- Financing or leasing requires insurance up front
- Paying cash requires proof of insurance before registration
- The kind of insurance coverage you need depends on how you are paying for your car
Whether or not you have to get insurance first depends on how you plan to pay for your car. But there’s no if’s and’s or but’s about it folks, you’re going to need to get the car insurance!
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Financing or Leasing
If you are financing or leasing a car then you’ll need to go ahead and purchase an insurance policy first. The dealership will not let you drive off the lot without proof of insurance in hand.
This is because the banks will not finance your new car without insurance. This is more to protect their assets than it is to comply with the law. When you finance a car, you agree to carry certain coverages so that they bank can recover their asset in the case of an accident.
Cash Payments
If you are paying cash for a car from a private seller, then you are usually able to purchase the car before the insurance.
The kicker is that the DMV will not let you register your car until it is properly insured according to your state’s laws. I must also remind you that it is illegal to drive without car insurance, so it’s best not to drive your new car until it is insured!
Buying Your First Car
When Buying your first car, it’s important to remember that auto insurance is a necessary expense.
It is illegal for you to drive a car without being properly insured according to your state’s laws and regulations. There are some things that you can do to make sure that buying insurance for your first car is less of a headache.
– Pick More Than One Car
When you are looking at cars, make sure you pick out two or more that you like.
This will be helpful when getting insurance quotes because one car might be cheaper insurance wise. When it comes to insurance rates, no car will have the same price. You should always have more than one option just in case you cannot afford the insurance on the car that you want.
– Get Several Quotes
There are a plethora of insurance companies out there, why just get one quote? Different insurance companies will have different rates so don’t be afraid to shop around!
– Get on Someone Else’s Policy
If you live with a relative, you can try to get on their insurance policy. Depending on the auto insurance company, you could receive a discount for bundling your car with theirs.
You will also benefit from their insurance history and experience so this will result in a lower payment for you!
Why do I need car insurance?
With buying a car comes great responsibility! You must have auto insurance to drive and there is no way around it! These driving laws are in place to protect you and everyone else around you.
– You Are a Danger to Drivers and Pedestrians
Driving without insurance affects everyone around you. According to state legislatures, you pose a huge threat to drivers and pedestrians when you do not follow the law and carry car insurance. Accidents happen, and auto insurance is meant to protect everyone financially in the event that one occurs.
– You Affect Responsible Driver’s Premiums
If you’re not paying insurance, someone still has to. Responsible drivers end up paying higher premiums to make up for those around them who are not.
These premiums rise often, and usually these responsible drivers are not too happy to have to pay for someone else who is not chipping in. It’s like when you go out to dinner with 6 friends and plan to split the bill but you “forgot your wallet”. It’s better for everyone when you’re a team player!
What Kind of Coverage Do I Need?
The kind of coverage you need will depend on how you are purchasing your vehicle.
– Leasing
If you are leasing your car, the bank will usually have a minimum liability limit that you can carry.
A liability limit is a policy’s minimum benefits payout. It covers damage done to other vehicles as well as bodily injury claims. The bank will also require that you carry comprehensive and collision coverage. Comprehensive and collision cover damages done to your own vehicle.
– Financing
Financing is a little more flexible. You are still required to carry liability, but often you can choose what limits you would like. You are also still required to carry comprehensive and collision coverage. There are sometimes exceptions to this when a car is 10 years or older.
– Cash Payments
When you pay for your car in cash, you own it. This means that you are only required to carry the liability limits that your state requires. It is still best to go over all options with your insurance agent to see which coverages may be appropriate for you and your vehicle.
Bottom line, you can’t avoid having auto insurance when buying a car. No matter how you pay for your vehicle, it’s usually best to handle the insurance first. Remember to get plenty of quotes and to have a backup car in mind- just in case!
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