Existing Insurance with a New Car: Will my policy on my old car cover me for property damages with my new, uninsured car?
UPDATED: July 22, 2020
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The least you should know...
- Your existing policy will not automatically extend to the new car
- You typically have 7-30 days to notify your insurer and have them cover your new car
- Failure to comply with the new car grace period and then add the new car to your policy (or get a new policy) leaves your new car uninsured
- Your existing insurance with a new car would not cover any damage you cause in that circumstance
As a general matter, the auto insurance you had on the old car won't be applicable to the new uninsured vehicle. After a car accident without insurance, you may be sued for negligence and may be liable for any property damage done to the cars you hit.
If you have caused damage or been in an accident, you may need to find a car accident attorney near you. If your insurance is denying claims when you think you and your vehicle were covered, contacting an insurance lawyer should be your next step.
To search for an experienced insurance or car accident lawyer near you, enter your ZIP code into our search tool.
When Damage You Caused with an Uninsured New Car Might Be Covered
Your existing policy will provide coverage if:
- your current automobile insurance policy, by its plain terms, automatically extends coverage to newly purchased cars;
- you have the relevant insurance under your existing policy (liability coverage for damage to other vehicles or property; collision or comprehensive coverage for damage to your own car); and
- you have informed your insurer of your new car purchase within the new car grace period allowed in your policy (typically 7 — 30 days).
Note that if you have automatic coverage but failed to make that phone call to your insurer within the specified window, you will have no insurance and will have to pay out of pocket for repairs to your new car — or for damage to another’s vehicle — if an accident happens.
That is because insurance policies are contracts. You need to comply with their terms, the same as you need to comply with the terms of any contract — if you fail to provide the notice required by the policy, then you will have breached the contract, and therefore will not be covered.
Accordingly, before you drive that new car off the dealer’s lot, check with your insurance company to see their exact requirements to add your new vehicle. Whatever your coverage is on your old car will match the coverage on your brand-new car — unless you specifically opt to change the coverage, which is your right.
(Of course, if you increase coverage, you will have to pay more.)
For example, say that your old car was barely operational and you did not carry either collision or comprehensive coverage because it wasn’t worthwhile paying for such coverage. As a result, your new car won’t have comprehensive or collision coverage either, unless and until you notify the insurer to add that coverage.
Proof of Insurance when Buying and Financing
Before taking possession of the new car, you have to provide proof of insurance coverage to the dealer, or the dealer may require your insurer to fax over proof of insurance. Even after doing that, you will still have to report your purchase to your insurer within the allotted time; failure to do so will cost you coverage.
Buying a new car has an insurance grace period, but just because the company provides proof to the dealer does not mean you have met your obligation to add your new vehicle.
How long do you have go get insurance after buying a used car? The grace period provided by your insurer will be the same whether your new vehicle is new or used.
If you decide to finance or lease the vehicle, the finance company or the lender will require you to obtain comprehensive and collision insurance as well as gap coverage to ensure that it is protected. Understanding your collision and comprehensive coverage will ensure you know your coverage in the event of an accident
If your auto policy lapses, the lender will obtain coverage (at a much higher rate than you would pay, if you bought insurance on your own) and add it to your loan. Known as the “forced place” clause, it provides protection to the lender, not you.
Bringing it All Together
Your insurance company will usually extend coverage for your new car only if you comply with the terms of the insurance contract. Typically, this means providing them notice within the new car grace period.
If you cause damage with a new, uninsured car without meeting these terms, you will likely be uncovered for those damages.
If extending your coverage to your new car — especially if you have to add collision and comprehensive coverage — is expensive, it may be worthwhile to get car insurance quotes from other companies.
Did we answer your questions about existing car insurance and new cars?
If you have a dispute about claims with your insurance company or are being sued for damages, you can find an accident or insurance law attorney by entering your ZIP code into our search tool now.