You need to have insurance before you drive the new car off the dealership lot. This is the absolute, non-negotiable rule. Driving without insurance is illegal in almost every state and leaves you financially exposed to massive costs. The best practice is to arrange the new policy a day or two before you take delivery of the vehicle. If you already have an existing car insurance policy, most providers offer a grace period (typically 7 to 30 days) that automatically covers a newly purchased car. However, this is not a substitute for officially adding the car to your policy as soon as possible.
The requirement is often driven by how you're financing the car. If you have an auto loan, the lender will require you to have full coverage (comprehensive and collision insurance) to protect their financial interest in the vehicle. The dealership will not finalize the sale without proof of this insurance.
Even if you're paying cash, state laws mandate at least a minimum amount of liability insurance. The specifics vary, but the principle is the same: you must be insured to legally operate the vehicle on public roads. You can typically call your insurance agent from the dealership to bind the new policy and have them email or fax the proof of insurance directly to the finance manager.
| State Minimum Liability Coverage (Example States) | Bodily Injury Liability (per person/per accident) | Property Damage Liability |
|---|
| California | $15,000 / $30,000 | $5,000 |
| New York | $25,000 / $50,000 | $10,000 |
| Texas | $30,000 / $60,000 | $25,000 |
| Florida* | $10,000 / $20,000 | $10,000 |
| Illinois | $25,000 / $50,000 | $20,000 |
*Florida is a "no-fault" state requiring Personal Injury Protection (PIP).
Don't assume your existing policy's grace period is sufficient. Use the car purchase as an opportunity to shop around for quotes. You might find a better rate, especially if you're adding a new, safer vehicle to your policy, which could qualify you for additional discounts.
