Buying a new car is a major life event. And like most big events, this one doesn’t come without its share of decisions and prep work. When you’re buying a vehicle from a car dealership, they’ll be able to provide you with guidance for certain things you’ll need to know in advance – like details about your loan and interest rates if you’re financing the vehicle. But when it comes to getting auto insurance for your new car, you should definitely leave it to the experts to help you out (hey, that’s us)! Here’s what to know about car dealership insurance requirements, and what you should and shouldn’t do before and after you drive away with your new set of wheels.

Do you need car insurance before buying a car?

It’s always in your best interest to secure insurance for a new or used car you’re buying before you go pick it up from the dealership. Can you buy a car from a dealership without insurance? Technically, yes – but you can’t legally drive it off the lot. Generally, the dealership’s insurance won’t cover the car anymore once you’ve signed the contract – only yours will.

Dealership insurance requirements

You’ll need to provide a physical or digital pink slip. If you’re leasing or financing the car, you may also have to fill out a form that they or you will send along to your insurance company so they can be added as an additional interest on the policy. There might be a few more things you have to do, so it’s always a good idea to contact your insurer to make sure they have all the details in case something slipped through the cracks.

Can you get insurance after buying a car?

Yes, you can arrange for insurance after buying a car in Canada, but there’s a major catch: You cannot legally drive the vehicle until it is insured. In Canada, it is against the law to drive on public roads without valid coverage. You also need proof of insurance to register the vehicle and get your license plates. It’s a lot easier to get your new car’s insurance sorted out before you go to pick up your vehicle.

Car insurance grace periods

If you have an active car insurance policy, most insurers offer an automatic grace period. This varies by insurer and province, always confirm with your current provider. This temporary benefit extends your current coverage to the new vehicle for a short time, often seven to fourteen days. It gives you a chance to drive home and sort out the paperwork later. However, you must tell your broker about the change before this period ends to keep your protection. Always check with your insurance provider first to make sure you are fully covered before leaving the lot.

Risks of not having car insurance for a new car

As we mentioned before, driving a new car without insurance in Canada is illegal, and you’ll be taking a massive risk if you drive home without the proper coverage.

First, the legal penalties are harsh. If police stop you, they can fine you anywhere from $500 to $2000 depending on the province. The police can also take your car away immediately and suspend your driver’s license, which mean you might not be allowed to drive any vehicle for a long time, let alone your new purchase.

Second, the potential financial risks are scary. If you cause a crash and don’t have insurance to cover your car, all the costs legally fall onto you and could total millions of dollars.

Finally, this hurts your record. Insurance companies will view you as a "high-risk" driver, so when you try to get insurance later, you’re going to be paying a much higher price than a safer driver – and this high price could continue for many years.

At the end of the day, it’s pretty clear: Make sure your insurance is active before you drive. It’ll keeps you safe from the risk of huge financial debts and trouble with the law.

Can you buy car insurance at the dealership?

In Canada, auto dealerships aren’t generally authorized to sell or offer insurance. And no dealership representative, or leasing or financing company, can buy insurance for you on your behalf.

Never allow a car dealer to purchase insurance for you. To protect yourself from auto insurance fraud, you must be the one to consent to and purchase your policy. Always arrange your auto insurance with a licensed broker or agent, or buy it yourself online so you know your information is safe and secure.

Heads up! Be very wary if a car dealer is trying to sell you a car insurance policy. This could signal a salesperson who’s trying to make a quick sale, and a red flag if you’re planning to have a business relationship with the company for the foreseeable future!

Do I need to have certain coverages if I’m leasing or financing my car?

Almost always, yes. If you’re leasing or financing your vehicle from a dealership, you’ll likely be required to have minimum limits for liability and accident benefits. You’ll also probably need to have full coverage including collision and comprehensive coverages and minimum deductibles for both. Why? It’s simple – they want to protect their financial stake in the car if something happens to it while it’s in your hands (and while you still owe them money for it). That’s also why they’re added to your policy as an additional interest – they want to be informed if any coverage changes are made, or if the policy is cancelled.

Required financed car coverages

• You legally need liability insurance to cover any damage you cause to other drivers.
• Because you have a loan, your bank requires collision coverage to fix your vehicle after a crash.
• You must also buy comprehensive insurance to protect against risks like theft and vandalism.
• Finally, accident benefits are usually required to help pay for medical needs if you get hurt.

Required leased car coverages

• You must carry liability insurance to cover costs if you hurt someone else.
• Lenders will require collision coverage to pay for repairs after a crash.
• Comprehensive protection is needed to handle losses from theft or bad weather.
• Your contract will likely cap the maximum deductible amount you have to pay.

Additional new car insurance considerations

Here are a few more things to consider doing:

• Factor car insurance costs into your budget. Plan your leasing and financing costs to include car insurance. Some vehicles cost more to insure, and you don’t want to sign a contract before you know how much you’ll be paying for your insurance.
• Compare insurance quotes. If you’re shopping around for insurance for your new car, make sure you know how to compare car insurance quotes so you get the best price, coverage, and service for you and the car you’re buying.
• Add a depreciation waiver. When you get a new car, think about adding the extra protection of a depreciation waiver. This optional endorsement means you’ll be reimbursed for the full value of your vehicle without deduction for depreciation if your new car is stolen or damaged beyond repair in a total loss accident.

How to arrange car insurance before your purchase

Whether it’s your first time buying a car or you’ve had some experience, it’s always good to get your car insurance in order before the purchase. It’s one less thing for you to worry about, and it’s more quick and simple than you might think (we promise). When it’s time to get insurance for your new car, here’s the steps to take:

Gather required documents

You’ll need to have info on hand about your car, including its make and model, the mileage and the vehicle identification number. Your insurance provider of choice will need these details when putting together your car insurance policy.

Get a quick auto insurance quote

We know a few things about this! Here at Sonnet, we make it quick and simple to get a free auto insurance quote. It’s definitely where you should start when you need to get car insurance.

Set a policy start date

Once you’ve got your coverage set up and ready to go, you simply have to choose when the policy starts. This ought to be the day you take possession of your new vehicle, so you know you’ll be covered right away.

Make sure your new car is covered with the best insurance available

Long story short? If you’re getting a car from a dealership, don’t leave your insurance until the last minute! Plan ahead, and make sure you have your proof of insurance in hand when you arrive. Call your broker or your insurance company as soon as you’ve made the decision to buy, or add your new car to your policy yourself online if your provider offers that option. With Sonnet, you can swap or add a new vehicle through your online account in just a few minutes!