Insuring your new car: What to do when you bring another vehicle home


Some drivers who add a new or used car to the garage think that their auto insurance automatically will cover an additional set of wheels. Others scramble furiously to get insurance tailored to their purchase before they ever turn the key in the ignition. So which of these groups of consumers is right when it comes to insuring a new car? Turns out it's a little bit of both.
Most insurers will cover a new car under the previous policy for a certain grace period, during which your existing policy will cover a new car. For Progressive Insurance, for example, that period is 30 days. After that, damage to the new vehicle may not be covered.
But don't drivers have to show proof of insurance to register a car? Yes. Some states will accept the existing policy that covers a previously owned vehicle. According to the Pennsylvania Department of Motor Vehicles, for example, applicants can provide proof of insurance for another car they own (or a car they traded in). The insurance must be current, and the insured vehicle must be in the same name that the new vehicle is -- and the owner is responsible for getting the new vehicle covered within 14 days.
It may be the case that your policy automatically covers additional vehicles. But what if you already have several cars with varying degrees of coverage? In Texas, a new car covered by an existing policy will have the same protection as the car on your policy that has the broadest coverage, according to the Texas Department of Insurance. For example, say you already have three cars. Two have liability-only coverage, and one has comprehensive and collision coverage. The new car would have comprehensive and collision coverage until you specify otherwise. That means the old clunker sitting in the driveway under minimal liability rates won't leave the new car exposed to huge damages the first day you bring it home.
But drivers beware: After that initial grace period, your auto insurance premium will go up when the new car and its value and risk are added to your policy. To deal with price increases, insurers recommend safety features that bring down rates. According to Allstate, the following can earn lower premiums:
  • Anti-lock brakes.
  • Airbags.
  • Automatic seat belts.
  • Security devices.
  • A high vehicle safety rating.
Another form of extra coverage can come in handy if you're financing or leasing a new vehicle: guaranteed asset protection, or GAP, insurance. A car's value plummets when you drive it off the lot -- and if you wreck it the first week, you'll likely owe your leasing or financing company more than what your auto insurance company will pay for it. GAP insurance helps make up that difference, so you're not stuck paying thousands of dollars out of your pocket.

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