What is the new car insurance grace period?
Car insurance is an expense that every driver must consider. Whether you are buying a vehicle, used or new, from a dealership or a private seller, you will need to have car insurance coverage before legally driving home in most states. Nearly every state requires at least a minimum level of car insurance coverage. If you already have an active insurance policy and have purchased another vehicle or are replacing an existing one, a new car grace period may apply. A car insurance grace period, typically ranging from seven to thirty days, depending on your policy, applies to a recently-purchased vehicle. This grace period is designed to give you time to formally update your insurance policy to cover your new vehicle before penalizing you for driving uninsured.
Depending on your situation and insurance company, a new car grace period may apply for seven to 30 days (or not at all).
You could be considered driving without insurance if you exhaust your grace period.
If you have a car insurance grace period, typically, the best coverage on your policy extends to your new vehicle for some time.
What is a car insurance grace period?
If you have an active auto insurance policy, it may include a new car insurance grace period, which offers temporary insurance coverage for a newly-purchased vehicle. The grace period, which may last between seven and thirty days from the date the vehicle was purchased, gives you time to add the new vehicle to your policy and ensure cancellation of coverage on any vehicle(s) you may have sold or traded in, if needed. Not every insurance provider or policy may offer a car insurance grace period, so you will want to confirm this with your insurance company before driving your newly purchased vehicle.
How does my car insurance coverage work in a grace period?
If you have full coverage car insurance on a vehicle on your insurance policy, that same coverage will probably extend to your new vehicle during a grace period. If you carry liability-only coverage, you may have significantly limited coverage on your new vehicle during the new car insurance grace period. If you have multiple vehicles on your policy with different levels of coverage, typically, the best coverage on your policy temporarily applies to your new car.
For example, say you have two vehicles on your auto insurance policy: one vehicle with $500 comprehensive and collision deductibles and one vehicle with liability-only coverage. If you were to purchase a third vehicle, generally, your new car would automatically have the best coverage available on your policy, which is comprehensive and collision coverage. However, how long the insurance grace period lasts when buying a car varies by carrier, so it is important to know what coverage limitations apply to your situation.
Either way, if your active auto insurance policy offers a grace period, temporary coverage applies regardless of whether you buy your newer vehicle through a dealer or a private seller.
How long does a car insurance grace period last?
Depending on your car insurance policy and current level of coverage, a car insurance grace period can last anywhere from seven to 30 days from the purchase date of your new vehicle. The level of coverage on your new vehicle may be limited during the grace period, and in some cases, your deductible would still apply to any claims filed. Checking in advance with your insurance company can help to prevent any gaps in coverage and associated financial risks.
When does a car insurance grace period not apply?
If you do not have an active car insurance policy when you buy a vehicle, a new car insurance grace period will not apply. In this case, you’ll need to shop for car insurance and simply get a new insurance policy for your vehicle. Depending on how much time you have before needing to drive off the car lot, it may be worth considering getting multiple car insurance quotes to find the best rate for your needs. Rates can vary drastically by vehicle type among insurance companies.
If you have an active policy, a car insurance grace period may not apply in a few scenarios, such as if your insurer does not offer a grace period or you have exhausted your grace period coverage. In either case, you’ll need to add your vehicle to your policy to have coverage. Without it, you could be considered driving without insurance should an incident happen, which could have major consequences.
Frequently asked questions
Do I need insurance before registering my new vehicle?
Yes, at least the minimum mandated coverage to legally drive in your state is required for your vehicle before registering it. Even when your insurance company grants a grace period, it may not be recognized by the DMV to register your vehicle. Your DMV will typically want to see proof of insurance for your vehicle, whether from an insurance ID card or declarations page.
Can I purchase insurance even with a new car insurance grace period?
A car insurance grace period assumes you already have an active car insurance policy. If you do not have car insurance currently, there is no grace period for acquiring coverage – you’ll need to purchase it immediately. However, even if a new car insurance grace period applies, you can add your vehicle to your insurance policy before your grace period expires. In many cases, it may be best to add your vehicle as soon as possible to avoid any gaps in coverage.
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