To add or not to add a new vehicle to an existing policy? It depends...
Holiday weekends are prime time for car sales events. If there is a long gap between holidays, the car dealerships often will make one up—anything to entice people to come check out a new car. For customers who drift in a car dealership and happened to find a great deal that makes it worth turning in their old car, they may wonder how their insurance policy and rates are affected by the new car purchase. There are basically three situations:
1. Replacing An Old Car That Only Has Liability Coverage
Purchasing a new car to replace an old car might give great advantage by providing peace of mind while travelling and expecting few mechanical issues. When it comes to automatic coverage transfer, however, you may be lacking in needed protection.
Many companies will not automatically offer physical damage protection (Comprehensive and Collision) when a new car replaces an old car that does not have physical damage protection.
Additionally, if the purchaser negotiated a loan in order to purchase the car, the finance person at the dealership will most likely require proof of coverage for that exact car in order to protect the investment of the lender.
In this situation, it is important for the purchaser to contact his or her insurance company to find out what information is needed to make the change before taking possession of the car and ensuring that someone will be manning the phones to do the job when needed. Often there will be someone during the day, so it’s likely the consumer can call the insurance agent or company directly while at the dealership so that the proper VIN information can be given and a fax number provided to send immediate proof of coverage.
2. Adding An Additional Vehicle to a Pre-Existing Auto Insurance Policy
If a consumer is purchasing a second, third, or more vehicle and is not replacing a vehicle, it is even less likely that coverage will extend. However, there are exceptions in some cases with some companies and some states. Because the probability is lower that the new vehicle will have automatically transferable coverage, it’s important that the insurance company be notified of the new car acquisition before driving off the lot.
This is more easily accomplished if there is some notification ahead of time that this might happen. By contacting the insurance company in advance, you can obtain estimated quotes and request that the VIN and estimated premium be added to the policy notes so that when the customer calls back, it will be easier to finalize the requested changes.
3. Replacing a Full-Coverage Vehicle With Another Full-Coverage Vehicle
In many cases, replacing a full coverage vehicle with another full-coverage vehicle will have automatically transferable protection for anywhere from three days to 30 days. Many times a dealer will look at your current insurance declaration and see that you are already protected with full coverage and will let you know you are okay to drive.
Be smart. Don’t wait for 29 days to report the new car. If the limitation is 14 days and you have an accident on day 15, you might be in for an expensive and unhappy surprise.
In any case, if you have any idea that you might be car shopping, call your current insurance company and ask what their procedures and policies are regarding new car purchases based on what you currently have insured. If you keep your renewal declarations and policy jackets (the fine print stuff), it will likely be included in there, but to save time, call and receive confirmation.
Most insurance companies offer extended hours for customers to make changes and it is even
possible in many cases to make your own updates and changes online. Rather than risk notifying your company too late about upgrades, contact them as soon as possible.
Image: Flickr.
