What is the New Car Insurance Grace Period?

Photography by Getty Images; Illustration by Bankrate

There is no shortage of paperwork to fill out the day you buy a new car, but insurance forms may not need to be among them. For drivers who currently have coverage on another car, there is often a grace period for adding a new vehicle to your policy. For example, Progressive gives you 30 days to add a new car to your policy. If you don’t currently have insurance on any vehicle, you’ll need to make sure you get insured before you drive the car off the lot.

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

When you buy a new car, your potential insurance grace period will depend on your insurance company. Although not all insurers offer a new car insurance grace period, many do. Most major insurers, like Progressive, Geico and State Farm offer a grace period of at least a few weeks. When you contact your insurer within your grace period to add your new car. If you’re getting rid of your previous vehicle, you’ll also want to cancel the insurance on your old car. You may want to use the grace period to compare quotes from other insurance companies to make sure you’re still getting the best rate.

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 often 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.

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 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 if 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 (or your state equivalent) 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.

• What happens if your insurance coverage lapses?
  

  In all states except New Hampshire, car insurance is mandatory for anyone driving on public roads. Failure to have an active policy can lead to civic penalties that may, depending on your state, include fines, points on your license, or suspension. But there’s another outcome: if you do not have insurance on your vehicle, you will likely be personally liable out of pocket for any costs related to damage or injuries in an accident you cause. An insurance policy can protect you from the potentially catastrophic costs associated with a serious accident, so it is vital to ensure that you adhere to state insurance laws when you purchase your car.