Do You Need Proof Of Insurance To Buy A Car?

Key Points:

• The car dealer and lender will require proof of insurance to finalize a vehicle sale.
• Even if you buy privately, you’re required to have minimum levels of car insurance.
• You can call a major insurance company while you’re at the dealership to get coverage on the same day.

Buying a new car is exciting. But before you head to the dealership, you might be wondering if you need proof of insurance to buy a car.

The answer is yes, you do need proof of insurance to buy a car. You can purchase a new policy specifically for the vehicle so you can drive it off the lot. Or, you can use an existing policy you have on another vehicle and add the new car later.

In this article, we’ll walk through the options and recommend some of the best car insurance companies that offer fast quotes.

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Do You Need Proof Of Insurance To Buy A Car?

Yes. In most cases, the dealership won’t let you drive off the lot without insurance. If you take out a loan, the lender will need to be listed as the lienholder on your policy before funding the loan. Take a look at your car insurance options before you start shopping for cars so your policy can start the same day you drive home from the dealership.

Do You Need Insurance To Buy A Used Car?

Whether your car is new or used, you’ll need to provide proof of insurance to the dealership before legally being able to drive it home. If you’re buying a car from a private seller, most won’t ask to see your car insurance details, but you will still need insurance on that car to legally drive it.

Do You Need Proof Of Insurance For A Trade-In?

If you are trading in your car, the dealer might verify your current coverage before selling the vehicle. And if you’re starting a new loan that day, you’ll have to call your insurance company to update your policy the same day also.

Your new rate will likely be different than your old one. For some providers, the more safety equipment that comes on your car–like anti-theft technology, anti-lock brakes, airbags, and passive restraints–the more you can save on your car insurance. Plus, some cars are more expensive to insure than others. 

Can You Drive Uninsured If You Just Bought A Car?

No, you can’t drive without proof of insurance in most states. Almost every state requires motorists to carry some car insurance liability limits. New Hampshire only requires motorists to prove that they are financially responsible for paying for damages and injuries caused in an at-fault accident.

If you don’t buy insurance before you purchase your vehicle from a dealer, you probably won’t be driving off the lot that day.

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Buying A New Car When You Already Have Insurance

If you already have an existing car insurance policy, you might be wondering if you need proof of insurance to buy a car on top of the coverage you already have. It depends. If you are buying a new car to add to your existing policy, your policy might include a grace period that gives you temporary coverage for a week, sometimes more.

During that grace period, it’s expected that you tell your car insurance company about the new car so a representative can officially add it to your policy without you experiencing a lapse in coverage. In some cases, if you already have a car insurance policy, the liability limits you have on that policy will temporarily extend to the new car that you are driving.

Even if you’re buying a new car to take the place of an older one, you must tell your car insurance company about the switch during this grace period. Because you would be driving around in an uninsured vehicle–which is illegal and can carry serious legal penalties–you can’t just make the switch yourself.

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Buying A New Car When You Don’t Have Auto Insurance

We’ve broken this process down into a few steps that will make buying auto insurance easier:

1. First, you should consider a variety of car insurance providers available in your area. We always recommend that drivers get quotes from multiple providers to compare coverage, rates, and other important factors. To do so, you’ll want to have information on hand such as your driver’s license number and social security number.
2. Then, enter the vehicle information that you gathered from the dealership and decide on the level of coverage that you need. Comprehensive insurance policies offer more coverage, but rates for this kind of insurance will be higher than a policy that just meets the state’s basic car insurance requirements.
3. You can set your car insurance policy to start on the day you plan to pick up your new vehicle and pay for your policy online.
4. You’ll receive a temporary card from the insurance company via email. You can use this to purchase the vehicle.

Which Company Should You Use?

While there are many insurance companies in each state, not all may offer near-instant quotes or the ability to purchase on the day you plan to get a car. In particular, if you’re at the dealership on the weekend, the best idea is to shop from major insurers like Progressive, Geico, USAA, and State Farm. Smaller local companies might not have fast service on the weekends.

One strategy is to get coverage from a major insurer while you’re at the dealership and then go home and compare rates from your ideal providers. There’s no penalty for switching insurance even after just a few days. You should be able to get a refund for the unused days from the first month.

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Proof Of Insurance When Buying A Car: Our Take

There’s no way around it–you need proof of insurance when you buy a car. The simplest way to go about it is to call a major insurer from the dealership and begin a policy over the phone.

Our Insurance Recommendations When Buying A Car

When you’re shopping for car insurance, it’s smart to get quotes from multiple providers and compare coverage to be sure you’re paying the best rates. In our research, two car insurance companies that we’ve found to have affordable coverage and great customer service are Progressive and Geico.

Progressive: Best For Usage-Based Insurance

Progressive keeps a competitive edge with technology like the Name Your Price® tool and an auto insurance comparison tool. It’s also a reliable company to use for a same-day policy. Progressive has standard car insurance as well as roadside assistance, rental car reimbursement, custom parts and equipment value, and more.

Read more: Progressive insurance review

Geico: Best For Basic Coverage

Geico is known for its wide array of discounts that complement its already low rates for car insurance. You can get extra types of coverage like mechanical breakdown insurance with Geico, and discount opportunities include a military discount, good student discount, and discounts for members of certain professional organizations and alumni associations. It’s another reliable pick for fast coverage.

Read more: Geico insurance review

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Proof Of Insurance When Buying A Car: FAQ

Below are a few questions about needing car insurance when purchasing a car.

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How We Rate Auto Insurers

Our review team extensively researches auto insurance providers to deliver informed and unbiased assessments of leading companies. We evaluate several key rating factors that are important to consumers to determine which providers are the best in the industry:

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
• Availability: Insurance companies that offer wider availability to consumers in terms of state availability and few eligibility requirements are more likely to meet consumer needs.
• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.
• Pricing: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.
• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer a smooth experience.
• Technology: Providers with an online quote tool, easy-to-use claims app and a usage-based insurance app score best in this category.

*Data accurate at time of publication.

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