How to Transfer Insurance to Your New Car

Unless you live in Virginia or New Hampshire, you cannot legally drive without car insurance. When replacing your car with a new one, you don’t have to purchase a new policy. You can transfer your current coverage to your new vehicle.

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Last Updated: 11/4/2022
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In most states, you need to be able to show proof of car insurance if a police officer pulls you over. Typically, you can’t drive your new car out of the lot without having coverage. However, if you're replacing one vehicle with a new one, you can transfer insurance from one car to the other.

The transfer of car insurance coverage doesn’t always have to happen immediately when you’ve bought a car. Most insurers offer a grace period, giving you time to update your insurance to include your new ride.

Although transferring insurance saves you the hassle of opening a new policy, the cost of your insurance may change. Your premium will likely be higher if your new vehicle is worth more than your old one.

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Key Takeaways

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You don't have to open a new car insurance policy when buying a new car. You can transfer your coverage from your previous vehicle to the new one.

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Transferring your insurance to your new car is the perfect opportunity to reassess your coverage needs. You may want to add comprehensive, collision or gap insurance or increase coverage limits.

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Insurers typically offer a 7–30 days grace period for you to inform them of your purchase and update your policy.

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How to Transfer Insurance to Your New Car

Transferring insurance to a new car doesn’t have to be complicated or intimidating. Usually, all you need to do is call your agent. Some insurers also allow you to modify your policy online. To get an updated quote, you will need to provide your new vehicle’s details, like VIN and make, model and year.

This is also a great time to reevaluate your coverage — you may want to increase limits or add other types of insurance, to protect your finances in case of an accident. Many people transfer their policy as-is, but if your new car has a higher value than your previous one, you might end up paying for repairs out of pocket if you sustain damages.

1

Get in touch with your insurance provider.

A phone call should be all it takes to let your insurer know you’re buying a new car. It’s best to get in touch with them even before your purchase is complete. This increases the likelihood you'll complete the transfer before your new vehicle is released.

2

Get an updated quote.

It's a safe assumption that your rates will increase if your new car is worth more than your old one. Your insurer needs the following information to make an accurate quote:

  • Vehicle Identification Number (VIN)
  • Safety features
  • Make and model
  • Model year
3

Reassess your coverage needs.

Since you’re in the process of transferring your policy, it’s an excellent time to see if there are any beneficial changes you could make for the new vehicle. For example, you may want to reevaluate whether your coverage limits are appropriate for your new car.

If your new car has a higher value than your previous vehicle, you may need to increase coverage limits. You may even want to add collision and comprehensive insurance to ensure your policy can cover the cost of repairs if your vehicle is damaged.

You might also consider purchasing gap insurance, which can help pay for the difference between your car’s market value and what you owe on your vehicle (if you took out a loan) if it is destroyed.

4

Ask about additional costs.

If there is an increase in your rates, ask your insurer how they will bill you for the difference. Some insurers can spread the amount across monthly payments, while others may require you to pay upfront.

Some companies charge an administrative fee for processing the transfer of insurance to a new vehicle. The fee varies between providers.

5

Compare quotes from other insurers.

In addition to getting an updated quote from your current insurer, gathering and comparing quotes from other insurers is also a good idea. This will help you see if you’re getting the best possible deal.

Whether you’re comfortable sticking with your current insurer or you’d like to jump to a new provider, now is the time to complete the process. It's a good idea to get documentation for your new or modified policy to reflect coverage for your new vehicle and other changes you may have made.

How Much Does It Cost to Transfer Insurance to Your New Car?

It’s best to request a car insurance quote before finalizing a purchase on a new vehicle, so you know what to expect as far as rates and coverage. You can shop around, but you don’t have to open a new policy, as it’s possible to transfer your insurance from your old car to your new vehicler.

Your policy premium will probably increase if your new vehicle is worth more than your old one. The average cost of insurance is $1,424 per year. That's for a full-coverage policy with 100/300/100 liability limits.

The 100/300/100 limits mean that if you cause an accident, your insurance can pay up to certain limits that correspond with those numbers. They’d pay up to $100,000 for property damage (such as the cost of repairs) for the other driver’s vehicle, $300,000 for the other driver’s medical expenses, and a cap of $100,000 for each person injured.

Your actual rate may vary, depending on several other factors such as your car’s make, model and year. Increasing your coverage limits can increase your premium as well.

If you have several cars insured through the same company, you could save money by taking advantage of a multi-vehicle discount. You can ask if your insurer offers this benefit.

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Once you get an updated quote, you may decide the rate is too expensive. Remember that you can always shop around for other policies.

How Much Time Do You Have to Add a New Car to Your Insurance Policy?

Although it’s best to have your new car added to your policy immediately, some insurers offer a grace period, which gives you more time to complete the process if you need it.

Generally, a grace period is the amount of time past your due date that you have to pay your premium before your coverage lapses. When you buy a new car, the grace period refers to how much time you have to tell your insurer about your purchase and update your policy.

Grace periods vary depending on the insurer, but it’s usually between 7–30 days. For example, American Family provides a 14-day grace period, while Progressive’s is 30 days. Check with your insurer to find out how long your grace period is.

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When you purchase a new car, your grace period is the amount of time you have in which you may drive it even if you haven’t officially added the vehicle to your policy yet. Suppose you continue to drive your car after this grace period without transferring your car insurance or getting a new policy. In that case, it means you may be illegally driving an uninsured vehicle.

Insurance Requirements for New Cars

It's a great idea to revisit your coverage requirements when you're transferring your insurance from your old car to your new vehicle. This is an excellent way to determine if you should modify your policy.

Car insurance laws vary by state, and the minimum overage requirements depend on where you live. Most state minimum policies only require liability coverage. With liability-only coverage, your insurance won’t cover the cost of repairs if your vehicle is damaged.

You may want to consider increasing your coverage limits, especially if you bought a high-value vehicle. For example, if your collision insurance covers up to $50,000, but your repair costs after an accident turn out to be $75,000, you’ll pay the difference out of your pocket.

Getting a full-coverage policy that includes comprehensive and collision insurance may be a better option if you don’t want to risk a substantial out-of-pocket expense.

The kind of coverage you need is also dependent on whether you’ve fully paid for your car or if you financed or leased it. The table below shows what insurance type is most appropriate for each.

Minimum car insurance coverage required
  • Required Coverage
    Minimum Coverage
    Comprehensive
    Collision
  • Financed vehicle

  • Leased vehicle

  • Owned vehicle

     

     

Frequently Asked Questions

You can transfer insurance from one car to another when you purchase a new vehicle. Here are the most commonly asked questions about how this process works.

About the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.


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