Insurance Matters When Buying a New Car

If you're buying a new car, you may wonder how to handle insuring the new vehicle. After all, you can't insure a car you haven't bought yet, but as soon as you buy the car, you have to drive it home, and you probably can't call your insurance company right then and there to get coverage. That isn't very realistic, especially if you buy the vehicle after business hours from a private seller.

Fortunately, car insurance companies are aware of this issue and have provided for it. Different companies will have slightly different policies, but what you can probably expect is that you will automatically be fully covered for a period of a few days after which time you must call your insurance company with your new car information or you will essentially be driving around uninsured, which you don't want to do ever but especially with a new (or new to you) car. Don't think that you'll get a few days' worth of free insurance though if you wait until the last day of the grace period to update your information. The insurance company just post-dates the policy to the date you purchased the vehicle.

If you still have your old vehicle, you'll want to keep it insured, too, even if you're planning to sell it as soon as possible. If you are selling it, you can downgrade your coverage to a low annual mileage and to pleasure use, which will significantly lower your premium. Then just cancel it as soon as the car has sold. If you're keeping your old car, you'll probably be able to get a discount for having multiple cars insured under the same policy.

Photo by Dale Gillard