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Purchasing a vehicle and your insurance agency is closed?

Can you drive your new vehicle before adding to your insurance

I’m buying a new car and my auto insurance agency is closed.  What now?

Picture this.  It’s President’s Day.  And they’re practically giving away cars (and mattresses!).  Deals too good to pass up, you’d be nuts not to buy (according to Crazy Lester’s Car Emporium).

So you drive down to the dealership and trade up to a new vehicle.  You’re ready to sign.  They say to call your insurance agent to add the new vehicle to your policy.  You make the call and find out… they’re closed.  How patriotic… and annoying.

Can you drive your new car without adding it to your auto insurance policy?

Yes.  Probably.  Keep reading.

Most personal insurance policies have built in language for just this occasion.  Insurance companies understand that people buy cars on Saturdays and holidays.  So, customers need insurance, even when their agents are not working.

For that reason, most auto insurance language automatically temporarily covers new vehicles.  This is typically how it works:

 

If you are: Then automatic coverage applies for:
trading in and own no other vehicles with physical damage coverage Liability Until Renewal
Physical Damage 4 Days
trading in a vehicle and do own another vehicle with physical damage coverage Liability Until Renewal
Physical Damage 14 Days
adding a new vehicle and own no other vehicles with physical damage coverage Liability 14 Days
Physical Damage 4 Days
adding a new vehicle and do own another vehicle with physical damage coverage Liability 14 Days
Physical Damage 14 Days

 

So, you should have at least 4 days to call your agent.  And I do recommend calling right away to get your vehicle on the policy.  Even if you have automatic coverage that goes longer.

Also worth noting, trailers designed to be pulled by a car or small truck are considered ‘newly acquired vehicles’ for the purposes of automatic coverage.

When automatic coverage doesn’t apply

In order to have automatic coverage, there are a few stipulations.  The insurance company giveth.  And the insurance company taketh away.

For example, commercial auto policies work entirely differently. If you have a commercial policy, then you probably have to add your new vehicle immediately.

Also, automatic coverage will only apply to private passenger autos, pickups or vans.  That means no automatic coverage from your auto policy for motorcycles, boats, atv’s or Segways.  Also, they have to be under a certain weight limit.  Typically 10,000 – 12,000 lbs is the max allowable GVW.

Last, your new car can’t be used for delivery or transport of goods.

Other things to consider

Gap Coverage

When you buy a new car, you need Gap Coverage.  As soon as you start driving your new vehicle it becomes a used vehicle.  So it immediately loses value.  That means if you crash the day after you buy, your new car may be worth less than the loan or lease value.  Gap coverage pays the difference so you don’t end up making payments on a totaled vehicle.

The dealership can sell you Gap Coverage as part of the loan or lease.  However, it’s usually 3-4x more expensive to purchase through the dealership than it is to add to you existing auto coverage.

Distractions and short memories

Knowing you have automatic coverage is one thing.  But don’t forget to add the coverage right away.  If you know you have two weeks to call you auto insurance agent, you may be tempted to take your time.  But life sometimes gets in the way.  So when you have the opportunity, call right away to avoid forgetting or getting sidetracked.

Problems at the dealership

Occasionally we see situations where dealerships don’t know their customers have temporary insurance automatically provided.  To avoid issues, it’s best to add the vehicle in advance if possible.

Also, the car dealership may say they’ll call for you.  It may seem like a helpful customer service they provide.  But you shouldn’t rely on them.

First, you’re the only one who can make changes to your policy.  By law, a dealership or other third party cannot add a vehicle to your policy. Second, they forget too.  We see it all the time.  We review coverage with our customers only to find out a vehicle they thought had been added by the dealership is totally uninsured.

Again, when possible we recommend you call your agent in advance to let them know you’re picking up a new vehicle.  If you can’t then make sure you call right away when convenient.

In Conclusion

Insurance policies make sense sometimes.  I think this is one of them.  But don’t let this built-in convenience turn into a costly mistake.  It’s always best to talk to your agent before a major purchase.  Now go get that new truck so you can drive your new mattress home.