Do You Need Car Insurance to Buy a Car?

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Contributor, Benzinga
March 4, 2022

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Thinking about getting a new (or new-to-you) vehicle and wondering if you need insurance to buy a car? If you don’t have an existing car insurance policy and you’re thinking about buying a new car, you should make sure that you have car insurance that starts before you drive off the lot in your new vehicle.

As a result, several questions arise like:

“Do I need insurance to buy a car from a dealership?”

”Do I get car insurance before I buy a used car?”

”Can I drive a car without insurance if I just bought it?”

”Can I have a car without insurance and not drive it?”

Though buying a car without insurance isn’t impossible, it’s highly recommended that you research policies and get your coverage before buying a car so you aren’t caught on the road without insurance. Our guide will help you understand the insurance process and why it’s so important to get covered as soon as possible.  

Short Answer

While you can buy a new car without car insurance, you should consider getting coverage before you purchase. And if you're buying or leasing a car from a dealership or financing, you may be required to buy car insurance before you are able to drive it off the lot.

Best Insurance Coverage for New Car Owners

If you’re thinking about buying your first car and you don’t already have insurance, don’t worry — it’s easy to apply for coverage and get signed onto a policy online. Consider beginning your search for the right insurance provider with a few of Benzinga’s favorite insurance companies for new vehicle owners using the chart below.  

What Type of Car Insurance is Required by Law?

No matter where you live, you must have car insurance in order to remain on the road legally. If you’re caught driving without insurance, you could face a costly fine — and you can even run the risk of having your license suspended if this isn’t the first time you’ve been cited for not carrying at least your state’s minimum coverage. 

Consider what you need to buy a car in your state. You can ask the dealership ahead of time, or you can even check your state’s Department of Insurance website. You can also ask the dealership a few other things like:

  • Can you finance a car without insurance?
  • Do you have to have car insurance under their policies or rules?
  • Is there a new car insurance grace period?
  • Can I buy car insurance on the spot?

If you’re involved in an accident while you’re driving without insurance (even if you just bought your car 10 minutes ago and you’re on your way home) you can face thousands of dollars in repair and liability bills.

Types of Car Insurance: How Much Coverage Do You Need?

The answer to this question will vary depending on where you live. Most states require that you carry 2 unique types of auto insurance.

  • Bodily injury liability insurance: Bodily injury liability insurance compensates anyone who you injure during an accident for their medical bills.
  • Property damage liability insurance: Property damage liability insurance compensates anyone whose property you damage during an accident.

The specific amount of coverage that you’ll need to carry for each type of liability insurance varies depending on state laws. For example, if you live in Pennsylvania, you’ll need to carry just $5,000 worth of property damage liability coverage and $15,000 worth of bodily injury liability coverage. However, if you live in Alaska, you’ll need to carry at least $25,000 worth of property damage liability coverage and $50,000 worth of bodily injury liability coverage. 

Speaking with an auto insurance agent in your area can help you understand your state’s unique insurance requirements and which coverages you’ll need to sign onto before you buy a new car.

Can You Transfer Your Current Car Insurance?

If you have a current car insurance policy and you aren’t sure which vehicle you want to purchase next, you can contact your insurance provider to ask for a grace period on your active policy. This grace period allows you to maintain your insurance coverage for your new vehicle before you technically add your new vehicle to your policy. This is especially helpful if you’re trading in a car.

Depending on the insurance provider, you may have a grace period of between 7 and 30 days. When this grace period expires, you must add your new car to your auto insurance policy if you want to keep your coverage current. Be sure to ask your current insurance provider if you have a grace period and how long it will last. 

Some insurance companies will only offer a grace period if you’re buying a new vehicle to replace a vehicle that you currently have, so don’t be afraid to contact your insurance agent to learn the rules before you assume that your coverage will extend to your new ride.

When you buy a new insurance policy, you’ll need to submit a bit of information to your insurance provider. Your insurance company will likely ask you for:

  • Your name and birthday
  • The name and birthday of anyone else who will be driving the car
  • A driver’s license number and Social Security number for everyone using the vehicle
  • Each vehicle’s vehicle identification number (VIN)
  • Your declarations page for your most recent car insurance policy
  • Your address and the address where the car will be parked (these 2 addresses will usually be the same)

If you’ve never owned a car and you aren’t sure which car you’d like to buy, contact an insurance agent. An agent can provide you with a few quotes for different vehicles, and you can provide the VIN of the car you eventually decide to purchase.

Maintaining insurance isn’t only a smart financial idea in the event you’re involved in an expensive accident — it’s the law. Most police officers won’t grant leeway for drivers on the road without insurance even if they’ve just bought their new car. 

Do You Need Insurance to Buy from a Dealership?

If you buy a car with a dealership, there is no way to get around the insurance requirement. Your dealership will not provide you with temporary tags or your title and registration before you prove that you have sufficient insurance coverage. This is because the dealership doesn’t want to risk being sued because they allowed you to drive off the lot without insurance.

If you’re trading in your current vehicle for a new car, you’ll usually add your new vehicle to your current insurance policy. In most cases, you’ll arrive at the dealership with your insurance already sorted out and attached to your new vehicle. You’ll call your insurance provider from the dealership to ensure you’re covered before you leave. Your insurance provider will usually email or fax your insurance details to the dealership so it can verify you have coverage.

Remember that it is not possible to purchase a car from a dealership without insurance. Don’t show up to the dealership without knowing that your insurance policy is sufficient for your state’s requirements and that it will be applied to your new vehicle purchase. Your dealer won’t allow you to take your car home without proper insurance coverage. 

Do You Need Insurance to Buy from a Private Dealer?

When you buy a car from a private seller or dealer, requirements to bring your car home are looser and more flexible. Most private sellers won’t ask you for your insurance information before they agree to swap the title, transfer ownership of the vehicle to you and accept your cash payment. However, when you register the car, your state’s motor vehicle office will ask you for your insurance information — and it will expect you to have coverage before it changes the title and registration over to you. The sale will not be completely finalized before you have insurance, so you might as well buy it earlier rather than later.

While it’s technically possible to purchase a car without insurance when you buy through a private dealer, you should never drive without insurance. You can be pulled over and cited at any time, and you may be personally financially liable for any damage or injuries you cause while driving without insurance. The costs of even a minor accident can quickly add up to thousands of dollars in fines, fees and court-awarded judgements. 

When Should You Buy Car Insurance?

Though you may not technically need insurance at the time of your vehicle purchase, you’ll definitely need coverage before you begin driving your new car. Comparing insurance policy options before you pick up your vehicle can leave you with more time to explore all of your options and ensure that you aren’t overpaying for coverage.

Can you get insurance without a car? No, but you can reach out to an insurance company, establish a relationship with the firm and call when it’s time to buy the car. Remember, in most cases, driving a car without insurance is illegal, finable and you will end up in traffic court.

We recommend starting your search for insurance early and comparing estimates from multiple competing car insurance providers before selecting a policy.