Is car insurance transferable to another vehicle?

Insurance Q&A: “Is car insurance transferable to another vehicle?”

We here at TTAI aren’t exactly sure what’s being asked. So we’ll provide some general information on this topic by the way of a few examples. In many cases, the simple answer is yes. But the devil is in the details. Sometimes, you have to take extra steps to make sure the car you’re talking about is covered. Other times, it could be fairly automated.

Read on if you are asking about a new car purchase or if you want to know what’s covered if you happen to borrow someone else’s car.

Did you buy a new car?

When it comes to auto insurance, although every company and state may have slightly varying rules, there’s typically a limited “transfer” of insurance (of sorts) when you buy a new car. But be certain to contact your insurer prior to buying the car to be certain you are covered. Companies like Progressive may give you up to 30 days grace period to update your auto insurance. If you’re having doubts, it never hurts to call your insurance agent or customer service with insurance companies. Legally, the answer can be different depending on if you’re keeping your old car.

Have you simply replaced a car by getting rid of your previous car or did you add a new car to your existing collection?

Replacement Car

If you bought a new car and sold or traded in your previous vehicle at the same time, you have a predetermined amount of time to notify your insurer of the change. Expect about 7-14 days max, although some insurers (such as Progressive) may allow quite a bit more time for a replacement vehicle. Some insurers may also treat it a little differently if you only have liability insurance compared to policies with comprehensive and collision coverage.

During that period, your auto insurance policy will cover the new car even though it is not specifically listed on your policy.

You can expect the same coverage you had on the previous car. Remember, if your old car was a clunker, and you didn’t have physical damage coverage, you’d want to add that to your policy before leaving the dealership. The only coverage that will apply when you drive off the lot is what you have at that time. If you total your car turning onto the road, you cannot retroactively increase your limits or add coverage you didn’t have.

The dealers will likely demand proof the coverage has been added unless you paid cash for the car and didn’t get a loan.

So, technically, your insurance has transferred to the new car.

[What is gap insurance? Do you need it?]

Adding a Car to Your Collection

If you simply purchased a new car and didn’t “drop” one in the process, you are required to notify your insurer much sooner. Typically, you’re allowed 2-4 days. The idea is to give you time to complete the paperwork with the dealer, drive home, and then call your insurance company or get on their website. Of course, your insurance premium will increase at this point. Depending on what car you pick, some policy premiums may actually drop. This is common if your insurance carrier was covering an outdated car and

Again, contact your insurer before you pick up the car. You may need proof of insurance for the dealer or loan company, and your insurance provider can make it easy. Depending on where yo live, a car dealership might not let you off the lot without valid proof of insurance. This is most common if you’re taking out a loan or lease.

Read More: Can I buy insurance for someone else’s car?

And note that if your policy allows for a grace period when adding a new car, and you require physical damage coverage, the highest deductible on any vehicle on the policy will apply to your new ride until you officially add it. Some loan companies do specify deductibles should only be $500-$1000. Others only require collision and comprehensive coverage. The idea is to make sure their investment is covered in the event of a total loss.

For example: You currently have two cars. One has $500 collision and comprehensive deductibles and the other has $1,000 deductibles; your newly purchased vehicle will have $1,000 deductibles unless you request to have lower deductibles when you add the car to the policy.

[What is the difference between collision and comprehensive coverage?]

Can you transfer coverage to a non-owned vehicle?

Liability coverage, in particular, follows the car in most cases. So if you’re driving your friend’s car, it’s your friend who would need to have it insured. It falls under the basic principles of insurance. In short, you need to have an ownership interest to collect on something through insurance. Insurance is meant to restore you to where you were before, not to make you rich. So if you’re driving your friend’s vehicle, “the coverage follows the vehicle.” Your friend is the only one with ownership interest.

If you and your friend are roommates or you drive their car on a regular basis for another reason, they may need to add you to their policy whether for liability-only  (bodily injury and property damage) or more comprehensive coverage. 

Even if you have full coverage auto insurance, your friend’s car is NOT covered by your policy. If you cause an accident or simply back into a street sign, your policy will provide NO coverage to repair your friend’s car.

On the other hand, if you’re driving a rental car, your coverage would carry over within the US. So if you don’t want to pay more for the rental company’s insurance, you could just pay your deductible if something happened. But you would only have your standard coverage. So if your insurance provider only has you listed with liability coverage, you may want to pay for the rental company’s collision coverage. (For more information, read more “Does car insurance cover me if I borrow a car?“)

Read more: Auto insurance: Am I covered?