Laura Berry is a former State Farm insurance producer and insurance expert.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 26, 2021

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Here's what you need to know...

  • Your auto insurance policy includes provisions that say that a newly acquired vehicle is defined as a covered auto for a limited amount of time
  • If you have existing insurance, your new vehicle will either be covered as a newly acquired vehicle or a vehicle replacement under your Personal Auto Policy
  • With most companies, newly acquired vehicles are only automatically covered for up to 14 days and they’ll receive the broadest form of coverage on the policy
  • If you don’t have physical damage coverage on the car, your insurer will offer up to four days of full coverage. After that period, you won’t have full coverage
  • You only have automatic coverage for vehicles that are purchased by at least one of the named insured on the policy

When you visit a car dealership, a lot of thoughts come to mind. Your main focus is on finding the perfect car that’s both reliable and affordable, but you also have to worry about haggling, financing, and steering clear of the cars that you want but don’t need. One thing that’s often overlooked is the need to buy auto insurance.

You may not need auto insurance before you buy a new car, but you definitely need it before you drive your car off the lot. Generally, you may want to buy an insurance plan before buying a new car to make sure you have enough coverage.

That’s why preparation is key before you go to the dealership to buy a new car. Believe it or not, your insurance company might make insuring your new car easy.

Ensure your new vehicle today. Then, enter your zip code into our FREE comparison tool above!

What’s included in the agreement by your insurance company?

Auto insurance companies are known for being sticklers when it comes to providing policyholders with insurance coverage. What you might not know is that your policy provides you with more protection than you might think. While your personal declarations page details who, what, and how you’re covered, your policy protects you in scenarios that don’t happen every day too.

One of the great things about a Personal Auto Policy is that it’s a contractual agreement between you and the insurer. The insurer has taken the time to write out a thorough explanation of what’s covered and what’s not. One thing that’s specifically defined in the insuring agreement is what the auto insurance company considers a covered auto. Here’s the definition:

  • Any vehicle listed on your declarations page
  • A trailer that you own while it’s being towed
  • A vehicle that’s being used as a temporary substitute while you’re owned auto is being repaired or serviced
  • A newly acquired auto that weighs less than 10,000 pounds

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Will your current policy cover your new car for a limited amount of time?

If you have insurance in your name when you visit a dealership and test drive cars, it will give you peace of mind to know that the existing policy will be there to make your new car purchase easier while you’re in the finance office. You might still have to hassle back and forth about interest rates and add-ons, but you don’t have to worry about your insurance.

The standard policy will cover newly acquired vehicles as soon as you sign on the dotted line and become the vehicle’s legal owner.

How much coverage is afforded depends on what you’re currently carrying and for how long you need the coverage. Assumptions can be very dangerous.

What happens if the vehicle is replacing a car that you have on the policy?

If you’re trading your car in or selling it on the private market, the new car that you purchase will be considered a replacement. If the car is a permanent replacement for the listed car on your policy, it will receive the same exact coverage as the car it’s replacing had until the term expires.

It’s always best to have car insurance before you buy or replace a vehicle. If you already have car insurance for another vehicle, you might not need to buy another plan. Depending on the car dealership and whether you’re purchasing your new car with a loan, you may need to provide proof of insurance before taking your car home. However, if you’re getting the car from a private seller, they will typically not ask for proof of insurance. Yet, keep in mind that driving without insurance is illegal and you could end up paying a lot of legal fees if you get caught, or cause an accident.

What if you only have basic coverage and you want full coverage?

Your insuring agreement may give you coverage for the remainder of the term when you replace a car, but if you only have the minimum coverage you won’t get the full coverage that you need to satisfy the conditions of your loan.

Your auto policy will only provide you with four days of comprehensive coverage and collision coverage when you don’t already carry it. This four-day period will give you time to contact your insurer and tell them that you’ve bought a new car and need to add more broad coverage. If you don’t call, you won’t have full coverage until you add the car.

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How does the insurance company handle a vehicle that’s not replacing any other vehicle?

If you’re buying a new car and keeping your old one, the rules are a bit

The company won’t cover just any car that someone in your home buys. The only way that a newly acquired vehicle will be covered is when a named insured is on the contract.

If a driver on the policy buys a car and a named insured isn’t in the financing agreement, the buyer needs to buy their own policy.

If you don’t have insurance or you aren’t happy with the rates you’ve been quoted, shop around for coverage with other auto insurers. You can call different companies or you can use an online rate comparison tool to do the work for you.

Enter your zip code into our FREE comparison tool, and see if you can save money by switching carriers!