Advice

Do I Need Car Insurance Before Buying a Vehicle?

By 03/04/2025 8:00am
Customer with car insurance agent

Should you get your car insured before buying it? Absolutely, because car insurance protects your finances when accidents happen. But, are you required to have an insurance policy when buying a car? Lenders usually require insurance coverage on the vehicle before giving you money for the loan, and dealers typically need proof of auto insurance when finalizing the transaction and registering the car. While you could buy a vehicle from a private seller without having car insurance, you’ll need coverage before you can legally drive it. Keep reading to learn more about getting insurance when you buy a car.

How Soon After Buying a Car Do You Need Insurance?

You should have at least the minimum liability insurance anytime you’re behind the wheel, including when you drive it home for the first time. You will need to buy car insurance before purchasing your car. The dealership will likely need proof of insurance before handing the keys to you. Your bank or credit union will require coverage if you’re financing the purchase with an auto loan.

Check your state’s department of motor vehicles (DMV) for car insurance requirements before buying a vehicle. Relying on luck is not smart. Even driving once without insurance is a risk. If law enforcement makes a traffic stop, you may face misdemeanor charges, fines, license suspension, jail time, or a combination of those things.

If you have a collision when driving without insurance, you may have to pay out of pocket for not just your repairs but those of the person you collided with. Costs can skyrocket with related medical bills, property damage, and legal fees.

It’s illegal to drive without car insurance in all states except New Hampshire, where drivers can choose not to purchase car insurance if they can prove they have the financial resources comparable to insurance coverage.

At the end of the day, having some vehicle insurance is always better than having none. But how exactly do you go about it?

Can You Get Auto Insurance Before Owning the Car?

If you currently have a car insurance policy, it should cover the new vehicle temporarily. However, you must contact your insurance company or agent to inform them about your new car so they can add it to your policy.

What if you’ve never had car insurance before? Don’t worry; you still have some options. First, you will want to compare insurance companies to see who can give you the best rate.

You can contact your insurer of choice online, in person, or over the phone. Applying for a policy online may be the most convenient option.

When getting a quote, you’ll provide general personal information, like your ZIP code and address, birth date, and name. Including information about the vehicle, like the year, make, and model, will get price estimates.

MORE: How to Choose Your Car Insurance Deductible in 2025

Can I Buy Insurance Without a Car?

Yes, you can. Since it is illegal to drive without insurance, in most cases, you will have to buy insurance without technically owning the car. Instances like this are common. You will need to provide your personal information and information about the vehicle to your insurer. If you already know the exact car you will be buying, you can provide its vehicle identification number, or VIN.

Providing this will allow the insurer to provide you with adequate coverage so that you are set to drive off the lot legally when purchasing the vehicle. Since buying insurance is typically a very quick task, you can buy the insurance the same day or the day before you plan on buying the car.

Insurance Grace Period

Many insurance carriers provide a grace period for current policyholders who purchase a new car at a moment’s notice, over a weekend, or on a holiday. For those drivers whose policies permit it, a newly purchased vehicle is automatically covered for up to a few days before officially adding it to the existing policy.

How Long Does It Take to Get Car Insurance?

It depends, but it’s possible to get your car insurance in just one day or in a matter of minutes. Most large insurance companies provide around-the-clock customer support. If you need coverage quickly, have all of your information prepared beforehand, such as your VIN, current insurance information, driver’s license number, and other personal data.

While we can make the process sound fast and easy, keep in mind that it could take some time. So make sure you set aside the time in advance to get this done to avoid stress. Of course, the best-case scenario is when you don’t need same-day coverage and everything goes smoothly.

What Kind of Coverage Do I Need?

The vehicle insurance you will need depends on the situation you are in. For example, most lenders will insist on full coverage auto insurance. So, typically, you need to get full coverage if you are financing your vehicle.

Some of the most common types of car insurance are comprehensive, collision, and liability insurance. It is essential to review your specific needs when it comes to insurance. Depending on where you live, you may need insurance that covers natural disasters such as floods.

If you’re buying a used car, many states require specific coverage, so it’s wise to look into guidelines where you live.

Typically, a combination of liability and collision or liability and comprehensive or even just liability insurance (which is not a wise choice) will work. That, again, depends on your personal preferences and your state’s requirements. Make sure you know what kind of protection is included in each type of auto insurance before you decide whether to get it or not.

Are the Rates for Full Coverage Auto Insurance Expensive?

Almost all lenders will require you to obtain full coverage auto insurance when buying a car. The full coverage includes collision, comprehensive, and liability insurance. When you fully cover your vehicle, you will have protection from all kinds of accidents or other damage, such as theft or fire.

The average state cost for full coverage auto insurance will vary. The price depends on the state where you live, your driving record, your car’s value, and other variables. But in return, you will have the comfort of knowing that your car is completely protected from accidents caused by you or others.

However, you can estimate how much your car insurance will be before actually buying it. Calculating can give you an idea of what you will be paying when it comes time to add your different types of coverage.

How to Save on Auto Insurance

Yes. There are dozens of car insurance discounts. Here are a few of the best ways to save money on car insurance.

  • Shop around. The best way to save money on auto insurance is to shop around. Every company may charge a different rate for seemingly the same coverage.
  • Bundle. Insurance companies give discounts if you bundle multiple cars or your home and auto with the same company.
  • Safe driver. It pays to be a safe driver. Insurance companies tend to give discounts to drivers without fender benders on their records.
  • Telematics. Many insurance companies now offer telematics to track drivers and their driving habits. If you go for this option, you could save money on your insurance, depending on your driving habits.
  • Get good grades. Insurance for teenagers can be costly. However, most companies give discounts to students who maintain a set minimum grade point average (GPA).

What About Insurance When Buying a Used Car?

Whether you buy a new or used vehicle, some auto insurance is required in every state except New Hampshire. According to the Virginia DMV, any resident “who refuses or neglects to submit the liability insurance information within 30 days [of vehicle registration] will have their license suspended” after the state eliminated the $500 Uninsured Motorist Fund waiver.

So, why risk getting into an accident and being uninsured? Driving without insurance coverage could cost you so much more when paying the bill out of pocket if something happens. Don’t assume that you will not get into an accident. It’s best to obtain insurance. The truth is, you never know what can happen and when.

Buying insurance for a used car is a quick and straightforward process. You can add a used car to your existing policy if you have one in most cases.

But let’s jump ahead now to the best part. Do you have your eye on any specific vehicle already? If you have anything specific in mind, or even if you don’t, you can browse online at Kelley Blue Book, which has new and used car listings.

Remember, it’s always better to have some insurance than none, even if it’s not required by law. Do this for your safety and peace of mind.

Bottom Line on Insurance Before Buying a Car

Before buying a car, securing insurance is essential for financial protection. Most states and lenders require coverage. Existing policies may temporarily cover new vehicles, but updating your policy is necessary. First-time buyers typically can get a policy relatively quickly, and current policyholders can add another vehicle within minutes. Full coverage is usually required for cars bought with an auto loan, and costs vary by location and driving history. To save on the expense, shop around to compare rates, bundle policies, and maintain a driving record without accidents and tickets. Having an insurance policy when you purchase your new or used car, insurance gives you some financial security and peace of mind.

Editor’s Note: This article has been updated since its initial publication.