Today, we’re explaining everything you need to know about whether or not car insurance is transferable to another vehicle or another owner.
First, there are a number of situations where you might want to transfer insurance. You might want to transfer insurance if you bought a new car, for example, or if you’re selling the car to another person, or if you’re temporarily lending the car to someone. We’ll talk about a number of different situations below.
Did You Buy a New Car and Sell your Old Car?
If you bought a new car, then you typically have a small ‘grace period’ after buying the new car. Contact your insurance company to verify this grace period, as it can vary widely between states and insurers. Typically, most car insurance companies will allow you to buy a new car and at least drive that car directly from the dealership to your home.
Or, some insurance companies give you a 7 to 14 day grace period or a longer grace period. During this grace period, you are required to contact the insurance company and list your new vehicle on your policy.
All terms of your old insurance policy will apply to your new policy. Remember: if you had an older vehicle with no collision or comprehensive coverage, then you may wish to add this to your policy before driving away with your new vehicle. Otherwise, your new vehicle might not be protected against hail damage, a collision with another vehicle, and other incidents.
Did You Buy a New Car and Keep your Old Car?
Insurance restrictions are different if you bought a new car and kept your old car. In this case, the insurance company now needs to cover two vehicles instead of just one.
In situations like this, you must notify your insurer much sooner – typically within 2 to 3 days of buying your new vehicle.
Again, we recommend contacting your car insurance company to verify you have collision and comprehensive coverage before buying a new vehicle. The terms of your old policy will apply to your new vehicle.
In both of the situations above, dealerships may not allow you to drive off the lot with your vehicle until you provide proof of insurance (unless you paid for your vehicle in cash).
Can I Transfer Insurance to a Non-Owned Vehicle?
In other cases, you might want to transfer your own personal car insurance policy to a non-owned vehicle – a vehicle that you do not personally own.
This cannot be done. Car insurance follows the vehicle – not the individual. Your car insurance policy will provide liability coverage for yourself (say, if you’re driving a friend’s vehicle and cause injuries or damage), but your insurance will not transfer to a friend’s car.
Let’s say you want to borrow a friend’s car. Your friend does not currently have insurance for that vehicle. You think, “Hey, I have insurance. Why don’t I drive?” In this case, your auto insurance liability coverage is considered an ‘excess’ policy, which means it only comes into effect if your friend’s auto insurance coverage limits are exhausted. Since your friend does not have insurance, your insurance becomes the primary insurance – but only for liability coverage. Your insurance does not extend to your friend’s vehicle. Because of this, your car insurance will cover any property damage and bodily injury damage you inflict on other people (up to the limits of your policy), but it will not cover the cost of repairing your friend’s vehicle.
Transferring Insurance to a New Owner
If you are selling your car to another person, then you may need to transfer insurance to that new owner as well. This is certainly possible, and car insurance companies deal with these types of new owner insurance transfers every day.
If you are selling your vehicle to another person, then your insurance will follow the vehicle to the new driver. However, you will first need to complete paperwork to make sure the insurance carries over.
First, you’ll need to transfer ownership titles and change ownership registration at the local DMV.
After both parties sign the ownership title and ownership has been officially transferred, you can contact your insurance company to complete the switch.
The insurance company will have a well-established procedure for transferring insurance between individuals. The insurance company will provide documents proving that liability has been transferred to the new owner. Then, you’ll need to provide those documents to the DMV, at which point the new owner can legally drive the car.
The important thing to remember here is that car insurance only remains valid if the names on the ownership documents match the names on the insurance documents. If the names do not match, then insurance may not be valid.
At this point, the new vehicle owner can start shopping for a new car insurance policy.
You may be required to transfer insurance when selling your vehicle to a new person. The process is relatively straightforward: just contact your insurance company after transferring ownership at the local DMV. Once ownership has been transferred, you can contact your insurance company to complete the switch.