Switching your car insurance when you buy or sell a car
5 minute read
When you buy or sell a car, it’s not as simple as handing it over to the new owner or paying your money and driving it away. There are certain steps that need to be taken, information that has to be changed and documentation to be completed. So whether you’re buying or selling, you can find out everything you need to know about insuring a new car or changing an existing policy below.
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Insuring a new car
Getting a new car can be exciting and you’ll likely want to pick it up as soon as possible. However, it’s really important to insure it with the correct level of cover and fill in any other forms of documentation that need to be completed, such as your car’s logbook.
Can I drive a new car home without insurance?
You can’t drive a new car home without insuring it first. This is why it’s so important that you arrange insurance before going to collect it.
It is illegal to drive any car in the UK if you are not insured to drive it, and so even if the car is insured in someone else’s name, you must be listed as a named driver as a minimum. If you were to pick a new car up without being insured and you got stopped by the police, you could face a fine of up to £300 and six points on your licence. In some instances, the police may seize the vehicle. And, of course, in the event of an accident, there’s no cover in place to pay for the repairs to any damage.
When do you have to insure a new car?
With the above in mind, when should you insure your new car? You must organise car insurance before you’re due to collect it, whether you’re picking it up from a private seller or a dealership. Getting a new policy only takes a few minutes and it can start immediately if requested, meaning there’ll be no delay in bringing your new car home. You’ll just need to make sure of the policy start day - you don’t want to be caught out thinking you have insurance when it doesn’t start for another 24 hours, for example.
How long do you have to insure a new car?
There is currently no allowance for driving without insurance when taking a new car home. You are required to insure it before you drive it. If your car was purchased from a dealership, they may offer temporary insurance that usually lasts up to a week; however, you must organise permanent insurance before this runs out.
Changing your existing policy
In some cases, you may already have an insurance policy in place. For instance, you may be selling a car as well as purchasing a new one, in which case you will likely be insured on the vehicle you’re wanting to sell. This means that rather than taking out a new policy altogether, you simply want to alter the details on the existing one.
When you purchase a new vehicle, you should contact your insurance provider and explain that you’d like to alter the information on your policy. They may need certain details such as the registration number and the make or model of the vehicle, so do be sure that you know these before trying to arrange your insurance.
It’s also likely that your insurance premium will change. This is because insurance premiums are based on a variety of factors, including the car engine size or the value of the vehicle. For instance, a Ferrari will be much more expensive to insure than a Ford Fiesta, as the cost to repair the damage is likely to be higher.
Once you’ve explained the change of details and you’ve agreed to the new premium offered by the provider, the changes to your policy will likely be instant. You may be asked to pay an administration fee in order for these changes to be made.
If your insurance policy has been altered to cover a new vehicle, replacing the current one, you will no longer be insured to drive your previous vehicle, so keep this in mind. Your new policy should arrive via your chosen method (post or online) confirming what’s changed and the updated premium. Make sure this does arrive and if it doesn’t, contact the insurance provider.
What happens to my insurance when I swap my car?
When you’re selling a car, you have two options when it comes to car insurance. You can either alter the policy as described above or cancel it entirely if you aren’t planning to get a replacement.
If you have sold your car and are getting a replacement, it’s not advisable that you cancel your policy. Instead, you should transfer the policy to the new vehicle. While there may sometimes be a small administrative fee in addition to the difference in premium for your replacement car, it means you can keep any No Claims Discount (NCD) you have earned. Cancelling altogether can sometimes mean you lose the NCD you have built up throughout the year.
When to cancel insurance after selling a car
If you’ve sold your car and want to completely cancel your insurance, when is the best time to do this? You should cancel it as soon as the vehicle has been picked up by the new owner or dropped off at the dealership. This is important as if you don't, you and your insurer will be responsible if anything happens with the car after you have sold it. You shouldn't cancel the insurance policy before you've officially sold it, as it would mean you’re not able to drive the vehicle at all.
Cancelling can be done even if you’re halfway through the policy term, although you may need to pay a small cancellation fee in order to exit.
There are a number of steps that must be completed when selling a car that aren’t just for insurance purposes. For instance, you must provide the new owner with the green ‘new keeper’ slip from the car’s V5C logbook. You must also tell the Driver and Vehicle Licensing Agency (DVLA) that you’ve sold the car. When you tell the DVLA it has been sold, your vehicle tax should be cancelled automatically. If you pay by Direct Debit this should also stop straight away. You can inform the DVLA and find out more about the car buying and selling process via the government website.
Taking out, altering or cancelling insurance is usually a straightforward process, and your insurance provider will be able to assist you, should you have any questions.