Automatic Insurance Coverage for a New Car

Posted in Auto Insurance , Liability

March 9th, 2009

Buying a new car can provide a thrill of a lifetime. Fancy gadgets, fuel efficiency and advanced safety technologies combined with the new car smell can be an intoxicating sensation to relish and enjoy. Before you float away on cloud 9, it is important that you stay grounded and make sure to take care of your auto insurance for your new car as most states require active insurance coverage before you can even take it off the lot.

You do not need to check with your insurance company and inform them that you plan on buying a new vehicle in advance if you currently have an active policy on another vehicle – the insurance will temporarily extend to your new car. In most cases you legally have14 to 30 days to notify your insurance company about your new car purchase so they can reword your policy to include the additional vehicle coverage. While you’re at it, you may want to sign up for additional gap coverage, rental coverage, and towing and labor coverage, or upgrade to comprehensive auto insurance to protect your new car.

The 14-30 day range (depending on where you live and insure your vehicles) is considered a grace period for proper notification. If you have an existing policy from another car and your new car is provided with automatic insurance coverage, if you fail to notify your insurance provider during the grace period, that brief period may expire and you may end up driving with no insurance without realizing it.

The automatic insurance coverage for your new car purchase will vary based on the original policy you already have. If your vehicle is older and you previouslydropped collision and comprehensive coverage and only have liability insurance, the same coverage will automatically apply to your new vehicle. That is why it is crucial that you properly notify your insurance company of the purchase within the proper grace period.

Additionally, the automatic insurance coverage may not be adequate for vehicles purchased by auto loan financing. When you buy a vehicle using financing, the lender owns the car until you make the final payment and receive the proper title documentation. Because of that, the insurance company wants to make sure that they are properly covered against financial risk and will most likely require you to add collision and comprehensive coverage before you can even leave the lot of the car dealership.