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 Jeffrey Johnson

UPDATED: Apr 14, 2022

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Here's what you need to know...

The car buying process can be a stressful one. No matter how prepared you think you are for the process, it’s easy to forget the small details that can drag the experience out longer than any car buyer wants.

One small yet very important detail that many people overlook is insurance. It’s your responsibility as a new car owner to insure the vehicle that you purchase as soon as you sign on the dotted line.

When the agent asks you to sign the paperwork that transfers the registration into your name, it’s your duty to insure that car. Luckily, standard personal car insurance policies have special provisions built in that help you protect your new cars automatically.

Start comparison shopping today by entering your zip code into our FREE tool above!

You Can’t Insure a Car Until Your Buy It


If you find your dream car online, the only thing that’s stopping you from being the owner of the car is a test drive and some intense negotiations.

No matter how confident you are that you’ll become the owner of the car, nothing is set in stone until you sign a bill of sale or a finance agreement.

If you’re the type to go above and beyond to prepare for a major purchase, it can be frustrating to learn that you can’t buy insurance on a car before you buy it.

Since insurance companies require you to have an insurable interest in the property before you can insure it, you’ll have to wait until you have a legal or financial interest so that you are eligible to enter into an indemnity contract.

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How does your insurance contract define a covered auto?

If you already own a vehicle, your existing insurance may cover the new car you just bought for a period. To determine if that’s the case with your personal auto policy, you should take a look at the terms and definitions of your contract.

It helps to know how the carrier defines a covered autoHere’s the definition under most PAP forms:

  • Any vehicle that’s listed on your declarations page
  • Any trailer that’s registered in your name (as long as it has a Gross Vehicle Weight Rating of less than 10,000 pounds)
  • Any auto or trailer that’s being used as a temporary substitute for a vehicle that’s listed on the declarations page when the vehicle is not available because of servicing, breakdown, loss, or destruction
  • Any newly acquired vehicle that’s classified as a private passenger auto will be covered for a specified period

How long is a newly acquired vehicle covered under your existing insurance?


You should never assume that your coverage will pay for claims presented in a new car for the rest of the policy term. Each policy limits how long the coverage will extend, but the period depends on the circumstance.

If you buy an additional car, your coverage will extend for fourteen to thirty days, depending on the state and the carrier.

If you are replacing a car that you currently own with the new car, the coverage extension isn’t as limited.

Instead of only protecting the car you recently purchased for a few weeks, the coverage will extend for the remainder of the term even if you don’t call your agent.

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How much coverage will a newly acquired vehicle have?

You should check your policy before you buy a new car to see how much coverage you currently carry. If there’s any confusion, you could have issues getting the keys to your car when it’s time to show the finance department that you have full coverage.

When you’re taking out a loan on the new car, you must have full coverage to satisfy the contract.

In most cases, your new car will have the broadest form of coverage on the policy for the automatic coverage period.

If you’re trading the car in or replacing it, you will receive the same coverage as the vehicle that you are replacing. If the car doesn’t have full coverage, you will receive four days of automatic physical damage coverage.

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Make Sure That You’re a Named Insured


None of the coverage will extend to a newly acquired vehicle if you’re not a named insured on the vehicle.

The named insured and the registered owner need to match, or the company won’t give you automatic coverage, which only happens as a rated driver on the policy and not a named insured or additional insured.

How to Price the Cost of Insurance if You Don’t Have Existing Insurance

If you are only a rated driver, or you don’t have insurance at all, it’s important to shop around so that you can find the most affordable rates before you start testing cars out.

When you know what types of cars you want to own, you can rate shop the market to see which cars cost the least to insure.

Having these quotes ready will help you when you need to bind insurance.

If you want to save money, the best way to do so is to solicit multiple quotes from well-known companies.

You can contact each carrier directly for a quote, or you can save time by using our FREE online rate comparison tool for access to instant quotes that you purchase with the click of a button. Enter your zip code below to get started!