If you buy a new car and then get in a wreck on your way home from the dealership, would the insurance policy attached to your old vehicle cover the damages? Unfortunately, this is a question that most motorists don’t even consider—until they’re facing just such a predicament.
Crashing a brand-new vehicle—or a vehicle that’s new to the motorist, at least—happens more often than you might realize. After all, when you’re driving a car you’re unfamiliar with, maneuvering it safely in traffic can pose a challenge. As long as you evaluate your auto insurance policy prior to finalizing the purchase, however, you can bridge any gaps in coverage before getting behind the wheel.
Let’s take a look at some of the most common questions motorists have when it comes to insuring new vehicles:
1. Is My New Car Covered by My Old Auto Insurance Policy?
Whether your current policy will cover a new purchase depends on the terms of the agreement with your carrier. Generally speaking, most auto insurance policies include a kind of grace period that provides automatic coverage for replacement vehicles.
During this grace period, which typically only lasts for a couple of days to a couple of weeks, the new vehicle will have the same coverage as the old vehicle. While that might sound reassuring, consider the price difference between the two.
If you replace a 20-year-old sedan with a brand-new SUV, for example, the actual cash value of the latter will be significantly higher. As such, you’ll want to update your old insurance policy as soon as possible.
In that same vein, if your old policy didn’t include collision or comprehensive coverage, neither will apply to your new purchase. At the end of the day, the automatic coverage that extends to replacement vehicles is only as good as the policy’s original terms—regardless of the value of the new car.
If you have multiple vehicles on the same policy, most carriers will honor the broadest coverage for the newest addition. If, on the other hand, the purchase is your first vehicle, you won’t have any automatic coverage whatsoever upon driving it off the lot.
2. When Should I Notify My Insurer of a New Car Purchase?
Notifying your insurer of a new purchase is your responsibility. Neither the dealership nor lender will do so for you. And since anything can happen—including a collision while driving the vehicle home—it’s advisable to arrange for adequate coverage before actually taking possession of the car.
Auto insurance is so important, in fact, that you may not even be able to take possession until you provide proof of coverage. If you’re financing some portion of the purchase, for example, your lender will likely require such proof to release the funds.
In order to obtain coverage for a new vehicle, you’ll need to provide your carrier with the following information:
- The make, model, and year;
- Your anticipated annual mileage;
- The number of licensed motorists in your household who will be driving it;
- Your commuting habits;
- How the vehicle will be stored when not in use (parked on the street, under a carport, or in a garage, for example);
- The vehicle identification number; and
- The titling and lienholder information.
3. How Much Coverage Should I Purchase for My New Car?
Excluding New Hampshire and Virginia, every state has minimum coverage requirements for auto insurance. In California, for example, motorists are obligated to purchase at least $15,000 in bodily injury liability per person, at least $30,000 in bodily injury liability per accident, and at least $5,000 in property damage liability per accident.
This may seem like a considerable amount of coverage, but it’s important to remember that liability insurance only covers damage you cause to others. Because California is a fault state, motorists are responsible for the damages that result from the wrecks they cause.
They are not required, however, to protect themselves. That means if you buy only the mandated minimum coverage, your policy won’t reimburse you for any losses you end up incurring.
What if you get struck by someone who doesn’t have adequate liability coverage? Or your vehicle is stolen from its parking space in front of your home? When you consider all possible scenarios, it quickly becomes obvious why purchasing a lot more than the minimum coverage is advisable.
Other kinds of insurance worth adding to your new policy include:
- Uninsured Motorist Coverage (UMC)/Underinsured Motorist Coverage (UIM): UMC and UIM will pay out if you’re in a wreck caused by someone who doesn’t have enough—or any—coverage.
- Medical Payments Coverage: If you or one of your passengers gets hurt in an accident, this will cover the resulting medical expenses up to the policy’s limit.
- Collision Coverage: This will cover the property damage that occurs if your vehicle comes in contact with another car or with an object like a guardrail, building, or tree.
- Comprehensive Coverage: Comprehensive coverage pays out if something other than a collision damages your vehicle. Examples of covered events include vandalism, flood, fire, and theft.
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If you were hurt in a motor-vehicle collision through no fault of your own, contact the Law Office of Michael D. Waks to determine the most strategic way to proceed. Our team is available 24/7 to take your call. What’s more, you will have a direct line of contact to Michael D. Waks every step of the way upon retaining our services.
A top-rated trial attorney, Michael has been representing the injured and their families for more than 30 years. Call (562) 206-1939 or fill out our Contact Form to schedule a free initial consultation with a car accident lawyer in Long Beach.
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