Publish Date: April 2016
Thinking about doing some weekend car shopping? Make sure to call your car insurance agent before you head to the dealership, so you have all the information you need before you buy a vehicle. You won't be able to drive that new car off the dealer's lot until you can prove it's covered by your insurer. There are a couple of scenarios to consider:
Every state except New Hampshire requires drivers to have liability coverage, according to the Insurance Information Institute (III). Typically, liability coverage helps protect you, as the driver or policyholder, if you're at fault for an accident and you hurt someone or damage someone's property as part of a covered incident, according to the III. (In New Hampshire, drivers must show they have sufficient funds to cover any losses in an “at-fault” accident." In Florida, the required insurance includes property damage liability and personal injury protection.)
Can You Apply Your Current Policy?
If you decide to purchase a car during the weekend and your insurance agent isn't available to set up coverage for your new auto, you should be able to take possession, under the following conditions, according to Laura Peterson, communications coordinator at the National Association of Insurance Commissioners (NAIC):
- You already own a vehicle;
- You are paying cash;
- You have a clause in your policy granting a 30-day window to report a new purchase.
If you only carry liability for your old vehicle, you will not have collision coverage nor comprehensive coverage for the new one until you add those coverages, says Peterson. The coverage on your new vehicle will match that on your old vehicle.
The scenario may change for those who are financing or leasing a car. Typically, you will have to show proof of insurance to your dealer to be able to take possession, according to David Kelleher, senior property and casualty insurance specialist at the NAIC. In this case, a weekend purchase could delay your ability to drive home in your new vehicle if you have not arranged specific coverage for that vehicle in advance.
If you only carry liability coverage on your current vehicle, the dealer is likely to require you add collision and comprehensive to help ensure the lender's risk is sufficiently covered, says Peterson.
Leasing contracts also may contain a so-called “forced place” clause. This allows the leasing company to arrange for insurance and add it to your monthly fee, if you don't provide proof of insurance within a specified window, says Kelleher.
You may also want to consider buying GAP coverage if you're financing or leasing your car. This type of coverage can cover the difference between what you owe on your vehicle and what your vehicle is worth at the time of an accident or theft.
When it comes down to it, if you know you're in the market to buy a car and you're planning on visiting a dealership over the weekend, consider talking to your insurer to confirm that you're prepared to make a purchase should you find that perfect vehicle.