What Is Drive Away Insurance? What Does It Cover?

Last Updated on September 30, 2021

Drive away insurance is a special type of insurance policy that lets you ‘drive away’ a recently-purchased vehicle.

If you just bought a car from the dealership, for example, then you might need ‘drive away insurance’ to drive that car home. The dealership will require proof of insurance before letting you drive away a new vehicle.

What is drive away insurance and how does it work? What does drive away insurance cover? Keep reading to discover everything you need to know about drive away insurance, how it works, and what it covers.

What Is Drive Away Insurance?

Drive away insurance is a type of temporary car insurance. Typically, drive away insurance covers you when driving your vehicle from the dealership to your garage.

If you already have car insurance, then that car insurance should temporarily cover a new vehicle. The grace period for notifying your insurer of your new purchase is typically between 7 and 30 days. If you buy a new vehicle from the dealership, for example, then your car insurance should temporarily cover you until you notify your insurer of the new purchase. You can drive your vehicle home, then notify your insurer to adjust your policy.

If you don’t have insurance, however, or if your policy does not cover new vehicle purchases, then you may need to buy drive away insurance.

Drive away insurance provides temporary coverage between the place where you purchased your vehicle (like the dealership) and the place where you are parking your vehicle (like your driveway or garage).

Why Do I Need Drive Away Insurance?

Buying a new car is exciting. However, you may need drive away insurance to ensure adequate coverage. Without drive away insurance, your new car could be uninsured, exposing you to significant risk.

Yes, plenty of drivers have crashed a new vehicle while driving away from the dealership. You might have just spent $30,000 on a new vehicle, only to destroy that vehicle between the dealership and home. That’s why drive away insurance is important – and that’s why all dealerships require proof of insurance before you drive away.

In other words, drive away insurance allows you to safely and legally drive your vehicle from the dealership to your home.

How Drive Away Insurance Works

Many insurers offer short-term car insurance for new vehicles. This insurance is ideal for short-term situations. You pay a daily rate for car insurance and can legally drive your new vehicle with adequate protection.

If you bought a new car and don’t have an insurance policy, then you might buy short-term car insurance or drive away insurance while you shop around. You can buy short-term car insurance for up to 28 days at a time, then drive your new car legally while you shop around.

Alternatively, your dealership may offer short-term car insurance or temporary drive away insurance, allowing you to protect your new vehicle until you buy a full auto insurance policy.

How the Dealership’s Drive Away Insurance Works

Many car dealerships offer drive away insurance, making it easy for drivers to cover their new vehicle.

Typically, the dealership’s drive away insurance lasts five to 10 days, providing short-term protection for your new vehicle while you shop around for car insurance.

The dealership’s drive away insurance may fulfill a short-term need. However, it’s typically expensive and inflexible. You might pay hundreds of dollars for just a few days’ worth of insurance coverage, for example. If you don’t have adequate car insurance coverage when you pick up your new car, however, then the dealership may require you to buy drive away insurance before they let you leave.

What Does Drive Away Insurance Cover?

Typically, drive away insurance provides short-term protection for your vehicle just like any auto insurance policy. You get liability coverage, collision coverage, and comprehensive coverage for your new vehicle, as well as any other minimum required car insurance coverages in your state.

However, some drive away insurance policies only cover the journey from the dealership to your garage. If your current car insurance policy provides temporary coverage on new vehicle purchases, for example, then it may only cover your first trip before you need to alert your insurer of the purchase.

Here’s what drive away insurance may cover, according to the type of drive away insurance you purchased:

Dealership Drive Away Insurance: If you bought drive away insurance through your car dealership, then you likely have full coverage car insurance for a specific period of time (typically between one and 10 days). This insurance functions just like ordinary car insurance, giving you complete protection for your vehicle over the specific period of time.

Drive Away Insurance on New Vehicles from your Current Insurer: Many insurance policies provide drive away insurance for new vehicles. If you already have a car insurance policy for an old vehicle, then this policy may extend to cover drive away insurance on new vehicles. Coverage varies between insurers. Some insurers only cover the drive from the dealership to your home. Others extend complete coverage to the new vehicle for five to 10 days before you need to alert the insurer of the new purchase.

Short-Term or Temporary Car Insurance: If you bought drive away insurance through a short-term or temporary car insurance company, then you likely have full coverage car insurance for a specific period of time. You can drive your new vehicle anywhere and enjoy all of the perks of an ordinary car insurance policy.

Please note that car insurance coverages can vary widely. Check with your insurance company or read your insurance documentation to verify coverage.

Drive Away Insurance for Commercial Businesses

In most cases, ‘drive away insurance’ refers to the short-term insurance offered by car dealerships to individuals. However, drive away insurance is also available for repo businesses, trucking companies, and similar enterprises.

Repo businesses may need drive away insurance, for example, if they need coverage when recovering a vehicle.

In fact, some people refer to trucking companies, repo businesses, and similar enterprises as ‘drive away businesses’, which is why these businesses may need ‘drive away insurance.’ This is a type of commercial insurance, and it’s different from the individual drive away insurance policies mentioned above.

Similarly, construction companies may need drive away insurance when operating heavy machinery. If driving a heavy piece of machinery on public roadways, for example, then a construction company may obtain commercial drive away insurance.

If you’re comparing drive away insurance quotes online, you’re typically looking at individual drive away insurance policies (for driving a new vehicle away from the dealership and for short-term coverage). However, drive away insurance can also refer to commercial insurance policies and industrial vehicles.

Final Word on Drive Away Insurance

Drive away insurance, also known as driveaway insurance, is a type of temporary car insurance to protect your vehicle over a short period of time.

Some drive away insurance policies cover your vehicle as you drive it from the dealership to your garage. Other drive away insurance policies completely cover your vehicle (just like an ordinary full coverage policy) over a short period (typically five to 10 days).

You can buy drive away insurance from a car dealership at a higher price. Alternatively, you can contact your insurer to verify you have drive away coverage on new vehicles. Or, shop around for drive away insurance from short-term car insurance companies in your area.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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