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I just bought a new car, is it covered on my auto insurance?

Does your auto insurance automatically cover a newly purchased vehicle?

You want to buy a new car on a nice Saturday morning. So you head off to the local dealership. You find the perfect car, agree to a great price and then sit down to get through the paperwork. And the time comes where the dealer ask you if you have auto insurance. Your answer is yes.

So the next question is: Does you auto insurance policy cover a newly purchased vehicle? And the answer is …. Maybe.

So why is it a maybe? The standard ISO (Insurance Service Office) auto insurance policy will provide insurance coverage for newly acquired cars, ONLY IF all of your owned vehicles are on that auto insurance policy.

What does that mean? If you have one car insured with Company A and another insured with Company B, you will NOT have automatic coverage on your newly acquired automobile. This is one major problem with not insuring all of your vehicles with the same auto insurance company. So if you buy a car and provide you insurance information from Company A to the dealership and drive off of the lot, you DO NOT have insurance on that car until you notify Company A that you have bought the vehicle. So, if you pull out of the lot and get into an accident before you make that call, then Company A does not have to pay that claim.

Now let’s assume that you do have all of your cars insured with an auto insurance company; and that company uses the ISO insurance policy language and you buy a car on a Saturday. What coverage will you have for that new car?

For liability insurance there are two scenarios:

1. If it is a replacement vehicle, liability insurance automatically transfers to the new vehicle without having to notify the insurance company. Although the policy wording states that you do not have to notify the company, we recommend that you make that call to the company.

2. If it is an additional vehicle to the policy, the policy states that liability insurance will transfer to the new vehicle provided that you notify the company within 14 days of the date of acquisition.

For physical damage coverage (comprehensive and collision) there are also 2 scenarios:

  1. If you currently have physical damage coverage on your auto insurance policy, provided that you notify the insurance coverage within 14 days of the acquisition date of the new vehicle, then the “broadest” coverage that you have on any auto on the policy will apply to the new.
  2. If you do not have physical damage coverage on any vehicle on you policy, provided that you notify the company within 4 days from the date of acquisition, the policy will provide comprehensive and collision coverage for the vehicle with a $500 deductible for each coverage.

We also hear cases where the sales person at the dealership states that they will take care of calling your insurance agent for you to add the vehicle. Please do not rely on this for two reason:

  1. Sometimes they may forget to make that call. We have had that issue come up several times when an insured calls in a few weeks after buying the car asking for ID cards only to find out that the dealership never called. They are good people and have good intentions, but sometimes things happen and the call does not get made.
  2. Even if the person at the auto dealership does call, they do not have the legal authority to make changes to your auto insurance policy. The policy is a contract between you and the insurance company and only the named insureds on the policy can legally request policy changes.

Buying a new car is an experience. And we can help make that experience a little smoother by making sure you have the right auto insurance in place at the time you purchase your vehicle.

If you know you will be buying a car soon, give us a call first to go over your coverage and go over the steps needed in order to assure that your auto insurance policy will cover your new vehicle. The last thing you want to happen is to not be able to drive your newly purchased vehicle home due to a glitch with the insurance verification.

Did you know that as a Huff Insurance client, you can have 24/7 access to your insurance information through our customer portal? With this portal you can access your auto ID cards and verify your insurance at any time. For details go to So next time you find yourself needing an ID card or proof of insurance for the auto dealership, you can quickly pull it up on your phone, tablet, or computer.

Huff Insurance is a full service Independent Insurance Agent We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance products. Call us at 410-647-1111

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