When you buy a car, it’s important to prepare yourself for every step of the process. All too often consumers focus on the steps that they have to take before they buy a used car without ever considering what needs to be done after they’ve become a pre-owned vehicle owner. (For more information, read our “If you just bought a car, do you need insurance?“).
While comparing financing rates and crash safety ratings is important to make the best deal, it’s also just as important to compare insurance rates.
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A dealer can’t reasonably expect that you’ll have insurance when you excitedly walk onto the lot if you don’t yet own a car.
While not every used car buyer has insurance, those who do have a leg up on the others because their coverage will protect them as soon as they take ownership of the car. Here’s a guide to help you time when to buy your insurance:
Do you need your own insurance to test drive a used car?
You can put your finances at risk if you’re testing out a used car and you get into an accident. During a test drive, it’s the dealer’s responsibility to carry liability coverage and insure the vehicle. This insurance is in place to protect the dealer and not necessarily drivers who are taking the vehicles for a spin.
While you don’t legally have to buy insurance, the injured party can sue you for being negligent behind the wheel.
Read more: How to Sue Someone Who Has No Car Insurance
If you don’t have your own coverage, this can create issues for you that will land you in court defending yourself. Be sure to consider this before you test drive a car without at least a non-owner’s liability policy.
When do you insure the pre-owned vehicle that you’re buying?
Test driving a car doesn’t mean that you’re going to definitely purchase it. You can’t buy insurance on a car that you don’t know that you’re going to buy, but you also can’t buy insurance on a vehicle that you don’t yet own. Under a
Under a standard auto insurance policy contract, you’re required to have an insurable interest in each car that you’re insuring.
An insurable interest means that you would suffer a financial loss if something were to happen to the property that you’re insuring.
If a car that you’re interested in is damaged on the lot by another driver, it doesn’t affect you financially. It’s not until you’re the legal owner of the car that you can buy an insurance policy on it.
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Read more: How Soon Do you Need Insurance After Buying a Car?
