Do You Need Car Insurance to Buy a Car?

While you might not need auto insurance to purchase a vehicle, you must meet your state’s minimum coverage requirements before driving your new car. These requirements often include:

• Liability insurance: Covers damages and injuries you cause when you’re at fault in an accident.
• Uninsured and underinsured motorist insurance: Covers injuries and damage if someone else causes an accident and lacks sufficient insurance.
• Medical payments or personal injury protection (PIP): Offers coverage if you or your passengers are injured, can’t work, or die because of an accident.

When buying from a dealer, proof of insurance may be required before releasing the car. If you already have an auto policy, it might temporarily cover your new car. Contact your agent to confirm. Some dealers also offer temporary policies for use while shopping for a permanent policy.

Financed or Leased Car Insurance Requirements

If you’re taking out an auto loan or leasing the car, the lender or leasing company will likely require full coverage, which includes:

• Collision: Covers costs when your vehicle is damaged during a collision.
• Comprehensive: Covers theft of your car and damage when you’re not driving, such as during a natural disaster or break-in.

You may need to maintain full coverage and specific coverage amounts until you pay off the loan or end the lease.

Do You Need Car Insurance to Rent a Car?

You need to be insured while driving a rental car. If you have an auto policy, it may automatically cover your rental car. If not, you can purchase a short-term policy or buy insurance from the rental car agency. Rental agencies generally offer several types of policies, including liability, medical expenses, and personal property coverage.

Compare options to see if you can save money by declining unnecessary policies. For example, your auto policy may cover liability, your homeowners or renters insurance could cover personal property, and some credit cards offer rental car protections.

Do You Need Car Insurance for a Car in Storage?

You aren’t legally required to have car insurance for a vehicle in storage. However, you won’t be protected if the car is stolen or damaged. You might save money by keeping collision and comprehensive coverage while pausing liability coverage. If you’re paying off an auto loan or leasing a car, you may need to maintain coverage even if the vehicle is in storage.

Consider a low mileage discount or a pay-per-mile insurance policy to save money if you’re not driving the car.

How to Buy Car Insurance

Buying car insurance can be done online or over the phone. Here’s how:

1. Review the types of coverage: Understand different types of coverage and what they include and exclude.
2. Gather your information: Have your driver’s license and the car’s vehicle identification number (VIN) ready.
3. Compare quotes: Collect quotes from several companies to find the best deal.
4. Review the companies: Look for reviews to learn more about the features they offer and other people’s experiences.
5. Purchase your policy: Choose when you want the policy to start. You might save money by paying upfront or enrolling in autopay.

Review car insurance discounts to see if you qualify for any that weren’t included in your quote.

How Much Does Car Insurance Cost?

The average annual cost of car insurance was $1,765 in 2023 according to AAA. However, costs can vary significantly based on factors such as coverage types, coverage limits, age, driving experience, and location. Other factors include the type of vehicle and whether it’s used for a regular commute. In most states, your credit history and a credit-based insurance score can also affect your rates.

Regularly comparing car insurance quotes can help you save money. With Experian’s car insurance comparison tool, you can get matched with personalized quotes and switch policies if it makes sense.