Insurance Tips When Buying a New Car
By Michael Giusti
Buying a new car is exciting — so exciting that it can be easy to forget about auto insurance as you are heading out to the dealership.
And while it often isn’t required that you let your insurance company know you are about to buy a new car, giving them a heads up before you sign on the dotted line may save a headache and several hurried phone calls — and maybe even some cash — in the end.
In some cases, such as if you are buying your first car, and you are doing it on a weekend, it may be impossible to drive off the lot that day if you haven’t already secured your insurance coverage. That’s because most insurance agents work weekdays, and if you don’t already have an auto insurance policy, you may just be out of luck.
On the other hand, if you already own an insured vehicle, you may be OK if you forget to tell your agent you are about to buy a new ride. That’s because different companies have different policies, with some offering a clause that lets you take as long as 30-days to report a new purchase to your insurance company while still enjoying the same coverage.
But don’t count on that grace period. Some companies require you report the purchase much sooner than 30 days, and some don’t automatically transfer your coverage at all, so make sure to talk to your agent or read your policy before you start shopping.
Insurance agents need a heads up when car shopping
But even if your policy does automatically transfer, there is still good reason to give your agent notice that you are about to shop.
One reason is that your agent can give you a glimpse into how much that new set of wheels is going to set you back to insure. Don’t just assume that you are going to pay the same amount for your new vehicle as you did for your old one.
In general, more valuable cars cost more to insure, and cars with more advanced technology, such as hybrids or electric vehicles, tend to cost even more still.
Another reason to talk to your agent before you start to shop is GAP insurance. Guaranteed Auto Protection insurance covers you for the months, or years, that you are “upside down” on your loan, or rather, while your car has depreciated so fast it is worth less than the value of your loan.
Buying your GAP policy from your insurer, or from your bank, is most likely going to be less expensive than what the finance manager offers you in the huge stack of papers he is shuffling in the back office. Plus, having a few minutes to sit back and think about your policy before it is time to sign takes that much more stress out of the purchase process later.
New car may mean new insurance coverage
Talking to your agent before you go shopping also makes sure that you are properly covered. Sure, you may have insurance on your previous vehicle that you hope will transfer to your new policy, but do you have enough?
If you just have a liability insurance policy, you may be fine with the law, but you will likely be short of what the bank or lease company expects you to have.
Plus, this would be a good time to do an overall insurance checkup. How are your liability limits? How about your uninsured motorist coverage? Do you need that roadside assistance, or are you good with your automobile club’s coverage?
And while you are examining your policies, it might be a good time to shop around to different providers to make sure your policy is the best deal available.
“Talking with your insurance professional before your new car leaves the showroom simply means you can drive it as of day one worry-free,” said Lynne McChristian, a spokesperson for the Insurance Information Institute. “The goal is to have customized coverage to match the new car you plan to drive.”
Worst case, just cool your heels, talk to your agent and come back Monday — insurance card in hand. You may not have that new car smell right away, but making sure you are properly insured is worth the wait.
