Is my New Car Automatically Covered by Insurance?

Normally, people go out to shop for a new car over the weekend when their agent or broker is closed. Most insurance companies make a provision to offer coverage for this newly bought auto. The insurance arrangements are totally different when you buy a new car while keeping the old one and when the new automobile is replacing the old one. In both cases, your new auto may be insured for a short period of time to allow you make permanent arrangements.

Is my New Car Covered by Current Insurance for the Traded in Vehicle?

What happens with insurance if I trade-in my old car and get a new one? do I have to call the automobile insurance company first to make the switch or can I drive home and call my insurer? How long can I drive my new car without notifying my current insurer?

Usually, vehicle insurance companies make provisions to cover a new car that is replacing the old one.  The sooner you inform your existing insurer the better. In most cases, you are protected because you have only one car in your possession. You have traded-in the old one and got a new one.

There are regulations regarding this in state insurance laws. For example, in Texas you have 30 days to notify your insurer of change of vehicle. Of course the sooner the better and this 30 days period may not be applicable in your state or may be much shorter. It is always best to call the insurer and ask about what coverage they offer to a car you just bought. In any case, you should call them and inform the car switch over.

You may need to pay additional premium or get refunded when there is change in vehicle. But this is doesn’t stop the coverage. The cover provided would be the same as the cover that was in place for the traded in auto.

Is My New Car Covered by Existing Policy for Another Vehicle? 

The situation is totally different when you bought a new car while keeping the old one. Most companies would be happy to cover your new auto until you make alternative insurance arrangements but you should call them first before driving it. Generally, an existing policy for another vehicle should cover the newly purchased auto for few days (3 – 4 days). The coverage provided would be same as the coverage the other vehicle has.

If you are trying to get rid of your old one in the meantime, speak to your insurer and they may place both vehicle on cover for a short period of time. Nonetheless, new automobile requires insurance and arrangements should be made almost immediately.

If you already have a multi-car policy the new car would be included in it for few days until you can contact your insurer. The coverage would be same as the maximum coverage offered for any of the vehicles.

It is important not to appear to be abusing this provision. Usually, 2 – 3 days would be plenty time to let your insurer that you bought a new car. Delaying to contact your insurer may mean that you are taking chances, unless you know you have time to report the purchase of new automobile. Also, your insurer or state may have different rules for reporting a vehicle switch over to insurance provider. It is always best to check this if it is possible.

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