A bit of background - a guy I know sells his car in a private sale for cash. The new owner totals it on the way back to his house. The seller figures that he probably didn’t put insurance on it.
My understanding of the way auto insurance works is that unless the buyer called the insurance company ahead of time, or added the car to his policy before driving home, he’s screwed, regardless of what kind of insurance he has on any other cars. In the past, on my insurance company’s advice, I’ve called in ahead of time and said “I’m going be looking at a used car, this make and model, but I don’t have a VIN. I might buy it.” They’ll put a note in their system good for 24 hours, giving me temporary coverage for enough time to buy it and officially add it if I choose.
The debate comes from a car salesman, who’s a bit of a mutual friend between me and this guy. He claims that state law (this is in Nebraska, if that matters) requires insurers to provide a 30 day grace period on car purchases. So if I have insurance on a few cars at home, and I buy a new one, or trade on in for a new one, I’m automatically covered for 30 days without telling my insurance company. I call hogwash on this, and google’s lack of results is backing me up. But I figured I’d ask here. He says he tells customers this very same “fact” every day, and I’d like to know if I need to tell him to stop.
Just to clarify, there’s really nothing on the line here, since none of us know or care about the guy who actually totalled the car, but we’d like to settle a discussion.
I don’t think it’s a matter of state law, but insurance company policy. Every insurance company I have dealt with has allowed a 30 day grace period of coverage when purchasing a new car, assuming that you already have a policy in force on another car (either the one you traded in to buy the new one, or a completely different auto).
Here is a web page for Progressive explaining their policy, and I’m sure most other major companies have similar provisions. I know that Farmers does (or at least my agent told me that when I bought my latest car).
I’m in Missouri. Our insurance company gave us a grace period. I can’t remember how long, but we were covered from the moment the previous owner handed over the title.
My policy covers me even if I’m driving somebody else’s vehicle, if it’s not insured. However, that’s just for liability. If I wanted collision coverage, I’d have to add it.
In Michigan, they won’t even let you leave the lot without a proof of insurance on the new car. Yeah, even when you’re not using a loss-payee. Luckily they all have those old facsimile machines for making it easy. Of course we’re no-fault, and covering our own vehicles here. My liability coverage follows me in whatever car I’m driving.
It’s pretty standard. But I guess that’s already been established. I can only add that you’ll want to check you car policy for specifics. What you’re looking for will be towards the front (first couple pages) and it’s coverage on a NEWLY ACQUIRED CAR. Common is 30 days for liability and 15 for Comp & Collision.
My insurance has a 30 day grace period, even so, when I get a new car, I call my insurance agent right away. Even if it’s in the middle of the night, I leave a message, Name, Phone number, year, make, model, color and VIN. I’ll call back in the morning to go over everything else, but my understanding is that once I make that call, the car is legally covered.