When, How and Why Auto Insurance Takes Effect

Unless you keep the same car covered by the same insurance company for an extended period of time, you will be faced with questions surrounding your auto insurance coverage. How much coverage should you carry? Should you purchase uninsured motorist insurance and should you just carry liability or comprehensive coverage? To prevent any gaps in coverage, you will also want to know your automobile insurance is in place when you take delivery of your new vehicle.

So when, how and why does auto insurance take effect? Here are some common questions and answers.

Can I get auto insurance that is predated?

No. Predating insurance prior to its actual activation is illegal. This is why you need to keep coverage in force. You simply can’t wait until you are involved in an accident or need proof of insurance to acquire it.

Can I get auto insurance coverage immediately?

Yes. While auto insurance can’t be predated, coverage can take effect immediately after application and initial payment.

Can I schedule auto insurance coverage to start at some future date and time?

Yes. If you are planning to take possession of a vehicle in the near future, you can schedule coverage to take effect up to 30 days in advance. Of course, you will need to provide your information and the vehicle details including the VIN number.

Do I have to pay a premium for auto insurance to go into effect?

Yes. Your initial premium serves as a binder that locks in coverage at the time of payment, or within 30 days of the initial payment if you are purchasing it in advance.

If I am switching auto insurance providers, what do I need to know about canceling my previous auto insurance?

There are several factors to consider. Most auto insurance policies are in effect for six months. While most insurance companies will cancel a policy at any time and refund any unused premiums, some may require a pre-specified notice. Some high-risk still use what are called “unearned premiums” This is a predetermined amount of money that is owed the insurance company upon initial sign up. Some companies could have as much as a 3-month earned premium. This means that even if you cancel the policy one day after it was started, you would owe 3 months of earned premium regardless. Typically, after that 3 month period, the rest would be refunded back without any penalty.

Should I shop around for auto insurance?

Absolutely. When you buy a vehicle, it can seem easier to just roll over coverage to your current company. This can be costly, however. Our independent insurance agents can do the shopping for you. They have access to a variety of companies and, armed with your basic information, can do the comparisons. You have the final choice of your insurance company.

If you anticipate purchasing a vehicle, take appropriate steps to prevent any gaps or lapses in coverage. Knowing how, when and why coverage takes effect can help.