Buying a new car can be a stressful experience. Not only are you worried about finding a car that meets all of your requirements, but you’re also trying to keep your payments as low as possible.
With all of the stress and anxiety that comes with the task of buying a new car, the last thing you want to do is your insurance company and deal with your agent.
While you might assume that you need to call and add your vehicle to your policy right away, there are special provisions that make your responsibilities a bit easier than you might think.
Before you start shopping around for the most affordable coverage, it’s helpful to know how your current insurer will extend coverage.
Understanding Your Auto Insurance Policy
Most consumers are aware that auto insurance is mandatory in most states. If might be familiar with the requirement but not familiar with the product itself.
What is the auto insurance definitions section?
Since auto insurance policies are legally-binding forms, carriers that provide coverage must be specific in every document, which is why the policy booklet will contain information on what’s covered and definitions for industry terms. Since some terms can be broad, there’s an entire section of definitions for words used throughout the policy form.
How does a car insurance company define a covered auto?
If you’re concerned about whether your new car will have coverage or not, you can start by looking at the definition of covered autos under your Personal Auto Policy form.
The language that’s written into this section of the policy will describe which cars will be covered in a loss and which are specifically excluded. Covered vehicles include:
- Owned private passenger vehicles, trucks, and vans
- Autos that you acquire after the policy begins as an additional vehicle or a replacement
- Trailers owned by you with a load capacity of 2000 pounds or less
- An auto you’re using as a temporary substitute while your vehicle is being repaired or serviced after a loss or a breakdown
How long will automatic coverage extend to a new car?
If you currently have a basic policy or a full coverage policy in your name, your coverage will extend to your new car for a limited period. To avoid any obstacles if you do have to file a claim, you need to be sure that at least one of the named insureds on your policy matches at least one name on your registration or loan contract.
If the name of the owner of the policy matches the name of the purchaser, automatic coverage will extend to vehicles that fall under the specific covered autos definition.
How long the coverage extends depends on whether or not the car will replace a car that’s already listed on your policy.
What are the rules for additional newly acquired vehicles?
Newly acquired vehicles are defined as cars, trucks and farm vehicles that you take ownership of after your policy takes effect. If you have a newly acquired vehicle that will not replace any other vehicles that you own, coverage is extended on a broad basis for a limited period.
If you don’t add the additional car to your policy before the time elapses you won’t have coverage on the vehicle until you request it. Any automatic coverage that you had will be voided because you failed to add the vehicle before your automatic coverage period expired. Here are the rules for newly acquired autos as written:
- Owners must ask for additional vehicles to be insured within 14 days from the date that they took ownership
- Automatic coverage will extend to the additional vehicle for 14 days with the broadest form of coverage applying to the new car
- If you don’t have collision coverage on your current policy, you’ll have four days of automatic collision coverage from the day that you become the owner
- If you don’t have comprehensive coverage, you’ll have four days of automatic coverage and a $500 deductible will apply
What are the rules for replacement vehicles acquired after the policy takes effect?
If you’re trading in a vehicle and replacing it with a new car, the rules for automatic coverage aren’t as strict. As long as it’s a private passenger vehicle, van, or truck that doesn’t exceed 10,000 pounds, the car will qualify for coverage under your current policy.
What’s nice is the insurer will provide coverage for a replacement vehicle without you having to ask to insure it. The coverage listed on the vehicle will apply to the replacement car until the policy is up for renewal.
Everything considered it’s best to update your policy as soon as possible so that you have proof of insurance for the new car.
When do you need to buy a new auto insurance policy?
There may be scenarios where signing on the dotted line doesn’t qualify you for automatic coverage. If you’re just a driver on your parents’ or family member’s policy, the new car that you buy in your name won’t be covered.
In this scenario, you need to get a quote for your own policy and bind it so that you’re covered from the moment that you drive off the lot.
The Cost of Procrastinating
It’s your duty to insure your cars from the moment that you own them. If you procrastinate, you could easily have an uninsured accident where you’re left paying for first-party and third-party repairs. You could also be cited or fined by the state for driving without insurance. Don’t take the risk.
If you’re buying a new car and you want to find a model that you can afford, the best thing to do is shop around. The most effective way to shop rates is to use a broker-style online insurance quote tool. Start entering your zip code in our FREE comparison tool. See how much you can save.