One question clients frequently ask me is what will happen if they buy a vehicle on the weekend and get in an accident on the way home – before they are able to reach me to add the vehicle to their insurance policy.
There is much confusion on this point. Some people have heard that you have ten days of free coverage or that you have a thirty-day window to call and add your vehicle. Neither of these are necessarily correct.
Most Personal Auto insurance policies do have a “newly acquired vehicle” provision. This provision provides a window of time after you buy a vehicle to report it and be covered as of the date you purchased it. However, there are several points of caution I’d like to share with you.
First caution tip: You need to have an existing policy in place. Once I had a prospective client come in. He had recently purchased a vehicle and been told by the dealer he had “thirty days to get it insured”. The problem was that he did not have an existing Auto insurance policy; so there was no policy to provide him a window to report the vehicle for retroactive coverage. If you are buying a vehicle and don’t already have Personal Auto insurance, you shouldn’t drive the vehicle off the lot.
Second caution tip: If you are the one buying the vehicle, you must have an insurance policy in your name. Let’s say Junior has been covered as a driver on Mom and Dad’s insurance for two years since he got his license. Now that he is 18, he goes out on a Saturday and buys a vehicle in his own name. Unfortunately, he gets into a wreck on Sunday evening. On Monday, Dad calls to report the vehicle and the accident and Junior and his parents confront an unwelcome surprise: The policy was in Dad and Mom’s name. Junior was just a driver. There was no reporting window to report the vehicle purchase, because Mom or Dad didn’t buy the vehicle. Junior needed to have arranged for coverage before he drove off the lot. (Similar issues can arise when buying a vehicle in the name of a trust or a business.)
Thirdly, there is no standard for how long you have to report your new vehicle. Different insurance companies set different time limits for different situations. Depending on your insurance carrier, whether it is an additional or replacement vehicle, what coverages you currently carry on other vehicles, what coverage you expect to receive on this vehicle and even where you are in your policy period, you may have as little as less than a day or as long as 364 days to report your vehicle for retroactive coverage. While most policies will provide at least 3-4 days in most situations and often you may have a couple weeks, there are exceptions. Some policies even include a stipulation that to have any reporting window at all, you must insure all autos that you own with them – a problem if you own an uninsured parked vehicle or maybe a collector vehicle on its own special policy.
Fourth, you don’t have any reporting period at all under your Personal Auto policy when you buy a boat, four-wheeler, snowmobile, motorhome, camper or even a motorcycle. This reporting period provided in your Auto policy typically applies to private passenger automobiles only – meaning cars, SUVs, light vans and light trucks (up to one ton, usually). Of course, if you already have a Motorcycle policy in force, it may give you some kind of a reporting period for buying a second motorcycle. But if it is your first bike, you definitely aren’t covered if you just drive it off the lot.
Finally, this reporting period is not free coverage. When you call to add your vehicle effective the purchase date, you will have to pay for coverage back to the purchase date, assuming your request falls within the terms of your policy.
At this point hopefully you can understand why I’m saying that the issue of “coverage to drive off the lot” is not always as simple as many people think. That’s why I encourage you to call your personal insurance agent before you make a vehicle purchase to discuss your situation and confirm how much time you have to report your vehicle after you buy it. If you don’t have a relationship with a personal agent to get answers to these kinds of questions, then maybe we should talk.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.