Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • You do not need car insurance to buy a new car
  • Every state requires that liability insurance is applied
  • Most agents will ask that you come to their office in person to fill out your insurance application

Car insurance is not a requirement for the purchase of a new or used car

However, if you are purchasing a new or used car from a dealer, you will be required to have insurance before the vehicle is driven off the dealer’s lot.

The reason you can test drive a car without insurance is that dealers carry insurance permitting you to test drive a new or used car, but this temporary coverage is valid only for the test drive.

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How much is car insurance per month?

Once you have selected a vehicle contact your insurance agent with the unique vehicle information. You will need to have the Vehicle Identification Number ready, which the dealer can provide.

If your new car is replacing a current vehicle, then your auto insurance rates will be adjusted based on the new car. If this is the second car on your insurance policy, prices will be determined by the type of car and the type of coverage selected.

If you buy a new car and have an insurance agent, you can contact your agent directly from the dealership. Your agent will then issue what is known as a binder.

A binder is a temporary agreement, which your agent will put in place until your actual policy is written or adjusted. This will serve as your insurance policy until your new car is added.

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What if I don’t have an insurance agent?

Most dealers have a bank of insurance agents they refer to. At the time, you purchase your car, you can ask for this referral.

If you do not have an insurance history, the agent may not be able to insure you over the telephone. Most agents will ask that you come to their office in person to fill out your insurance application.

However, you should always know that it’s probably much cheaper to research car insurance on your own rather than take a dealer referral.

What will I need to apply for car insurance?

You should be prepared to answer general questions about the coverage you would like, your driving record, who will operate the vehicle, how the car will be used and more.

Before accepting coverage, it’s also wise to be familiar with the auto insurance laws in your state and obtain coverage reflective of your personal needs.

Outside of choosing the type of coverage, you will also need:

  • Your driver’s license
  • Your social security card
  • A credit card or check
  • The VIN of the new car

Every state requires that liability insurance is applied, but vary on the amount of collision and comprehensive insurance.

You will also need to choose a car insurance deductible – this is the amount you are required to pay before your car insurance coverage kicks in during a claim.

As stated before, you will need to have car insurance before you leave the dealer’s lot. In some cases, it is possible for a dealer’s representative to accompany you in the vehicle to an agent.

Do I need car insurance before I buy a used car?

If you are purchasing a used car from a car dealer, you will also be required to have insurance before driving the car off the lot. You should follow the same steps as if you were purchasing a new car.

This will begin with you contacting your insurance agent before leaving the dealers lot and securing a binder for the vehicle.

If this is a private sale, some states allow you two to five days to transfer insurance from the previous owner to your policy but before trying this check with your state law.

You should always try to get car insurance in place well before operating any new vehicle. Never assume that the previous owners’ insurance policy will remain in effect.

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