If you are shopping for a new or used car, you might need to have car insurance before leaving the dealership with your new purchase. Car dealers typically will not let buyers leave without proof of auto insurance. If you are preparing to buy a new or used car, there are several things to understand about car insurance requirements.
1. Dealers Require Auto Insurance When You Have a Loan
You can buy a car with cash or a loan. If you pay with cash, you have more freedom because you do not have a lender involved with the deal. If you pay with a loan, you have a lender with interest in the purchase. The lender fronts the money to the dealership for you, and you repay the money over time through your car payments. Because the lender invests money in the deal, they set requirements. One requirement is that you must have car insurance on the vehicle. Your policy must begin before you drive off the lot, and it must continue until you pay off the loan. You cannot get by without car insurance when you have a lender involved.
2. Dealers Might Require It When You Pay Cash
Some dealers even require auto insurance when people pay cash for cars, and they do this for protection. Suppose you buy a car with cash and do not have insurance. If you wreck the car on the way home, you might cancel the check or credit card transaction you used to pay for the car. While the risks of this happening are minor, it can still occur. Therefore, the dealer might require proof of auto insurance before you leave.
3. How to Get Auto Insurance
If you already have auto insurance, your current policy might cover your new car for one day or much longer. Insurance companies have different rules about how this works. The best thing you can do is to contact your insurance company before leaving the car lot. In fact, you can call your car insurance agent as soon as you pick out a vehicle. Once you do this, the agent can add this new car to your policy, and you will immediately have coverage.
Having car insurance is essential. Therefore, you should avoid procrastinating with getting it. If you need a quote for car insurance coverage, contact an agent today to get started on the process.