Do I need to get auto insurance before I buy a used car?

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Here's what you need to know...

Purchasing a vehicle can be a very exciting time in one’s life. It means freedom to come and go as you please yet it also means additional responsibility. One of these responsibilities to car ownership is obtaining car insurance on your used vehicle.

Adding the expense of car insurance can be difficult for some drivers. If this is you, or if you simply want to see if you can qualify for a lower car insurance premium, try using an online price comparison tool.

These tools make it easy for drivers to ensure they are paying the lowest rates when it comes to car insurance on a new or used vehicle.

Enter your zip code above to use our FREE comparison tool to find the best insurance coverage for your budget today!

Auto Insurance: A Legal Requirement

In almost every state, drivers are legally required to have current auto insurance for their vehicles.

This is true whether you have had your car for some time or are buying a new or used car. Coverage needs to be active from the first time you drive the vehicle as the owner.

What if I purchase a used car before getting my own auto insurance?

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If you are purchasing your used vehicle from a dealership, they will likely require you to provide proof of insurance prior to driving off of the lot. If you are purchasing the vehicle from a private party, you are still legally required to have insurance.

It is quite possible that the seller of the used car stopped the insurance coverage on it prior to putting it up for sale.

Even if the seller still maintains insurance coverage on it at the time you buy it, the insurance carrier may be within their legal rights to refuse to pay on any claims that were incurred once you took physical possession of the car.

This is because the insurance policy assumes that the person insured is the owner of the vehicle.

The Potentially High Price of not Having Insurance

It may seem like a minor infraction, however, getting caught driving without insurance can lead to expensive legal consequences. Even assuming you have not been in a car accident and are pulled over without having insurance you will face the following ramifications, depending on where you live:

  • Impoundment of your vehicle
  • Possible imprisonment
  • Suspension or revocation of your driver’s license
  • Suspension or revocation of your car registration
  • An SR22 insurance mandate
  • Community service
  • Fines of up to $1,000 or more

In addition, if you did cause an accident and were not covered by any insurance , you could be taken to civil court and ordered to pay for the damages of other parties to the accident.

They could even go after your assets and garnish your wages to make you pay. Going without auto insurance really isn’t worth the risk.

While some drivers think they have time to drive home and then research and purchase an auto insurance policy for their new car, this should be completed prior to driving the car home from the dealership or wherever it was purchased in order to avoid any potential problems.

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What types of insurance coverage do I need on my used car?

An auto insurance policy can have many different pieces to it. Each piece represents a specific coverage type. Here are the different types of available coverages and what used car buyers need to know about them:

– Liability

In most states, liability is the minimum type of insurance that is legally required.

Bodily injury liability covers medical bills and any funeral expenses for other parties due to your own fault.

Property liability covers damages to other cars or buildings as a result of your own actions. Liability does not provide coverage for your medical bills or car repairs.

– Collision and Comprehensive

If you have financed your used vehicle, you will likely be required to have these coverages. Check with your loan company to be certain. Both of these types of coverage have deductibles, usually ranging from $100 to $1000 per claim.

Even if it is not required or you own your vehicle, it is wise to carry these types of insurance.

However, if you could pay out of your own pocket to repair or replace a vehicle that you own, you may be able to consider not getting policies for collision and comprehensive.

Drivers should carefully consider their finances and options when making such a decision.

Collision pays for damages to your vehicle if it collides with another car or something else like a pole or structure.

Comprehensive pays for damages caused by other events like hitting an animal, vandalism, theft, fire, flooding, and other natural disasters.

– Medical Payments

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In some states, medical payments coverage is required. Also known as med pay, personal injury protection or PIP, it pays for your own medical expenses regardless of who was at fault for the accident.

It can also help pay for help around the house if you are injured badly enough to not be able to cook, clean, or care for your children.

– Uninsured/Underinsured Motorist

Far too many drivers are still on the road with insurance coverage or enough insurance coverage in every state.

This is such a problem that some states have put laws in place requiring drivers to have uninsured motorist coverage that helps pay the bills if the other party to the accident does not have insurance.

Underinsured motorist coverage will pick up the tab where the other driver’s insurance policy stops due to reaching its pre-determined limit.

For example, if their property liability policy limit is $5,000 but you incurred $7,000 worth of damages to your car in an accident that they caused, your underinsured motorist policy would pay the additional $2,000.

In the excitement of buying a used car, don’t forget to secure an auto insurance policy on it before your purchase is final and you drive it home. This is not the most enjoyable part of purchasing a new car, however, it is a necessary and legal one.

To find the best rates possible on your used car, try using an online price comparison tool.

Use our FREE comparison tool below! Just enter your zip code and compare rates from top car insurance companies in your area!

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