Do I have to cancel my car insurance if I sell my car?

No. In fact, you need to keep your car insurance if the vehicle is still registered in your name. Even if you aren't driving, you may risk fines or a license suspension if you own a registered vehicle but don't have insurance. Canceling your insurance will also lead to a lapse in coverage, which may mean higher rates in the future. If you're purchasing a new car, you can contact your insurance company to add your new vehicle to your current policy. If you aren't buying a new car right away, you could also swap to a non-owner policy in the interim.

Do I need insurance on a car I'm selling?

Most states require car owners and drivers to have liability insurance coverage — and some require additional coverage — even for car owners that aren't driving. Remember, if the car is still registered in your name, you still need an auto policy that meets your state's insurance requirements.

You could be held legally and financially responsible for any accidents involving your car while selling it — which means it's in your best interest to keep your insurance. For example, if a potential buyer takes the car for a test drive and damages it, your insurance may help pay for damages. If you don't have insurance while selling an old car, you'll need to pay out of pocket for repairs and may even face fines or other consequences for being uninsured.

Can I cancel my car insurance if I sell my car?

Yes, you can cancel your car insurance after selling your car once you've signed over the title to the new owner, completed the bill of sale, and submitted a Notice of Release of Liability to your state's department of motor vehicles, if your state requires one. Canceling your policy too soon means you may face legal repercussions, like hefty fines or having your license suspended.

When you cancel, you'll have a lapse in coverage. This isn't a problem if you won't be driving. If you're planning to purchase another car, a lapse in insurance can mean higher rates when you go to buy a new policy. To prevent a lapse in coverage before buying another car, consider getting a non-owner policy.

If you choose to cancel your policy, have a copy of the bill of sale ready when contacting your insurance company. This will prove that the car is no longer in your name, and you're not legally required to hold insurance. Depending on your state, you may also need to notify your DMV after canceling an insurance policy.

When you cancel, you'll have a lapse in coverage. If you're planning to purchase another car, a lapse in insurance can mean higher rates and premiums when you open a new policy.

Can I keep my insurance if I sell my car?

You can keep your car insurance after selling your car, but you'll need to make some adjustments. If you're buying or bought a new car, you can easily add it to your current policy. You typically need to provide the VIN, make and model, and lienholder (if applicable) when adding a new vehicle to a policy. Note that your rate may change based on the make and model of your new car.

If you've sold your old car but haven't purchased a new one yet, a non-owner policy may be a good temporary option. You'll be covered when driving rentals or borrowed cars without risking a lapse in coverage.

Steps to take when selling your car:

  1. Prepare your documents:

    You'll need to provide the bill of sale, title of the car, and Notice of Release of Liability (if required in your state). Certain states may require additional paperwork, such as an odometer disclosure statement or emissions test.

  2. Get the car up to date on repairs:

    You'll get top dollar if your car is in great condition.

  3. Give the car a deep clean inside and out:

    A well-kept car is more appealing to potential buyers.

  4. Sell your car:

    Trade it in at a local dealership or post an ad online if you'd like to sell privately.

  5. Follow-up with your insurer:

    Once the car is no longer in your name, you can cancel your insurance, transfer the policy to a new car, or change to a non-owner policy.

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