It's a beautiful Saturday afternoon and you plan to visit a dealership and get behind the wheel of a new car. But before purchasing that sweet ride, make sure your car insurance will cover any mishaps.
Buyers who already have an auto insurance policy typically have automatic coverage on their new car for 14 to 30 days after their purchase. Some states require insurance companies to give new car owners even more time.
But instead of "gambling on the 14 to 30 days," contact your insurance agent and find out if you have adequate coverage before driving off with the new car, says Tully Lehman, a spokesman for the Insurance Information Network of California.
Doing so can help you uncover possible coverage gaps. For example, in Wisconsin the new car automatically has the same coverage as the car it is replacing, according to the Wisconsin Office of the Commissioner of Insurance.
So if your trade-in only has liability coverage, your new car's coverage will be limited to liability insurance. If that's the case, it's wise to make sure your new car has comprehensive and collision insurance coverage before driving it off the lot. (See "Insuring your brand-new car.")
Auto insurance when there is no trade-in
It's doubly important to ensure coverage on the new car if you don't already have insurance. If your are financing your purchase, you'll need proof of insurance before driving the car home.
It's best to shop around or talk to an agent beforehand, especially if you're buying a car for the first time and don't have a history with a car insurance company. In such cases, the insurance company requires you to fill out an application and to offer details about the car, such as the year, make, model, mileage and safety features.
"Needing to have insurance in place before driving away will require a little leg work on your end, especially if making a first car purchase," Lehman says.
If you're shopping from the waiting area at a dealership, compare auto insurance quotes online.(Insurance.com and other sites allow you to compare several companies at once). You'll need your new car's vehicle identification number (VIN) and a credit card to make a down payment.
Car insurance rates are based in part on your driving record, credit report and insurance history. Other factors that impact car insurance rates include the year and make of the car, its overall safety record, how often thieves target that model, and the likely cost of repairs for that make and model.
Getting a car insurance policy on weekends
If you're buying on a weekend, your insurance company will probably have a 24-hour, seven-day-a-week phone service you can call to notify the company you are driving a new car, Lehman says.
Just make sure you have all the specifics the car insurance company will need - vehicle identification number, safety features, and the make, model and year of the car. The insurer needs this information to establish a new policy and set a premium.
Your job isn't over once you've got the keys and an insurance policy. Your new insurance carrier should have asked whether the car was financed. Typically it will send notice that you're insured to your lender, which requires collision and comprehensive coverage to protect its investment.
If you got your insurance before the financing was done, it's your job to contact your insurance company to let them know who the lienholder on the car is. (See "Insuring a new car? Your bank needs to know.")