See how your current auto insurance policy extends to your new vehicle.
Shopping for a new car to replace your 10-year-old model can generate the kind of excitement that few other tasks do. When you're ready to sign the papers, you'll need to show the dealership you have insurance before you drive away. Does this mean you should notify your insurance company before buying a new car, or will your current auto insurance policy suffice?
While the safest bet is to check with your insurance company before you buy a car, here are a few things to remember about auto insurance and how it transfers from your current vehicle to a new one.
How Far Does Your Current Insurance Policy Go?
The first thing you should know is that your current auto insurance policy will temporarily cover a new car, regardless of whether you're replacing an older vehicle in your household or simply adding another one. So, you don't need to purchase new insurance before you buy a new vehicle. However, your current policy only goes so far.
Even though you may not be required to tell your insurance company before you buy a new car, you should keep the following points in mind:
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Your insurance policy transfers exactly as is to the new car. If you only have Liability coverage with minimum limits for your old car, you'll only have Liability with minimum limits for your new one — until you notify your insurance company to change them. If you're financing your vehicle, banks won't loan you money for the car without adding at least Comprehensive and Collision coverage to your policy first. So, in this case, you may need to add coverage to your policy before you can complete your car purchase.
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Certain coverages may become ineffective if you don't contact your insurance company within a specific period of time. Although some companies allow you less time to notify them about your new car, Progressive allows you 30 days. If you fail to notify your insurer within the proper amount of time, certain coverages may no longer protect you and your new vehicle. The amount of coverage you carry over after your grace period has elapsed may depend on whether you're replacing a vehicle in your household or simply adding another one.
If you replace your old car with a new one and you have Comprehensive and Collision on your policy, Progressive will extend these coverages to your new car for 30 days without notification of the purchase. After 30 days, Comprehensive and Collision will not apply to your new vehicle, even though you may still be paying for them. If this happens, you'll be driving around without protection for damage to your own vehicle — a recipe for a bad financial predicament if you're at fault for an accident.
If you add a car that's not replacing another vehicle on your policy but you forget to call Progressive within 30 days to notify us about the purchase, none of the coverages on your current policy will apply to your new vehicle.
Every insurance company has different restrictions involving replacement or additional vehicles, so make sure you discuss them with your insurance company if you have questions.
Bottom Line: Update Your Policy as Soon as Possible
To continue uninterrupted auto insurance coverage, your best option is to notify your insurance company of your new car purchase as soon as possible. It's not a requirement, but it can help you drive comfortably knowing your new car is properly covered.
Plus, when you update your policy, you can tailor it specifically to your new vehicle, whether it's increasing your Liability limits because you purchased a larger vehicle or adding Loan/Lease Payoff coverage for added peace of mind.
At Progressive, representatives are available 24/7 at 1-800-PROGRESSIVE (1-800-776-4737) to help you add new vehicles or answer any questions — before or after you make your purchase.
The information in this blog may vary based on your particular state or situation. Always refer to your insurance policy for your specific coverages.