A Swing and a Myth: Automatic Auto Insurance Coverage for New Cars

From Insurance for Dummies by Jack Hungelmann

I often get phone calls from clients wanting to add coverage for a newly purchased automobile that they’ve been driving casually for a couple of weeks. When I tell them that they’ve been driving without car insurance, they reply with a shocked, “But I thought I had 30-days automatic coverage!” That is often not the case. Yes, you do have automatic coverage for newly acquired vehicles under certain circumstances (for example, if it’s the first Tuesday of the month following a full moon). But assuming that you have automatic coverage is a huge mistake. I won’t bore you to tears describing all the scenarios in which you don’t have coverage. Let me give you the bottom-line instead.

When adding a newly purchased vehicle to your auto policy, always arrange for the insurance on the vehicle to commence prior to the day you transfer the title or the day you start driving the new car regularly, whichever comes first. If you don’t, you may be uninsured at claim time.

All Personal Auto policies provide automatic liability coverage when test-driving a vehicle. That coverage, however, often stops the day you acquire possession. Follow this ironclad rule and never be caught with your insurance pants down.

If you’re selling a car, don’t rely on the buyer to complete the title transfer for you, or you may get a phone call in the middle of the night from the police wondering about your abandoned car that was in an accident involving some serious injuries. Whether you are a buyer or a seller, always accompany the other person to the title-transfer office and request proof of the transfer. Then, if you are the seller, remove the insurance from the car.