Car owners who are wondering whether they can sell and replace their car while their insurance policy is in force can put their mind at ease on this issue. You can choose to trade in or sell your car privately at any time you wish. If you decide to make a change, you will need to let your auto insurance company know so that it can take the appropriate action.
Auto Insurance Basics
Auto insurance is a contract between a driver and the company. The driver agrees to pay a certain amount in premiums and in return, the insurance company will provide coverage for specified losses up to the policy limit the driver has agreed to buy. When the policy is issued, it specifies that it covers specific vehicles only.
As part of the application process, the insurance company will ask about the vehicle’s specific make and model year. When you are ready to arrange coverage, it will ask for the Vehicle Identification Number (VIN) and the car’s license plate. The insurance coverage is granted to the car, not the person driving it, and for this reason the insurance company will gather details about the vehicle which is being covered under the policy.
Selling and Replacing a Car While Insured
If you have decided to trade in or sell your car during your policy term, let your insurance company know about your plans. You will need to arrange for coverage for your new car before you start driving it.
Call the customer service department of your insurance company inform it of your plans once you have made a decision about your next vehicle. You can also contact the insurer if you have narrowed down your choices to a few models and you would like to find out how much it would cost to insure them.
Buying a car is a major purchase. You will want to make sure that you can afford the payments if you are financing the vehicle, as well as the insurance premiums. The information your insurance company provides can help you to decide whether to go ahead with the purchase or not.
A change in circumstances, such as buying a new vehicle, is a good time to consider other car insurance providers. Go online to get quotes for coverage from a few insurance companies to compare rates. You may be able to find a lower price for your coverage from a new provider.
Selling Your Car Outright
If you are planning to sell your car and not replace it, you will need to cancel your policy as of the date of sale. Your insurance policy documents will specify how to cancel your coverage, and you can contact the company to find out the right procedure for doing so.
Don’t simply stop paying the premiums, as the company will cancel your policy for nonpayment. This event will create a gap in coverage and you may find it difficult to get insurance later on because of it.