UPDATED: Mar 13, 2020
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If you are thinking about buying a new vehicle and are wondering when exactly in the automobile buying process you should get auto insurance, you’ve come to the right place. Insurance is one of the most important factors when it comes to car buying, mainly because it is required by law, just like license plates, but also because it is one of the biggest expenses to consider when you are totaling up the amount of money you’ll be spending to own a car.
If you want to buy car insurance, the first step in doing so is actually purchasing a car. That’s because you can’t get an accurate car insurance quote without a vehicle. If you haven’t already purchased a vehicle, or are in the final stages of the purchase, you aren’t going to be able to get a car insurance quote, and therefore, car insurance. The insurance company considers all kinds of factors from your vehicle choice. You have to specify exactly what you have to get insured – including trim, safety features, 4WD capability, and more.
However, there are some cases where you might want to get car insurance before you purchase a vehicle – in a manner of speaking anyway. First, let’s talk about what’s going to happen when you try to get a quote.
Driving Record & Insurance Rates
One thing that many people who are buying a car after a long period of not owning one (or are buying their first car ever) fail to realize is that the insurance company is a little frightened of a driver who hasn’t been behind the wheel in years and covered by insurance. So, if you are looking to get insurance and you haven’t had any coverage recently, been on an employer’s insurance plan, or been covered under any other car insurance coverage, you might have to pay a higher premium for a while until they see that you haven’t forgotten how to drive. The reason for this is that your driving record is one of the most important factors in determining your auto insurance rates.
Paying Cash for a Vehicle & Driving it Home
For those who are planning on buying a car from a private owner (or a dealership) and paying cash, the process can happen in one of several ways. Here are your options for buying insurance for a car bought with cash:
- You can purchase insurance beforehand and then drive the car home. You will be covered, but you take the chance of being stuck with insurance if you don’t get the car.
- You can try to find an insurance company that will sell you a policy immediately after purchasing the car (ideally through a mobile phone app) and then allow you to use that app to prove your insurance coverage if you get pulled over.
- You can avoid driving the car home altogether and get it towed behind a friend’s truck (or commercial tow truck) and then buy insurance at home, at your leisure.
- You can take the chance of driving the car without insurance. But you may have to have insurance before you can register the vehicle and get your plates and title transferred.
Buying a Vehicle On Credit & Driving It Home
Buying a vehicle on credit and driving it home works a little bit differently. The bottom line is, if you are financing a car, you are going to have to have insurance on the car before you drive a single mile (not counting the test drive, of course). Financing companies and dealerships will not allow you to buy the car on credit without insurance. In fact, some companies factor in car insurance as part of your payment and require you to carry it from their insurer. Other dealerships will allow you to get your own car insurance.
One thing that you do want to keep in mind about buying from a dealership is that even if you can choose your own insurance company, you might be required to carry comprehensive or collision. Rarely is a car financed while carrying simple liability insurance. Since it isn’t yet your car (until it is paid off), the bank or finance company wants to be sure that they are covered if you wreck the vehicle.
Leasing A Vehicle
Of course, the third option here is leasing a vehicle. When you lease a car, you are basically renting it for an agreed-upon period of time. Leased vehicles will usually have very similar insurance requirements to finance vehicles. Look at your lease agreement if you are considering this option to see what kind of insurance coverage they require, and make sure that you factor in that cost when you determine how much you will be paying for your leased car every month.
So, whether you need insurance before buying a car or not depends on the method of purchase and your own personal preference. Most of the time, the answer is yes.