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How Long Do You Have to Get Insurance After Buying a Used Car?

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  • How Long Do You Have to Get Insurance After Buying a Used Car?

Car insurance is perhaps the least glamorous part of getting a new vehicle. But, it might be one of the most important parts of the process. No matter what vehicle you get, you need to protect yourself and others on the road with some form of auto insurance. We’ll go over when you need to get insurance when buying a used car and what you need to know about car insurance grace periods.

How Long Do You Have to Get Insurance After Buying a Used Car?

You generally have between a week to a month to add an additional used car to your policy if you already have car insurance, depending on your insurance carrier and the state you live in. If you don’t have car insurance, you can’t buy any car, even a used one, from a dealership without proof of insurance. You’ll need to get a policy on the spot, which your dealer or Clovered can help you with.

Buying a Used Car From a Dealership

When you’re buying a used car from a dealership, the dealer transfers the title to you as your purchase is finalized. To be able to do this, the dealership files with the department of motor vehicles (DMV) of whatever state you’re in. And, in every state except Virginia and New Hampshire, you have to have car insurance to register a vehicle. A dealer wouldn’t be able to give you ownership of the car without it, which is why you need at least liability coverage to drive a used car off the lot.

If you’re buying a used car from a dealership, either in addition to a car you already own or as part of a car swap, you must already have car insurance. You can show the dealer your proof of existing insurance when you buy the used car.

If you’ve picked out the model you want and are in the process of buying it, you can call your provider while at the dealer and have them send some proof of insurance on the spot. 

If you don’t exactly know what car you want, but you know you’re in the market, you may be able to take advantage of your insurance’s grace period.

Is There a Grace Period for Car Insurance When Buying a Used Car?

When buying a new car, your insurance grace period is determined by your insurer. Many car insurance companies provide grace periods for newly purchased vehicles, including used cars. A grace period, in this case, means your auto coverage may extend to a newly purchased vehicle even though you haven’t officially added it to your policy yet.

If your policy has a grace period, you may then have up to a month to call your carrier with the exact information of your newly purchased car and officially add it. If you know you have a grace period in your policy, showing the dealer the proof of insurance of your existing plan after you buy may be enough to satisfy requirements on their end.

But, you’d still need to officially add the car to your policy. You can be heavily penalized if you don’t add your car in time.

Your coverage under a grace period should be about the same as the coverage for your previous car. But, grace periods vary by insurer and by policy, so be sure to check yours before getting a used car. 

Some companies may require you to let them know you’re thinking of purchasing a car before they allow you to utilize a grace period. Once you do get your newly purchased vehicle, update your coverage as soon as possible. You don’t want to rely on grace period coverage because it’s not suited to your newly acquired vehicle – it’s tailored to whatever car you initially got the policy for. So there’s a chance you could be vastly underinsured.

For instance, if the used car you’re buying is an upgrade from your current car, your coverage may not be sufficient to protect your newly purchased vehicle. If a car costs more to replace or repair, it likely costs more to cover. This could leave you underinsured if you’re relying on the grace period coverage of your initial older car.

Do I Need Insurance Before I Buy a Used Car?

You always need insurance before driving a car. If you’re buying a used car from a dealership and you already have coverage on another vehicle you own, your coverage should still be satisfactory whether you update it on the spot or you take advantage of your policy’s grace period.

The only time you technically don’t need insurance when buying a used car is when you’re buying from a private seller. But, you’d still need insurance to operate and register the car.

Buying a Used Car From a Private Seller (Not a Dealership)

If you’re buying a used car from a private seller, this person probably won’t check that you have insurance coverage at the time of purchase. But, to register the vehicle in your name, you’ll almost certainly need coverage. States have timelines for when you need to register a car. 

Depending on the state you live in, you may have up to 30 days to register your vehicle, which means you need to have insurance before then. But, legally, you can’t drive any car without a minimum amount of insurance. Almost every state mandates a minimum amount of liability coverage to protect other drivers on the road.

Buying from an individual means you’ll have to transfer the title of ownership of the vehicle yourself, which means you’ll have to talk to your state DMV at some point. The DMV will require you to have car insurance before granting you formal ownership.

If you have an auto insurance carrier at the time of buying a used car from a private seller, you should be able to let your insurance company know that you’re in the market for an additional used car. Then, when you get the car, you can give your insurer the specifics, and they should add your newly purchased used car to your coverage promptly.

If You’re a First Time Car Buyer

If you’ve never had a car before, you’ve probably never had car insurance before. In this case, when you’re car shopping, you should also be auto insurance shopping. You should be able to save quotes when you’re comparing policies online, and when you know exactly which car you’re getting, you should be able to enter the specifications and receive a policy the same day.

You can then show the dealer (if you’re at a dealership) your coverage, and they can transfer the car to you. If you’re buying the car privately, your coverage would suffice with the state for ownership purposes when you register it.

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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.