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Can I buy a car with no insurance?

Fact-checked with HomeInsurance.com

If you’re in the market for a new car, an important aspect you’ll need to think about is the cost of car insurance. The only states in which you can legally drive without car insurance are New Hampshire and Virginia. In every other state, insurance is required to get behind the wheel. But do you need car insurance to buy a car? The answer depends on a few different factors. This article explores when you should buy car insurance, what to do if you’re replacing your vehicle and what kind of coverage you may need for a new car. 

Do I need car insurance to buy a car?

Technically, you don’t need car insurance to purchase a car. However, most lenders require proof of insurance if you are financing a car. In that case, you’d need to purchase an insurance policy before you purchase the vehicle. 

If you’re paying cash, you can buy a car without insurance, provided that you don’t drive it home. If you’re buying a new car and having it delivered but you don’t plan on driving it just yet, you can hold off on purchasing an insurance policy. If you have an existing policy and are replacing your car or getting a second vehicle, you can typically wait up to 14 days to update your policy or purchase a new one, although it’s generally recommended to update the policy sooner rather than later. 

Can I drive off the lot without insurance?

In most states, you can’t legally drive without car insurance, and that includes the trip home from the dealership. While you can take a test drive of a new vehicle that is insured by the dealer, you can’t drive anywhere without car insurance if you own the vehicle. 

In all states (and D.C.), you’ll be financially responsible for any damage you cause while driving uninsured. The financial repercussions of driving without insurance can be devastating. Even if you don’t cause an accident, you could incur a penalty ranging from $25 to $5,000 if caught by law enforcement, depending where you live. 

Most states can also suspend your driver’s license and charge you a steep fine. And in some states, if you are in an accident that someone else causes and you don’t have insurance, their insurance company could limit or deny coverage for the damage to your vehicle or your medical bills. 

The two exceptions are New Hampshire and Virginia. In New Hampshire, you are required to prove that you can be financially responsible for an at-fault accident in order to drive without insurance. You may also need insurance if you’ve been convicted of certain violations. In Virginia, you can elect to pay the $500 Uninsured Motor Vehicle fee and forego getting an insurance policy. 

Do you need a new policy if you’re adding or replacing a car?

If you have an existing policy, it will cover your new car between four and 14 days. Check with your insurance provider for the exact timeline. You’ll need to update or replace your policy after buying a new or used car, and it’s best to do so as soon as possible. That’s because your new car will only be insured up to the actual cash value of your existing vehicle. You can update your policy before or shortly after purchasing your new vehicle by contacting your insurance agent or logging into your online account. 

What to know if you’re trading in a car

If you’re trading up to a higher value vehicle, you should update your policy or purchase new insurance coverage before driving your new car home. That way, you won’t risk driving a car that is underinsured. The same is true if you are buying a second car and keeping your current vehicle. However, if you forget to secure new coverage, know that you’ll be covered up to the limits of your existing policy for at least four days. 

What is new car insurance?

When you insure a vehicle, you’re typically covered up to the actual cash value if the car is totaled. Since a brand new car will begin depreciating the moment you drive it off the lot, an immediate discrepancy will exist between what you paid for the vehicle and your maximum insurance payout. That’s why new car owners often consider these special types of coverage:

New car replacement coverage

If you purchase new car replacement coverage, your insurance company will replace your totaled car with a new car that is the same make and model and has all the same features. If you opt for this type of coverage, it will add to your premium, but you may only need it for the first few years that your car is new. 

Repair provision coverage

If your car is not declared a total loss but the repair costs are greater than the actual cash value of the vehicle, repair provision coverage helps pay the difference. 

GAP Coverage

If your car were to be totaled while you still owed money on your car loan, the insurance payout might not cover the remaining principal, which could leave you making payments out of your own pocket. That’s where guaranteed asset protection (GAP) coverage comes in. It’s intended to provide you with the funds to pay the difference between what you owe and the actual cash value of your vehicle. 

The takeaway

  • While you can purchase a car without insurance, you can’t legally drive a car off the lot without insurance in most states.
  • Most lenders also require proof of insurance before providing financing.
  • If you’re adding or replacing a vehicle, your existing insurance policy will cover you for up to 14 days.
  • If you’re purchasing a new car, there are special types of coverage that can help protect your finances.

It’s best to get an insurance policy (or update your existing policy) before you purchase a new vehicle. In any event, you’ll need insurance to legally drive the car in all but two states. When comparing insurance policies, consider purchasing additional protection for your new car — such as new car replacement coverage, or GAP coverage if you are taking out a loan. Sufficient car insurance coverage will protect your finances in the event of an accident.

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