How Insurance Works When You're Buying A Car

Written By
Kris Angelucci
Posted
January 11, 2022

Proof of Insurance is Required.

Depending on your particular situation—whether you currently have insurance on another vehicle or are purchasing your first car, whether you’re financing or leasing, and the precise regulations set forth by your current insurer—this proof of insurance requirement will mean different things for different people. The most common situations are outlined below for you to get a better understanding of exactly how these requirements may apply to you and how to get immediate car insurance quotes!

You are Currently Uninsured and/or Purchasing a Vehicle for the First Time:

If this is you; you will need to purchase insurance before getting your vehicle, which often means you'll need an immediate insurance quote. Unfortunately, this is often the most challenging insurance scenario. Insurance companies are understandably wary of offering coverage to individuals without current insurance because your insurance history is one of the most critical factors used in calculating your rate. Similar to applying for your first credit card, you may not have the necessary history for insurers to determine the level of risk you pose as a driver, meaning that you will usually pay more than someone with a long, clear insurance history. It also complicates the question of, “Can you get insurance quotes the same day?”

In this scenario, you are likely to see substantial variance between rates offered by different insurance companies. Some will decline to offer you coverage at all, while others may only offer you coverage at unaffordable prices. It’s extremely important to shop with as many insurers as possible to find an insurer that is willing to cover you at a reasonable price. You should also consider discounts you may be eligible for, as well as other ways to save. For instance, most insurance companies offer significant discounts for enrolling in a driving monitor program. Woop can help you to identify these savings options and more, as our goal is to give customers immediate insurance quotes, comparing the best auto rates– we’re car insurance made easy.

You Currently Have Insurance on Another Vehicle

If you already have auto insurance, your current insurance company may allow a short “grace period” in which your current coverages will extend to the new vehicle. This grace period can vary greatly and is up to the sole discretion of the insurer. If you’re banking on this grace period allowing you to drive off the lot with the new vehicle, it is imperative that you fully understand how that grace period works.  

Even if your current policy meets all the requirements of your lease/financing agreement, the financing company will likely require that you have your new vehicle explicitly listed on your policy before you drive it home

Typically, insurance companies will offer anywhere from 0 to 30 days of coverage for a newly acquired vehicle, allowing you to drive it home before adding it to your policy. This can be a risky proposition—especially if you plan on driving your car home before adding the new vehicle to your policy. If you are financing your vehicle, you’ll need to carry Collision and Comprehensive coverage and your financing agreement might even stipulate that you carry higher liability limits then you currently have. Even if your current policy meets all the requirements of your lease/financing agreement, the financing company will likely require that you have your new vehicle explicitly listed on your policy before you drive it home. For this reason, it is wise to have your new vehicle added to your policy before you drive it off the lot.  

Now that we’ve covered the basics of how insurance plays into the car-buying process, you may be wondering what else you’ll need to drive your new vehicle home! This includes knowing how to get car insurance and how to find a quick car insurance quote. We’ve put together a short resource that you can use to ensure that your car buying experience goes smoothly, and to know what you need to do to get immediate car insurance quotes online and find the best ways to lower your auto insurance premium. You can read more about that here.

About the Author
Kris Angelucci
Insurance producer, engineer, and world renown Rockstar… okay maybe not an engineer.
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