Is There a Grace Period for Getting Insurance on a New Car?

Last Updated on June 29, 2023

If you want to legally drive your new car, then you’ll need to buy valid car insurance. You may be wondering, however, if there’s a grace period for getting insurance on a new car.

Is there a grace period for car insurance when you buy a new vehicle? Or do you need to buy insurance immediately? Today, we’re answering all your questions about new vehicles, grace periods, and car insurance.

Car Dealerships Won’t Let You Drive Off the Lot Without Proof of Insurance

Car insurance is required virtually everywhere in America. If you want to legally drive on roads in the United States, then you need to have valid car insurance.

That’s why in most states, car dealerships will not allow you to drive off the lot without showing proof of insurance for your new vehicle.

This is particularly common when leasing a vehicle. If you’re leasing a vehicle, then you don’t fully own your vehicle: the dealership owns part of your vehicle. For that reason, the dealership will almost certainly check your insurance before leasing a vehicle to you.

If You Already Have Car Insurance, Then You Should Have a Grace Period When Buying a New Vehicle

Let’s say you already drive on the roads legally. Your current vehicle is registered and insured. You have valid car insurance on your current vehicle.

If you go buy a new vehicle and you already have insurance, then you’re typically covered under your existing car insurance policy. In most cases, your car insurance policy will have a brief grace period for your new vehicle.

Not all car insurance policies come with a grace period. Check your policy documents to make sure there’s a grace period. Or, better yet, call your car insurance company.

Some car insurance policies will extend coverage to a new vehicle temporarily – but only when you alert the car insurance company first.

If your current car insurance policy does not automatically extend coverage to a new vehicle, then you do not have to alert the car insurance company before buying the new vehicle. However, you will need to buy separate insurance for your new vehicle. Oftentimes, this insurance is called drive-away insurance, because it covers you as you “drive away” from the car dealership.

A Typical Grace Period for Car Insurance is 7 to 30 Days

Most ordinary car insurance policies give you a grace period when you buy a new vehicle. Typically, that new car insurance grace period is anywhere from seven to 30 days. GEICO, Allstate, and Progressive, for example, have a grace period of 30 days. State Farm has a grace period of 14 days.

In other words, you have seven to 30 days to inform your car insurance company that you purchased a new vehicle. You need to alert your car insurance company within this grace period to avoid a lapse in insurance coverage.

Typically, the seven to 30-day grace period assumes that you’re replacing your older vehicle with a newer vehicle.

Some New Car Insurance Grace Periods Only Last a Few Days or a Few Hours

Some car insurance companies will automatically extend policy coverage to a new vehicle. However, this coverage is extremely limited: it will only last 2 to 4 days, for example, and it only covers the drive from your car dealership to your home.

With this grace period, you’re permitted to drive the car off the lot and head directly home. At home, you’re expected to call your car insurance company immediately.

This type of grace period is helpful if you’re buying a car on weekends. Your ordinary insurance agent may not be available on weekends. You can drive your new car home, then wait until ordinary office hours to upgrade your policy to your new vehicle.

That’s why it’s so important to call your car insurance company before purchasing a new vehicle. You don’t want to buy a brand-new vehicle only to get into a collision and be forced to pay for everything out of pocket because you were not technically insured.

If You’re Leasing a Vehicle, then Full Coverage is Required

There’s one more thing to remember about grace periods on car insurance for new vehicles.

If you’re leasing a new vehicle, then you may need to buy extended car insurance. Most car dealerships and leasing companies will require you to add physical damage coverages to your new car policy immediately. That means buying collision coverage and comprehensive coverage to ensure full coverage for your vehicle.

Final Word – Is There a Grace Period for Car Insurance When Buying a New Car?

Remember to clarify insurance requirements before you buy a new car. Car insurance is required in most parts of the United States. Car insurance is a huge part of the cost of owning a vehicle. That’s why it’s important to clarify insurance requirements before you buy. You might have found a great deal on a new vehicle – only to find that you can’t afford the insurance on that vehicle.

Talk to your car insurance company to see if there’s a new car insurance grace period for buying a new vehicle. Generally speaking, there are three different grace period options for new vehicles:

• Your car insurance company has a 7 to 30-day grace period, and you’ll need to inform them of the new vehicle purchase within that period; this is typically available if you’re trading in an existing vehicle
• Your car insurance company has a 2 to 4-day grace period where they allow you to drive your vehicle from the dealership directly to your home and then immediately inform your car insurance company of the new vehicle purchase
• Your car insurance company does not offer a grace period for new vehicle purchases

You don’t want your insurance coverage to lapse when buying a new vehicle, so make sure you call your car insurance company before buying a new vehicle. In general, it’s best to contact your car insurance company as soon as possible to inquire about the grace period on new vehicles.