How to Get Auto Insurance Before Buying a Car?

If you’re planning to buy a car soon, it is important to know that you can’t register, and legally own a vehicle without auto insurance. On top of that, most car dealerships wouldn’t agree to sell you a car without proof of an active auto insurance policy.

Even if you’re privately buying a used car, you will have to register it in your name, and you can’t do that without having auto insurance. Also, if you’re planning to purchase the car on loan whether it’s from the dealership, or through a bank loan, you practically can’t without having an active auto insurance.

This is mainly because most dealerships, and banks don’t approve loans for purchasing a car without proof of auto insurance. So, without auto insurance it’s almost impossible to purchase a car.

In this article you will learn how to get auto insurance before buying a car. Don’t worry it is not anything tough, but you will have to do a little bit of research and put in some effort.

Additionally, this guide will walk you through the steps to secure auto insurance before buying a car, whether new or used, when the insurance policy starts, and why it’s necessary to have auto insurance early on.

How to Get Auto Insurance Before Buying a Car? 

The good news is that it’s fairly an easy process to get the most suitable auto insurance policy within your budget before buying a car. The first thing that you need to do is get a good idea about the car itself, and then determine what type of auto insurance policy and coverage do you actually need.

The advantage of having your own background research will help you understand and decide which auto insurance policies work best for you, especially before buying the car with some effective tips mentioned as follows.

Gather Necessary Information about the Car of Your Choice

The most important step of buying auto insurance is to first know the car well enough. Don’t worry, you don’t have to be a car enthusiast for it, neither do you need to have any mechanical expertise.

Auto insurance rates vary based on the car itself, its type, make and model, year of manufacture, cost and availability of parts such as the engine, body materials, wheels, tires etc.

It is also important for you to know the VIN (vehicle identification number) as this is used by car manufacturers and dealerships to identify vehicles that are sent for repair or replacement. And, if you’re buying a used or reconditioned vehicle make sure to also check the mileage driven so far.

If you can’t get detailed information about the car, you can just tell your insurer about the car’s year, make and model. For example, 2024 Nissan Sentra along with the car’s VIN. Prioritize getting the car’s VIN, as it is used by auto insurance companies to determine your coverage, and rate.

Analyze the Possible Maintenace Cost of the Car

Your auto insurance rate can typically vary depending on the car’s possible maintenance cost. This is because in the event of an accident, your auto insurance company will evaluate the cost of repairing and replacing your car.

Based on the overall estimate of such costs your auto insurance company will offer you auto insurance policies, coverages and rates. Generally, the more expensive the car is, the higher the repair and replacement cost is likely to be.

It also depends on the availability, cost of parts, and the overall repair costs. Regardless of the car’s price, make and model, if its parts are not readily available or are expensive to acquire then it can lead to higher maintenance costs. So, you can expect a higher insurance rate.

Plus, there are some cars that have an increased risk of theft, and if that’s the case for the car of your choice then it can also lead to higher premiums as it comes down with a high vehicle replacement cost.

So, that’s why it’s crucial for you to either specifically identify the maintenance cost of the car, or to get a general idea. In this way, it will be easier for you to determine which auto insurance policies are the best choice within your budget.

Find Auto Insurance Companies, Get Quotes, and Compare the Rates

There are dozens of auto insurance companies out there throughout the USA. In Michigan alone, you will find more than 50 auto insurance companies. Whether you choose any of the top auto insurance companies, or a local auto insurance company it is crucial to determine which one offers the best coverage within your budget.

Auto insurance rates can significantly vary from one company to another, as there are different ways every insurance company verifies and sets insurance rates for different policies, and coverages.

So, that’s why it’s recommended that you list out 5 to 10 auto insurance companies and reach out to them to get a quote. By doing so, you will know which auto insurance company is offering the best policy, rate, and coverage for you. Plus, as you’d get quotes from multiple auto insurance companies, you can pull off a hard negotiation to get the best rates.

If you’re looking for an insurance agency in Michigan, we offer various auto insurance policies with a personalized quote within your budget.

Mandatory, and Optional Auto Insurance Policies to Consider

Throughout the USA, it is legally mandatory for you to have an active auto insurance policy to own or drive a car, except for New Hampshire. In Virginia, you can opt out by proving that you’re financially solvent enough to provide for yourself, the other driver and any other victim harmed in an at-fault accident.

So, unless you’re living in New Hampshire or Virginia, you must have the 3 mandatory auto insurance policies which includes liability insurance, personal injury protection insurance (PIP), and uninsured/underinsured motor vehicle insurance.

You have the option to purchase the minimum auto insurance coverage that’s mandated by your state, or you can even go for higher coverage limits. But for that you will have to pay higher premiums.

But when it comes to buying a new car, you may need to also add necessary optional auto insurance coverage policies such as comprehensive insurance, collision insurance, gap insurance. These 3 optional auto insurance policies provide the additional financial safety that you need, especially when you’re purchasing a car on loan for the following reasons.

• Collision auto insurance: This insurance policy covers your car for damages for any type of collision regardless of whoever is at-fault. This includes vehicle damage from crashing into objects such as other cars, mailboxes, buildings, potholes, guardrails etc.
• Comprehensive auto insurance: It’s often called ‘other than collision coverage’ which protects your car financially from damage due to natural disasters, theft, robbery, vandalism, fire, explosions, falling objects, windshield and glass damage, and more. Typically covers non-collision accidents that are beyond your control.
• Gap insurance: GAP, or Guaranteed Asset Protection Insurance, is a type of auto insurance that covers the difference between your car's actual cash value (after depreciation) and the remaining balance on your loan or lease if the car is totaled or stolen. This insurance helps pay off the outstanding amount you still owe to your lender or leasing company.

To learn more about the types of auto insurance, read this blog on How Many Types of Auto Insurance are There?

When it comes to acquiring auto insurance before buying a car, we would recommend that you consider a combination of the 6 types of auto insurance policies which includes liability insurance, personal injury protection insurance, uninsured/underinsured motor insurance, collision insurance, comprehensive insurance, and gap insurance.

Fill Up the Form, Submit the Application and Pay for the Auto Insurance Policies

Once you have made up your mind on which auto insurance policies to purchase, it’s time to complete the formalities.

• Contact the auto insurance company either by phone or email, or visit their office in person
• Talk to their insurance agent and inform them of your interest of purchasing a car soon
• Provide the details of the car particularly it’s VIN, make and model, and year of manufacturing, along with driving records, state ID, and other required documents
• Make sure to carefully read the insurance policies to know what you’re getting, and to stay aligned with the conditions
• Fill out the form, and submit the application Make the payment using your credit card, or any other preferred payment source available

After making the payment, you should instantly get an email confirming your auto insurance purchase. In case you haven’t received it yet contact your auto insurance company immediately, and then they will let you know when you will get the confirmation letter. Once you receive it, you finally have proof of your auto insurance. Now you’re secure both legally and financially to purchase that car.

Buy the Car with the Proof of the Auto Insurance

Now that you have auto insurance, you can buy the car without any hassle. Whether you’re planning to buy the car on loan, or by paying in full. Also, with auto insurance you are financially and legally secured to purchase, own and drive the car.

Even after buying the car from the dealership, you wouldn’t be able to register the car under your ownership without an active auto insurance policy. Let alone driving it in the streets without auto insurance would be illegal too.

With proof of auto insurance, you have fulfilled the most crucial requirement to purchase and own a vehicle. So, now you’re all set to buy the car. Although if you already have an existing auto insurance policy, you don’t necessarily need to get a new one.

Just contact your auto insurance company and inform them that you’re buying another car, and the car will soon get added to your insurance policy. The official procedure to enlist the car and update your auto insurance policy can take a while, so you’ll be legally protected by a grace period of 30 days. The same grace period also applies if you’re applying for a new auto insurance policy.

Do You Need Auto Insurance for Buying Both New and Used Car?

The short answer is yes, you need auto insurance to buy both new and used cars. As used cars are personal deals, if the seller wants, they can sell you the car even if you are uninsured.

But here’s the catch you can’t transfer the car under your ownership without having an active auto insurance policy. Also, if the car breaks down, or if you encounter an accident you will have to bear a huge out of pocket expense.

Moreover, if you’re driving a car without auto insurance you can face legal penalties which include a fine ranging from $500 to $1000 or more, license suspension, and jailtime up to 1 year. In such cases, you will also have to spend a significant amount of money dealing with court proceedings.

So, if you want to stay secure both financially and legally then you do need an active auto insurance policy for buying either a new or used car. Also, as it was mentioned before, if you intend to buy a new car, most dealerships will not agree to sell one without proof of auto insurance.

When Does a New Car Insurance Policy Start?

Your car insurance policy will start within 7 to 30 days after submitting the application. In the meantime, most auto insurance companies offer a grace period. So, within this timeframe your car will technically be secured under insurance coverage.

On that note, you can show the proof of auto insurance to buy a car and drive freely while you’re legally and financially protected by the insurance policy. Make sure to request your auto insurance company to provide an insurance ID card, this will help you avoid legal issues and fines in case of an accident or traffic stop.

Bottomline: Consider Staying Insured Before Buying a Car

The main reason auto insurance is legally mandatory in 49 out 50 states in the USA is to financially protect you from high unprecedented expenses. Also, the fact that there are serious legal repercussions is another reason it’s crucial to stay insured before buying a car.

Regardless of whether you’re planning to buy the car on loan, or by paying the full price at once, there are substantial financial risks for you and the auto retailers. So, that’s why most dealerships don’t sell cars to customers without an active auto insurance policy.

Not to mention, you can’t officially register, own and drive a vehicle legally without auto insurance. Therefore, it’s a crucial requirement to first purchase an auto insurance policy before purchasing a car.

If you’re looking for suggestions, or if you would like to know more about buying auto insurance policies in Michigan before purchasing a car, book a free consultation with us. One of our insurance agents will contact you soon, and provide you with proper guidelines, and also answer any questions you may have.

FAQ

Do you need insurance to buy your first car?

Technically you can buy a car without being insured, but you can’t register it under your ownership without an active auto insurance policy. So that’s why you need insurance before buying a car whether it’s your first car, or not.

Why is it a good idea to get insurance quotes before you buy a car?

Before buying auto insurance, it’s important to get insurance quotes to understand, and compare the cost of insurance. So, based on that you can determine which company offers the best auto insurance coverage within your requirements and budget.

Can you call an insurance company for a quote?

Yes of course, auto insurance companies have dedicated insurance agents to provide quotes on their policies depending on your requirements. So, calling an auto insurance company is the best, and the fastest way to get a quote.

What do I need to get auto insurance before buying a car?

You will need a driver’s license, vehicle identification number (VIN), social security number, state ID card, and other basic details such as your full name, address, contact information and insurance coverage of choice.