As you probably know, it is against the law to drive a vehicle without the required insurance. Issues frequently arise when individuals purchase new vehicles. While state law generally gives you thirty days to transfer the title and register the vehicle with the state, that does not mean you have that much time to let your insurance company know. The specific deadlines for acquiring additional coverage will be in your insurance policy, but most policies only allow 10-14 days to notify the company about these so-called “newly acquired vehicles.” If you do not notify your insurance company within their time frame, then coverage will only start when you contact them. In the meantime, you are driving uninsured. If you are in an accident during this time, that can be a huge problem.
Recently, I spoke to a man with severe injuries from a motorcycle accident. He had owned the motorcycle for about three weeks, but hadn’t gotten around to contacting his insurance yet, thinking he had thirty days. The driver that struck his motorcycle was uninsured. So, the potential client sought coverage from his own underinsured motorist insurance. Unfortunately, his insurance policy required notification of new vehicles within 14 days. Because he failed to contact his insurance company promptly, he was left without coverage for this collision.
Beware—there are other traps besides timing. If you are not listed as one of the insured on the policy, you cannot just add another vehicle with a phone call. In addition, if the vehicle is not of the same type, you cannot just add coverage under the policy. For instance, most automobile insurance policies do not cover motorcycles. Thus, even if you have a valid insurance policy, you must specifically purchase motorcycle insurance before you can legally ride a new motorcycle. It all depends on the definitions in your policy. When in doubt, call your insurance agent to ensure you have coverage before you start driving that new vehicle on the road.
Most car dealerships require some proof of insurance before you leave with a new vehicle, but they don’t necessarily call to make sure you have coverage on the vehicle you are purchasing. If you are thinking about purchasing a vehicle, it is a good idea to let your car insurance company know ahead of time. That way you can ensure you have coverage from the moment you sign the paperwork for your new vehicle. Problems more often arise when you purchase a vehicle from a private party.
If you do happen to be in an accident before you have a chance to call your insurance company, you are likely covered if you are replacing a previously insured vehicle. But, there are exceptions. Review your policy, and plan ahead when you’re purchasing a vehicle to make sure you’re protected.