What is the New Car Insurance Grace Period?
Do you need insurance coverage to drive your new car off the lot?
Auto insurance grace periods explained
A car insurance grace period is the amount of time you are allowed to drive a new vehicle before adding it to your car insurance policy. Put simply, whether or not you have a grace period depends on your insurance company, as this can vary widely from one insurer to another. However, you must always carry auto insurance when you drive. If you don't currently have an existing policy, you are effectively uninsured and will not benefit from a grace period. In this case, you would need to procure a new policy before leaving the dealership. Luckily, car insurance quotes are free and the best policy for you can be put into place rather quickly.
Car insurance grace periods are one of the more common — and often misunderstood — concerns arising from the purchase of a new car. Read on to find out more about grace periods and how to ensure you're properly covered when driving your new car.
Is there a grace period for getting auto insurance on a new car?Â
Whether or not you have an insurance grace period for a new car depends on your current insured status and your insurance company’s individual policy. If you currently have an active insurance policy, you may be allowed a short period of time — typically anywhere from one week to 30 days — during which you can add the new car to your policy (the same rules apply to both new and used cars). Most car insurance companies will extend coverage to your new vehicle during this period in good faith.
If you purchase a car from a dealership, expect the dealer to confirm your insurance status before you drive off the lot. This is especially true if you lease your car, as the car dealership is still technically the owner of the vehicle.Â
If you are not currently insured, you will need to acquire insurance before getting behind the wheel. Finding a policy usually doesn’t take too long. A driver can typically get a new car insurance policy within an hour. Same-day car insurance is fairly common, and underwriters can put policies together with ease. This can even occur while you are at the dealership. Most companies simply require a down payment to start insurance coverage.Â
Make sure that your old car is taken off your auto insurance policy as soon as possible to avoid any hiccups in case of an accident or a claim. Likewise, if you are buying a new car, chances are that your lender will require more than just liability coverage. In addition to the bodily injury and property damage coverage offered by liability coverage, most may lenders will also require comprehensive and collision coverage to protect their stake in your loan.
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How long is the grace period for car insurance?Â
The auto insurance grace period usually lasts between 7-30 days. This may vary by company. Progressive, for instance, has a 30-day grace period. Some insurance companies, on the other hand, may not even offer a grace period. Regardless of how long your insurance company allows you to go without adding your vehicle to your policy, it’s still wise to add it sooner than later.Â
Is there an insurance grace period when buying from a private seller?Â
When buying a car from a private seller, the same rules apply. All drivers are required to have insurance. Again, if your insurance company allows a grace period, coverage will extend to you and the vehicle from the time you drive it home until the end of the allotted period.
Unlike a dealership, a private seller isn’t likely to require proof of insurance before driving off. If you don’t currently have a policy, it’s best to purchase coverage as soon as you decide to buy the vehicle. Remember: it doesn’t take long to get insured, so it’s best to compare quotes early.
What happens if I'm involved in a car accident during my insurance grace period?Â
As long as the collision occurs within your insurance company’s grace period, you should be covered. Your coverage limits will be the same as they were on your previous vehicle. For instance, if your policy includes full coverage (collision and comprehensive), that coverage would extend to your new vehicle. You can expect your insurance rates to rise if you file a claim. The table below outlines the average annual rates after specific violations, such as an at-fault accident.Â
| Accident/Violation | Avg. Annual Premium |
|---|---|
| Speeding 16 - 20 MPH over limit | $2,190 |
| At-fault accident - greater than $2000 | $2,605 |
| Reckless driving | $3,187 |
| Racing | $3,291 |
| DUI | $3,441 |
What happens if I have a lapse in coverage?Â
It’s crucial you don’t allow your auto insurance coverage to lapse. If you go beyond the grace period without insurance coverage, you could face serious consequences. For one, you won’t be covered should you be in an accident. This can leave you personally liable for any damages that you cause. Secondly, once you reinstate your insurance, you can expect to pay higher rates.Â
Lapses in insurance coverage are among the many factors insurers assess when determining rates. A lapse may lead to you being defined as a high-risk insurance client, which could also lead to more expensive insurance premiums. For instance, a driver with five consecutive years of coverage history pays an average of $216 less per year than a driver with no recent insurance history. As such, it’s important to maintain coverage. To be on the safe side, begin searching for insurance quotes as soon as possible.Â
Insurance grace period considerations
Getting a new car can be exciting. However, don’t allow your excitement to keep you from taking care of important details like securing insurance coverage. It’s vital to get coverage as soon as possible. A dealership won’t contact your insurance company for you. If you are uncertain as to whether or not your insurer will build in a grace period, contact your insurance agent or company before the purchase to make sure.Â
It’s always better to update your coverage than to rely on an insurance company’s grace period. Remember that getting insurance doesn’t have to be difficult or take too long.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
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