Switching Car Insurance to a Newly Acquired Auto
by Edward Sneineh,
While auto insurance is chosen to cover certain vehicles scheduled on the policy, one should not presume that auto insurance is anything but a form of Personal Insurance. The Personal Auto Policy (PAP) which is accepted by many car insurance companies emphasizes the significance of personal attributes of the policy. For that reason, the auto insurance policy, while providing coverage for vehicle(s) follows the person(s) whose name(s) scheduled on the Declaration Page of the policy, called The Named Insured (not necessarily the drivers)
For that reason, a car insurance policy is not transportable among individual people (except legally wedded couples). If you have a policy covering you then you cannot ask your company to switch the coverage to your children, siblings or friends because you sold your car to them. In the situation you sold the car to a sibling or a friend, for instance, then you may ask your company to terminate your coverage, get your refund check, then you may offer it to your siblings or friends as a gift. Asking your company to expand auto insurance coverages to your siblings or friends is not probable because they may not be satisfactory for auto insurance purposes with that company, or they may be suitable but under different provisions and conditions.
But if you trade your car with a different car then your insurance is moveable from the existing vehicle to the newly acquired one. All what you need to do is call your insurance broker/ agent and report the change to him/ her. The questions that is always asked is if you were covered between the time you got the new vehicle to the time you list it on your policy.
In the Insurance Service Office suggested Personal Auto Policy (PAP) form, if you are switching (replacing) vehicles most companies will cover you immediately on your newly acquired auto, providing you report it through a particular number of days (usually 30 days). In situations like that, your most broad coverage on your existing policy will be extended to the newly acquired vehicle. So if you have comprehensive and collision coverage on the existing policy, then it will be extended to the newly acquired vehicle. Some preferred insurance companies are liberal to grant comprehensive and collision coverage for newly acquired vehicles for 4 days, even if the existing policy is a liability only policy.
If the newly acquired car is an added car, then the provisions set in the original ISO's PAP form are very comparable, however the insured must report the newly acquired vehicle to the company in 14 days or less for collision coverage to stay extended. There is no collision coverage after 14 days if the extra vehicle is not scheduled.
It is obvious that a good number of insurance companies will extend the coverage to the newly acquired vehicle whether that vehicle is a replacement vehicle or an additional vehicles. Certain warning points
to remind you:
1. These are guidelines of the Personal Auto Policy (PAP) of the Insurance Service Office (ISO), and are not the law. Insurance companies do not have to stick on to these requirements, and some companies may be charitable and give more time, more flexibility than what the ISO counsels, while other companies are severe in their provisions and may not use the ISO form. First word of advice: Read your policy!
2. Even with companies that are kind and giving the extension of coverage is strictly for any acquired vehicle titled in the name of the insured or spouse of the named insured. So if your child, boyfriend, girlfriend or sibling purchased an additional vehicle or replaced their vehicles this automatic extension of coverage will not apply, even if these people are listed as operators on your policy. Also, no coverage is extended if the newly acquired vehicle weighs more than 10,000 pounds or is going to be used for business functions such as delivery. Second word of advice: Read your policy!
Get more information about general insurance policies at our blog.