Is My New Car Covered by My Existing Policy?
In all of the excitement of buying a new vehicle, it is easy to overlook one thing: car insurance. People often don’t give a thought to insuring their new vehicle until after all of the paperwork has been signed. Before you drive that shiny new car off the lot, though, you need to make sure that you are adequately protected. Laws differ from state to state. The terms of your existing insurance policy will largely determine whether or not you are covered. They will also determine the extent of any coverage that you enjoy. Delve more deeply into this topic below.
Replacing Your Primary Vehicle
Most of the time, people buy new vehicles to replace their old ones. In fact, you might even trade in your old car in order to apply its value to the price of your new one. If you are simply replacing your old vehicle, your existing insurance policy should protect your new one through the end of its term. After all, you are paying the insurance company to insure one vehicle. You do not necessarily have to notify your insurance company right away. If you are unable to do so, your existing policy will keep you safe while you are driving your new car.
Buying an Additional Vehicle
If the new car that you are buying is going to increase the total number of cars that you own, different rules come into play. Whether you are buying the new car for a spouse, child or other relative, or if you are going to use it as a backup, your existing policy will not cover it through the end of the term of coverage. That is because your existing policy only insures one vehicle. Adding a new vehicle into the mix means that your premium is definitely going to go up.
Grace Periods
Although your existing policy won’t cover an additional car through the end of its term, a grace period may apply. This is a gray area, however; laws vary from state to state. In many cases, your new car will be covered by your insurance company for 14 days. At that point, you will have to notify them in order to continue that coverage. While you can dig around to find out the laws of your particular state, it is easier and safer to simply ask your insurance company how the process works.
Liability-Only Coverage versus Comprehensive Coverage
The extent of the coverage that is granted to a new car depends on the terms of your existing policy. If you had an older car with a liability-only policy, the same terms will apply to your new vehicle. In other words, your insurance policy will only cover damages to other vehicles and injuries to other drivers. If you had comprehensive coverage, however, it will carry over to your new car. If you didn’t have physical damage coverage, though, your new vehicle most likely won’t be protected. In some states, physical damage coverage kicks in for up to four days.
Always Check First
You should always give your insurance company a call when you are buying a new car. In fact, you might even want to call them if you are simply thinking about buying a new one. They will be able to tell you, in no uncertain terms, whether or not that new vehicle will be covered right away. In many cases, they can handle the paperwork while they are on the phone with you. By the time you leave the dealership, all of your ducks will be in a row. For all intents and purposes, this is the smartest way to go.