What is the new car insurance grace period?

Jessica Gibson

Key takeaways

  • If your insurer offers a grace period to drivers who purchase a new car, the coverage on your existing car insurance policy may extend to your new vehicle for seven to 30 days, depending on the company.

  • If you're insured by a company that does not offer a grace period, you must add your new vehicle to your existing policy or purchase a new car insurance policy immediately.

  • If you've exhausted your grace period or were not extended a grace period and drive your new car anyway, you're driving without insurance and may face legal penalties.

Almost every state in the U.S. requires a minimum amount of car insurance coverage to drive legally. That means that when you buy a new or used vehicle, you’ll have to buy a new car insurance policy or update your existing one. Many people don’t realize that if they already have a policy, there’s usually a grace period for car insurance where you can drive your newly purchased vehicle before your policy is fully updated to include it. Most insurers offer between seven and 30 days to give you time to work with your insurer to update your coverage without being penalized for driving without insurance.

Is there a grace period for car insurance when buying a new car?

If you have an active auto insurance policy, it may include a new car insurance grace period, which offers temporary insurance coverage for a newly purchased vehicle. The grace period, which may last between seven and 30 days from the date the vehicle was purchased, gives you time to add the new vehicle to your policy and ensure cancellation of coverage on any vehicle(s) you may have sold or traded in.

Not every insurance provider or policy may offer a car insurance grace period, so you will want to confirm this with your insurance company before driving your newly purchased vehicle.

How does my car insurance coverage work in a grace period?

If you have full coverage car insurance on a vehicle on your insurance policy, that same coverage will probably extend to your new vehicle during a grace period. If you carry liability-only coverage, you may have significantly limited coverage on your new vehicle during the new car insurance grace period. If you have multiple vehicles on your policy with different levels of coverage, typically, the best coverage on your policy temporarily applies to your new car. Temporary coverage applies regardless of whether you buy your newer vehicle through a dealer or a private seller.

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For example, say you have two vehicles on your auto insurance policy: one vehicle with $500 comprehensive and collision deductibles and one vehicle with liability-only coverage. If you were to purchase a third vehicle, generally, your new car would automatically have the best coverage available on your policy, which is comprehensive and collision coverage. However, how long the insurance grace period for a new car lasts varies by carrier, so it is important to know what coverage limitations apply to your situation.

How long does a car insurance grace period last?

Depending on your car insurance policy and current level of coverage, a car insurance grace period can last anywhere from seven to 30 days from the purchase date of your new vehicle. The level of coverage on your new vehicle may be limited during the grace period, and in some cases, your deductible would still apply to any claims filed. Checking in advance with your insurance company can help to prevent any gaps in coverage and associated financial risks.

When does a car insurance grace period not apply?

If you do not have an active car insurance policy when buying a new car, the insurance grace period will not apply. In this case, you’ll need to shop for car insurance and simply get a new insurance policy for your vehicle. Depending on how much time you have before needing to drive off the car lot, it may be worth considering getting multiple car insurance quotes to find the best rate for your needs. Rates can vary drastically from company to company based on several factors specific to you and your car.

If you have an active policy, a car insurance grace period may not apply in a few scenarios, such as if your insurer does not offer a grace period or you have exhausted your grace period coverage. In either case, you’ll need to add your vehicle to your policy to have coverage. Without it, you could be considered driving without insurance should an incident happen, which could have major consequences.

Frequently asked questions

    • Do I need insurance before registering my new vehicle?

      Yes, most states require you to have at least the minimum car insurance coverage required by law. You’ll typically have to show proof of insurance before you can register your new vehicle with your local motor vehicle department. Check the department of motor vehicles website to learn what documentation is necessary (like an insurance ID card or declarations page).

    • Do all insurance policies have a 30-day grace period?

      Not necessarily. Not all insurance providers or car insurance policies offer a 30-day grace period. Some might offer shorter grace periods or none at all, which is why you might want to talk with your car insurance provider or check your policy documents if you have active car insurance. If your insurer offers 24/7 customer support, you should be able to contact them at any point in your car-buying journey.

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