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What is the new car insurance grace period?

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Key takeaways

  • Depending on your situation and insurance company, a new car grace period may apply for seven to 30 days (or not at all).
  • You could be considered driving without insurance if you exhaust your grace period.
  • If you have a car insurance grace period, typically, the best coverage on your policy extends to your new vehicle for some time.

Almost every state in the U.S. requires that you purchase a minimum amount of car insurance coverage before you’re allowed to drive your car legally. That means that when you buy a new or used vehicle, you’ll have to buy a new car insurance policy or update your existing one. Many people don’t realize that if they already have a policy, there’s usually a grace period where you can drive your newly-purchased car before your policy is fully updated to include it. Most insurers offer between seven and 30 days to give you time to work with your insurer to update your coverage without being penalized for driving without insurance.


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What is a car insurance grace period?

If you have an active auto insurance policy, it may include a new car insurance grace period, which offers temporary insurance coverage for a newly-purchased vehicle. The grace period, which may last between seven and thirty days from the date the vehicle was purchased, gives you time to add the new vehicle to your policy and ensure cancellation of coverage on any vehicle(s) you may have sold or traded in, if needed.

Not every insurance provider or policy may offer a car insurance grace period, so you will want to confirm this with your insurance company before driving your newly purchased vehicle.

How does my car insurance coverage work in a grace period?

If you have full coverage car insurance on a vehicle on your insurance policy, that same coverage will probably extend to your new vehicle during a grace period. If you carry liability-only coverage, you may have significantly limited coverage on your new vehicle during the new car insurance grace period. If you have multiple vehicles on your policy with different levels of coverage, typically, the best coverage on your policy temporarily applies to your new car.

For example, say you have two vehicles on your auto insurance policy: one vehicle with $500 comprehensive and collision deductibles and one vehicle with liability-only coverage. If you were to purchase a third vehicle, generally, your new car would automatically have the best coverage available on your policy, which is comprehensive and collision coverage. However, how long the insurance grace period for a new car lasts varies by carrier, so it is important to know what coverage limitations apply to your situation.

Either way, if your active auto insurance policy offers a grace period, temporary coverage applies regardless of whether you buy your newer vehicle through a dealer or a private seller.

How long does a car insurance grace period last?

Depending on your car insurance policy and current level of coverage, a car insurance grace period can last anywhere from seven to 30 days from the purchase date of your new vehicle. The level of coverage on your new vehicle may be limited during the grace period, and in some cases, your deductible would still apply to any claims filed. Checking in advance with your insurance company can help to prevent any gaps in coverage and associated financial risks.

When does a car insurance grace period not apply?

If you do not have an active car insurance policy when you buy a vehicle, a new car insurance grace period will not apply. In this case, you’ll need to shop for car insurance and simply get a new insurance policy for your vehicle. Depending on how much time you have before needing to drive off the car lot, it may be worth considering getting multiple car insurance quotes to find the best rate for your needs. Rates can vary drastically by vehicle type among insurance companies.

If you have an active policy, a car insurance grace period may not apply in a few scenarios, such as if your insurer does not offer a grace period or you have exhausted your grace period coverage. In either case, you’ll need to add your vehicle to your policy to have coverage. Without it, you could be considered driving without insurance should an incident happen, which could have major consequences.

Frequently asked questions

    • Yes, in the vast majority of states, you’ll need to have at least minimum coverage car insurance for your car before you can legally drive it or register it. This is true even if your insurer has a grace period. You’ll want to check your state’s DMV requirements, but the DMV will usually want to see proof of insurance for your vehicle, whether from an insurance ID card or declarations page before registering your car.
    • A car insurance grace period assumes you already have an active car insurance policy. If you do not have car insurance currently, there is no grace period for acquiring coverage – you’ll need to purchase it immediately. However, even if a new car insurance grace period applies, you can add your vehicle to your insurance policy before your grace period expires. In many cases, it may be best to add your vehicle as soon as possible to avoid any gaps in coverage.

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