Do I Need Car Insurance Before Buying a Car?

Can I Drive Without Car Insurance?

You can't legally drive without car insurance in any state except New Hampshire. Laws in all the other states mandate car insurance to drive a car, although requirements differ from state to state.

Penalties for driving without car insurance vary from state to state. For instance, one state might impose minor penalties, while another might punish you with a large fine or jail time.

Learn more: Minimum Car Insurance Requirements by State

How Soon After Buying a Car Do I Need Car Insurance?

Generally, you must carry at least the minimum amount of liability insurance required in your state when you get behind the wheel of a new car. In fact, a dealership may require proof of insurance before letting you drive away, and a lender generally requires coverage if you're financing the purchase.

If You Already Have Car Insurance

If you already have car insurance, it should cover the new vehicle temporarily. But you should inform your insurer as soon as possible—by phone, via email, through a website or app, or in person—so they can add the car to your policy.

Many insurers offer a grace period for current policyholders who make a snap decision to buy a new car, or who purchase the car on a holiday or over a weekend. The grace period typically lasts from seven to 30 days.

If you're adding a car to a policy, it generally gets the same coverage as the car with the most coverage on your policy. If you're swapping a newly purchased car for a car already on the policy, it gets the same coverage as the car being replaced.

Example: If you have full coverage on one car and liability-only coverage on a second car, then you add a third car to your policy, that car will receive full coverage. However, if you buy a car that replaces the car with only liability coverage, the new car will receive liability coverage only unless you elect otherwise.

If You Do Not Already Have Car Insurance

If you don't already have car insurance for a vehicle you're buying, you'll need to obtain coverage before getting behind the wheel.

How Much Car Insurance Do I Need?

How much car insurance you need depends largely on the state where your vehicle is registered and, if you financed the car, what your lender requires. All but one state mandates a minimum amount of liability coverage.

You may also be required to buy some combination of comprehensive coverage, collision coverage, and underinsured and uninsured motorist coverage, either by law or because your lender requires it.

Liability Coverage

Liability insurance, required by every state except New Hampshire, pays for damage to another person's property and injuries to other people if you're found to be responsible for an accident. Liability insurance does not cover repairing your own vehicle or your own medical bills.

Learn more: What Is Liability Insurance?

Comprehensive Coverage

Comprehensive insurance covers non-collision incidents involving your car. These include theft, vandalism, glass and windshield damage, fire, weather damage and accidents involving animals (such as hitting a deer).

A lender may require comprehensive coverage when you finance or lease a vehicle, but it's not required by state law.

Collision Coverage

Collision insurance pays to repair or replace your vehicle if it's damaged in an accident, no matter who's at fault. This includes collisions with another vehicle or with an object like a tree or guardrail.

A lender may mandate the purchase of collision coverage when you finance or lease a vehicle. However, it's not required under state law.

Learn more: Comprehensive vs. Collision Coverage: Key Differences

Uninsured and Underinsured Motorist Coverage

Insurers usually pair uninsured and underinsured motorist coverage—often noted as UM/UIM coverage—and many states require it.

Uninsured motorist coverage protects you if you're hit by a driver who lacks car insurance. Underinsured motorist coverage protects you if you're hit by a driver who doesn't have sufficient insurance to pay for damage or injuries they caused.

How to Get Car Insurance Before Buying a Car

Here are four steps for getting insurance before buying a car:

1. Pick a car. An insurer will need to know information about the car before it can supply a quote and issue a policy. This includes the car's year, make and model, as well as the VIN, odometer reading and vehicle history.
2. Verify details with the seller. Before you make the purchase, check specifics such as the lending arrangements.
3. Shop for insurance. As a rule of thumb, you should compare quotes from at least three insurers.
4. Choose an insurer. After you've weighed factors like cost, coverage and customer service, it's time to purchase a policy. You may be able to do all of this online, over the phone or in person. At this stage, you'll decide on your coverage types and deductibles.

How Long Does It Take to Get Car Insurance?

If you apply for car insurance online or over the phone, it might take as little as five minutes to get a policy—as long as you're already armed with the required information. Once you complete the process, the policy normally takes effect right away. In other words, it's possible to get same-day car insurance.

Obtaining car insurance through a broker or agent might take longer, perhaps a few days.

Learn more: How Long Does It Take to Get Car Insurance?

Frequently Asked Questions

The Bottom Line

Car insurance generally needs to be in place before a newly purchased car leaves the lot, whether by adding the vehicle to an existing policy or buying a new policy. Shopping for coverage during the car-buying process can make it easier to compare quotes, meet state and lender requirements, and avoid a last-minute scramble or potential penalties. You can easily compare quotes from top auto insurance providers with Experian's auto insurance comparison platform.