Buying a Car as a Gift: What About Insurance?

By: SmartFinancial
NEWPORT BEACH, Calif. - Nov. 28, 2023 - PRLog -- Are you purchasing a car for a partner or a child as a surprise? Holidays are when people tend to make big purchases like this for loved ones. However, before you put a giant bow on the car, it's important to consider car insurance to make sure you're covered while it's in your care and after it changes hands.

Let us help you navigate car insurance on a gifted car, so you can know what to expect and how you can protect yourself from losses and prevent being uninsured.

Key Takeaways
  • If you have an existing car insurance policy, you have a grace period of coverage in which the same coverages on your car apply to the new car as well.
  • It's important that you contact your insurer right away about the purchase of the vehicle to ensure a grace period of coverage.
  • Decide who will be paying for car insurance permanently, so you have the right person on the title and the registration of the car .

Car Insurance for the Gift Giver: Temporary Car Insurance Coverage

To drive a car home from the dealership or from a previous owner's home requires car insurance. Chances are that you will not be able to take the car home without it if you're buying at a dealership, but even if you're buying a used car from a private owner who is willing to look the other way,  you will quickly regret doing so if you find yourself in an accident that is your fault.

If you already have a car insurance policy on another car, there is a grace period in which you are covered for the new car, but only the same kinds of coverage you have on your existing policy. Most insurance companies will allow you anywhere from seven to 30 days to buy a new policy, either for yourself or for the gift recipient. You can also add the car to your existing car insurance policy for a multi-car discount.

If you're buying a car for a teen or young person with little driving experience, the cheapest insurance option is to put the car on your own policy.

Here's what you need to do, based on who will be the insured on the car, step-by-step:

Fran Majidi
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Location:Newport Beach - California - United States
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