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Before you can lease or finance a vehicle, car dealerships will first verify that you have a valid

car insurance policy

that meets your state’s minimum insurance requirements.

Dealerships check your insurance because it’s illegal to drive without it—even if you’re just bringing your
new car
home from the lot
If you already have insurance on another car, you might be able to use your existing policy for a temporary grace period

Do car dealers verify insurance?

If you buy from a dealer, they are responsible for processing the paperwork for the Department of Motor Vehicles. You must provide

proof of insurance

along with your driver’s license, down payment, and other documentation before you can receive the keys to your new ride.

Some dealers will ask to see the actual documentation, such as an insurance identification card. Others will simply ask you to sign a legally binding document declaring that you have the required coverage. Either way, you can expect the dealership to verify your insurance before you can drive off the lot.

MORE:

How can I show proof of insurance when buying a car?

Do I need auto insurance to buy a used car?

Yes. Each state has a

minimum coverage level

that your auto insurance policy must meet before you can legally drive any vehicle, whether it’s new or used. Every state (except

New Hampshire

and

Virginia

) requires drivers to purchase

liability coverage

, and dealerships won’t sell a car to a driver without the necessary coverage.

Leased and financed vehicles have additional coverage requirements. If you’re taking out an auto loan to buy your new car, most lenders will also require you to carry

collision insurance

and

comprehensive coverage

Key Takeaway Even if the seller or dealership doesn’t verify your auto insurance, you still need to have it.

MORE:

How car dealerships make money from financing

Do I need more than liability insurance?

It depends—on your state laws and your individual insurance needs.

Know your state’s laws: In many states, you only need

property damage liability

and

bodily injury liability

coverage. However, some states also require some combination of:

Personal injury protection (PIP)

Medical payments (MedPay)

coverage

Uninsured/underinsured motorist coverage

Check with your lender: If you’re financing a vehicle, your contract will require your policy to include both

collision coverage

and

comprehensive coverage

. You can also purchase a product called

“gap insurance

” which will cover the difference between your insurance payout and your remaining loan balance if your vehicle is totaled shortly after purchase.

Make the call: Sticking to the minimum requirements set by state law or your lender will keep your car insurance rate lower, but additional coverage might be worth it, especially if:

You live in an area where heavy traffic or bad weather makes accidents common

You’re buying a rare or luxury vehicle

You have a teenage driver in your household

You can afford to purchase additional coverage or raise your liability limits

Pro Tip Dealers and lenders often use the shorthand
“full coverage”
to refer to a policy that includes both comprehensive and collision.

MORE:

How to buy a used car from a dealership

“
Jerry
was fast and easy to use. Their customer service was so helpful in helping me navigate the situation my state is dealing with. Now I’m saving an extra $100 every 6 months!” —Tony C.

Why do financed cars require full coverage?

If you finance a vehicle, the lender is still technically the legal owner until you

pay off the loan

. As long as you’re making monthly payments on the loan, the lender gets to choose the level of coverage you need.

You should plan to maintain full coverage until you’ve paid off the loan completely. This will protect the legal owner if the vehicle is damaged while you are behind the wheel.

Once you pay off the car, you can

consider options that work better

for you.

MORE:

Canceling your insurance when selling your car

How to get insurance on a new car if you don’t already have a policy

Here’s the secret: Every auto insurance company uses a different set of calculations to set your premium, so you could get five different insurance quotes for the same coverage from five different companies. For example, if

GEICO

quotes you a high rate because of a traffic ticket two years ago,

Allstate

Progressive

might weigh those violations differently and give you a lower rate because of your high credit score.

What affects your car insurance rates: Everything from your

credit history

and driving record to your age, gender, ZIP code, and type of car can affect your auto insurance rates, and they’ll look a little different with each provider. That’s why buying the first policy an insurance agent offers you is one of the biggest mistakes new drivers make when looking for cheap car insurance.

How to find cheap auto insurance coverage: Compare free quotes from at least three to five car insurance companies. You can compare quotes as soon as you know what make and model of car you want to buy, and you’ll be able to buy your new policy once you have the

vehicle identification number (VIN)

for the exact vehicle you plan to purchase.

MORE:

How Jerry helps drivers find cheap car insurance quotes

How to buy affordable same-day car insurance coverage

Most car insurance companies will activate your policy

the same day you buy it

. And you don’t have to skip the comparison step, either! Comparing car insurance quotes doesn’t take long, especially if you’re using

a trustworthy online broker or comparison tool

MORE: 8 easy tips for saving money on car insurance

What is temporary auto insurance?

Temporary auto insurance usually refers to a product like

rental car insurance

, where drivers may be offered a short-term policy through the rental company.

Temporary car insurance

is not commonly available in the United States except in unusual circumstances. Most insurance providers will only write policies between six months and one year. If you’re buying a car, you’ll need to buy at least a six-month policy.

MORE:

Is pay-as-you-go insurance right for you?

Can I drive a car I just bought without buying insurance?

No—but there’s a bit of a loophole for drivers that already have coverage. There is something called an insurance grace period, and it could last between 14 and 30 days.

If you already have existing insurance, there may be a clause in your policy relating to newly-acquired vehicles. This coverage could extend to cover your new vehicle for a limited time until you can officially

add the vehicle to your policy

Call up your insurance company agent to confirm how long you have to add the new vehicle. If you are replacing the vehicle on your policy with a new one, your coverage could even extend to the final date of the current term. But keep in mind, when using this grace period, your vehicle isn’t “officially” on an insurance policy, so you can still be cited for

driving without insurance

Buying from a private seller

means that you probably won’t have to show them proof of insurance. However, you still need to have car insurance if you will be driving.

MORE:

How police catch uninsured drivers

So, will the dealership check my insurance before selling me a car?

Yes. You need to be covered before you drive off the lot with a new or used vehicle, and the dealership is obligated to verify your insurance.

However, it’s important to allow yourself to research insurance and compare quotes. A casual search online will not bring up the best rates.

“
Jerry
was easy to use with great savings. I was afraid to get car insurance because of my age and new car. But with this app, I found my own affordable policy. I definitely recommend it for young drivers.” —Xena S.

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FAQs

How long do I have to get insurance after buying a used car?

You need coverage before you get behind the wheel. If you don’t already have insurance coverage, you’ll need to buy at least minimum liability coverage before you head to the dealership. If you already have insurance, let your insurance company know about your new car purchase as soon as you can. It may even be possible to transfer your old vehicle’s policy to your new one.

How do I get auto insurance before I buy a car?

If you know which vehicle you will purchase, you can buy a policy ahead of time! You will need to provide information about the make, model, mileage, and VIN for your exact car. Otherwise, you’ll have to wait until you know which vehicle you’ll be taking home.

Knowing what you can expect to pay for insurance might help you narrow down your choices—so you only

test-drive

vehicles you can actually afford to maintain insurance on.