How Soon After Buying a Used Car Do You Need to Get Insurance?
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When you buy a previously owned car, the fact that it’s used doesn’t make it any less exciting. Regardless of if you buy new or used, there’s still a process required after the purchase to make it legal to be on the road, such as registration and getting license plates.
Before you get that far, you need car insurance. How long you have to get insurance after buying a used car depends on two major things: if you had insurance on your prior vehicle and the grace period associated with that coverage, if applicable.
Were you insured before you bought a used car?
There are reasons why you may not have had car insurance before purchasing a used vehicle. Maybe you allowed your policy to lapse because your last car was a clunker you couldn’t drive. Perhaps you were on another’s policy, and that’s no longer the case. Or, maybe you didn’t have a vehicle before buying the used one.
The bottom line is this: If you don’t have insurance in place on a previous car that is still current, you need insurance on your used car the moment you drive off the lot.
Some used car dealers may allow you to leave with your new purchase, especially if you paid cash in full. After all, they would not be liable if you wreck it on the drive home. If you financed, however, your lender will likely require proof of insurance before you take possession of the used car.
What is a grace period, and how long is it?
Many insurance companies have a grace period, or a length of time you can go without notifying them, that they will cover a new car under the same policy that covered your previous one. Depending on the provider, this ranges between seven and 30 days. Progressive and GEICO, for instance, have 30-day grace periods.
Do not just assume, however, that a grace period exists. The terms of your policy may have changed, and it’s always better to check before driving off than being sorry later. You should also check your state’s laws regarding grace periods and used car purchases. Not all states, including California, allow grace periods and instead require the policy to match the car from the get-go.
What kind of insurance is needed on a used car?
Frankly, there is no one-size-fits-all approach to deciding what kind of coverage, deductible, and limits you need on a used car. If your car is financed, you are likely required to carry comprehensive coverage. This lets the lender off the hook if you’re in an at-fault accident. In this case, your only decisions are on the provider, amount of the deductible, and the limits beyond the minimums. Shop around, choose a deductible you can afford, and think about what payout you would need if the worst occurs.
If you paid cash in full, however, you have more options in selecting the type of car insurance. You could, for instance, skate by with the minimum liability or go in-between with underinsured motorist coverage after buying a used car. Here, carefully weigh the risks to yourself and your assets. Also, objectively examine your budget and priorities. While most experts would warn against liability coverage, it’s ultimately your decision which insurance to get.