Will My Current Car Insurance Policy Cover My New Car?

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?

The quickest way to find out if your coverage will carry over from one car to a new one is to simply call your auto insurance company and see what their policy on rolling policies over is. If you have to start a brand new policy for your brand new car, they can walk you through the process. If some of your old policy will apply to your new car, they can tell you how much and what you need to do next. Here are a few things to keep in mind when rolling over your auto insurance policy to a new car.

If you are reading this after you have already bought your new car, rest assured, your current policy will at least temporarily cover your new car, even if you haven't checked with your insurance company yet. A new car means new features and new costs however, so probably a different insurance policy and rate. Because of this, your old policy will only cover so much, so it's important to get it updated as soon as possible.

The first thing that might happen when you get a new car is that your policy will roll over to your new vehicle exactly the same as it was with your old one. This is generally the case when you have state mandatory minimum insurance coverage - called "liability only coverage." In this case all you need to do is switch the information with your company. If you lease your new car or use any kind of financing, this type of insurance probably won't be enough and you will have to add collision coverage and probably a more comprehensive coverage package to your policy to ensure that you are able to fix anything that breaks on your car.

Some of your old insurance policy will probably become ineffective and no longer cover your car once you buy a new car. Most companies give you 30 days to contact them and start the process of switching your policy over. If the grace period that you are given to notify your insurance company that you have a new car runs out you may find yourself with coverage that doesn't match your car and if you have an accident or another situation - like theft or weather damage - you may not be fully covered. The amount of coverage that will move from one car to a new one will depend largely on what kind of new car you are getting.

If you replace your old car with a new one and you have Comprehensive and Collision on your policy, Insurance companies will extend these coverage 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 have bought an additional car for your family, not simply replaced an older one, then you will need to add a car to your auto insurance policy and you will probably find that your current policy will not cover the new car at all. Get in touch with your insurance company as soon as you can to make sure they are aware that you have added an additional vehicle so that they can add additional coverage to your policy.

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.