Car insurance 101: Driving away from the dealership
Couple at car dealership with car insurance

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.

When do I need to get car insurance if I’m buying a car from a dealership – before or after I purchase the vehicle? 

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.

Can I 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!

Does the car dealership need proof of insurance?

Absolutely. 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.

Do car dealerships offer temporary or “drive-away” insurance? 

Again, the answer is no. That’s why we highly recommend securing insurance for your new car before picking it up – it just makes your life a whole lot easier!

Heads up! Swapping an old vehicle for a shiny new one? You can’t transfer the insurance from your old car to your new car just by switching the licence plate.

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.

Is there anything else I should know about my insurance if I’m buying a car from a dealership?

Yes! 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.

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!

Coverage your car’s always wanted at a competitive price.