proof of minimum coverage before registering the vehicle.
What happens if your coverage lapses?
The coverage extension only lasts up to 30 days, depending on the car insurance company, and it’ll lapse if you go past the grace period and don’t add the newly purchased vehicle to your policy. A coverage lapse can have serious repercussions for an uninsured driver.
If you get pulled over and can’t provide proof of current insurance, you can get fined, have your license or vehicle registration suspended, or have the car impounded. You also have no coverage if you cause an accident and need to file a claim.
When you purchase a new policy, your premium may be higher with a gap in your recent history. You might also have to get SR-22 insurance to get your driving privileges back.
How to Get Insurance for a New Car
Getting a new car can be exciting, but you need to make sure you have proper car insurance coverage in case the worst happens. Get your new ride covered with these five simple steps:
1. Research before you buy
Car insurance rates differ by year, make, and model, and your new car may be cheaper or more expensive to insure than your old one. Before buying something new, compare the costs for the new car to your old one and any other makes and models you might be interested in to know how your premiums will change later. That way, you’ll avoid getting blindsided when you go to add your new car and can ensure you stay on budget.
2. Determine if you need to adjust your coverage
If your old vehicle had only liability insurance, you might need full-coverage car insurance — especially if you’re financing or leasing your new car. Full coverage includes collision and comprehensive coverage, which pay for damage to your vehicle. The Insurance Information Institute (Triple-I) also advises adding gap insurance if you’re considering a long financing term or a small down payment.
3. Gather your VIN and other information
Your insurance company requires you to provide general information to insure your new vehicle, like the exact make, model, and year. You’ll also need the vehicle identification number (VIN). You may also need other information, such as the name and address of the financial institution financing or leasing it to you.
4. Compare quotes against your current insurer
Just because your current insurer is the cheapest for your old car doesn’t mean that will be the case for the new one. After getting a quote for your new vehicle, compare it to quotes from other companies to see which offers the best rate. Car insurance comparison websites can help you compare quotes faster and easier.
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5. Finalize your new policy
After finding the best quote, it’s time to finalize your new car insurance policy. You might not need to pay money immediately if you’re replacing your old vehicle with a new one. But if you’re getting a brand-new policy, you’ll have to make a down payment to activate your coverage. Remember to download or print out your latest proof of insurance and any coverage changes.
Can You Drive off the Dealer Lot Without Insurance?
No. You must have valid proof of insurance greater than or equal to your state’s minimum coverage requirements to drive off the dealer lot. You can buy new coverage if you don’t have an active policy or take advantage of the new car grace period if you do.
The dealer may offer to sell you an auto insurance policy, but it’s rarely the best rate available. It’s worth it to compare car insurance quotes on your own to find the best coverage and price.
New Car Insurance FAQs
Understanding how a new car insurance grace period works can help ensure your new car is covered once you drive it off the lot. You’ll find the answers to common questions about new car grace periods below.
How long is insurance good for after buying a new car?
It depends. The amount of time insurance is good for after buying a new vehicle varies based on your insurance company and state. Most insurance companies offer up to a 30-day grace period to add a new or used car to your policy, but others only offer seven days — and some don’t have a grace period at all. You also may get a shorter time if your bill isn’t current.
Do all car insurance policies have a 30-day grace period?
No. Most car insurance policies have a built-in grace period of seven to 30 days on old or new vehicle purchases, but not every company offers this kind of temporary coverage. It’s a good idea to ask your insurance agent or company how much time you have to add the car to your current policy before you purchase your new car.
How long do you have to get insurance on a new car in Texas?
Texas drivers have seven to 30 days to get insurance on a new car — the grace period varies by insurance company. The same coverages automatically apply to your new vehicle until you add it to your policy. But if you don’t have insurance, you must buy a new policy before driving the car.
Is there a grace period for State Farm?
Yes, State Farm offers a 14-day grace period for existing policyholders who purchase a new car. The same types and levels of coverage and deductibles on your existing auto insurance policy apply to the new vehicle. But if you have liability-only coverage and cause a car accident, damage to your newly acquired vehicle isn’t covered.
Sources
- Insurance Information Institute, “What is gap insurance?,” Accessed February 20, 2024.
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