Three Things You Need to Know About Grace Periods and Car Insurance


You’ve done your research, checked out all the ads and websites, and now you’re ready to buy your new car. Whoa and hold it! Before you hit the car lots, you need to give some thought to a very important
component of car ownership: car insurance. No big deal, you say. You’re covered by a grace period on your existing policy. Maybe. Maybe not. And assuming you have sufficient coverage can be a big, costly mistake. Here are X things you need to know about new cars and insurance grace periods.

  • In most instances, you’ll have between two weeks and 30 days to let you car insurance company know that you’ve bought a new ride. But, different states and different insurance companies have different rules regarding new car insurance grace periods. Where the state law allows a longer period than the insurer, the state law applies. So after you check your policy, check your state’s insurance commission website. The grace period, by the way, ends at 12:01 a.m. on the expiration date. In any event, the sooner you notify your insurance company about the change in status, the better.
  • Are you  replacing an old car with a new one? Your existing policy will provide the same level of coverage on your new car that it provided for you old one, and that coverage will stay in place during the grace period. If you’ve been driving an old beater, you’re probably only carry minimal liability coverage. Which means you’re covered for any damages or injuries you cause in an accident (but to the limits of your policy), but not for repairs to your new and presumably more valuable car. If you’re financing your new wheels, the lender is going to insist that you have collision and comprehensive coverage. Collision will cover repairs or replace to your new car if it gets banged up in an accident; comprehensive will cover other losses like theft and vandalism.
  • Are you adding another car to your existing policy? If your policy includes any grace period at all, it may be for a shorter time frame than for a replacement car. Don’t take chances. Call your insurer before you take possession. Expect your premiums to go up, but ask about multi-vehicle discounts or shop around for an insurer who offers them. And, here again, if you’re financing the purchase, you’ll probably need additional collision and comprehensive coverage.
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