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A Guide to New Car Insurance Grace Periods (With Tips)

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When you buy a new vehicle, you may wonder about the insurance requirements so that you can legally drive it off of the dealership’s lot and maintain adequate coverage in case of an accident. Below, you can learn about buying new car insurance with a grace period and discover why you should avoid a lapse in coverage.

Buying New Car Insurance With a Grace Period

If you’re buying a new car and want to add it to an existing auto insurance policy, you may have a grace period, i.e., some time to add the new vehicle to your policy. You can delay paying your insurance premiums without experiencing a coverage gap. As long as you have an existing policy in place, the dealership will let you leave the lot with your new vehicle.

How Long Is a Car Insurance Grace Period?

The car insurance grace period will vary depending on the insurance provider. Some providers only have a grace period of one week, while others offer 30 days, which gives you much more time to add your new vehicle to your auto insurance plan. Still, other providers can offer a grace period that lasts anywhere between seven and 30 days.

Note that some insurance companies don’t provide a grace period at all. An insurance company provides a grace period for the convenience of its existing customers. However, it doesn’t have any obligation to provide a grace period. It’s important to be aware of whether your insurance provider offers a grace period so that you can know how to best handle a new car purchase.

Is There a Grace Period if You Buy Your Car From a Private Seller?

Some aspiring car owners may choose to purchase a new vehicle from a private seller. It can present several benefits, including a lower starting price for your desired vehicle and the avoidance of dealer and warranty fees. If your insurance provider offers a grace period, you can still apply it if you buy a car from a private seller.

Every driver needs to have auto insurance regardless of where they decide to purchase their vehicle. A private seller may not request proof of insurance, but it’s still your responsibility to secure it before you drive off with the vehicle. Ideally, you can purchase insurance as soon as you decide to purchase a vehicle and arrive at the sale site with your insurance already in tow.

Can You Buy Auto Insurance Before You Purchase Your Car?

Yes, it’s possible to buy auto insurance before you purchase a car. You can sign up for an insurance policy by providing a few key pieces of information. When you know what insurance policy you want, you can present the provider with the vehicle identification number. You’ll also have to provide them with the make and model of the car you want to purchase. This information should be enough to acquire insurance for the vehicle before you actually receive the keys.

If you didn’t buy insurance ahead of time, you can still close the deal on your new vehicle at a dealership or with a private seller. You may sign up for a policy online. The provider can give you digital proof of your insurance on the same day. With this document on your mobile device, you can legally leave the private seller or dealership with your new vehicle. Most providers will also mail you a copy of your insurance card, and you’ll likely receive it within a week.

Do I Need Insurance To Register My Vehicle?

In most states, drivers need insurance to register their vehicles with their local Department of Motor Vehicles (DMV). Before registering your vehicle, you should understand your insurance provider’s grace period. Some DMVs may let you register your vehicle during a grace period, but some DMVs don’t recognize grace periods, so you’ll have to plan accordingly.

What If You Get Into an Accident During Your Grace Period?

Your provider should offer coverage if you get into an accident during your grace period. Note that the collision must not occur outside of this grace period if you wish to receive coverage. The coverage limits will be identical to what they were with your previous vehicle. For example, if your policy had comprehensive collision coverage for your old vehicle, it will automatically apply to your new vehicle. You may see an increase in your insurance rates if you file a claim.

Why You Should Avoid a Lapse in Coverage

Avoiding a lapse in coverage can help you prevent several serious problems, such as:

  • Paying for all damages out of pocket if you get into a car accident
  • Searching for a new insurance policy
  • Paying higher rates with more specialized providers, as traditional policy providers may view you as a higher-risk customer

Note that it is possible to return to your same insurance policy even if you’ve allowed the coverage to lapse. Your previous provider may be willing to accept you back onto a policy if you have a clean driving record and no old claims or lapses. The provider may require you to pay a one-time fee and higher monthly premiums.

Tips for Avoiding a Lapse in Coverage

One of the easiest ways to avoid a lapse in coverage is to pay your monthly premiums on time. Set up automatic payments through your insurance provider so that you never miss a deadline. You can also avoid a lapse in coverage by insuring a new vehicle well within the grace period.

It’s also a good idea to alert your provider if you plan to sell or stop driving your only vehicle. Some states require insurance companies to send a letter of intent before they can cancel your policy. If you live in one such state, you may receive some warning before the cancellation of your policy so that you can take corrective actions accordingly.

Purchasing a new car is an exciting endeavor, but it’s important to consider insurance requirements. This can help ensure that you have optimal coverage and are within legal requirements in your particular area.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.


About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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