If you’re thinking about buying a new car, you should also be thinking about your insurance needs. Can you buy a car without insurance? How do you know how much insurance you need if you haven’t chosen the vehicle? It seems a bit like ‘the chicken or the egg’ scenario, but it’s not as confusing. In this article, we discuss if you’re able to buy a car without insurance in place, and how to make sure you and your new vehicle get the right coverage.
Vehicle or insurance: Which comes first?
In Ontario, you can purchase a vehicle from a dealership or through a private sale without car insurance. However, in order to drive the vehicle off the lot, or from the point of personal sale, it is the law that you must have car insurance. In most cases, you may want to purchase an insurance plan before buying a new car to ensure that you have ample coverage.
Does your old insurance policy cover your new vehicle?
In Canada, in order to register a vehicle in your name, you must have car insurance in place. If you already have car insurance in place for your old vehicle, some insurance companies will allow you a grace period to get everything in order. As soon as you sign the paperwork to purchase a new vehicle, your isure broker or insurance company needs to be contacted immediately.
Buying a new vehicle
Fortunately, you can use your previous car’s insurance for a grace period of six to 14 days while you are registering and insuring your new car. You’ll need to have your sales documentation and proof of insurance (from your previous vehicle) available at all times. If you don’t, you may incur a fine, and a serious driving violation might go on your permanent record. Depending on the dealership, you may have to have proof of insurance before taking your new car home. Dealerships have a form letter that is to be sent to your insurance company outlining all the details pertaining to the new vehicle. Your insurance company will then advise the dealership that your auto insurance coverage is in place. This must be done at the dealership as dealerships arrange for the registration of your vehicle with the government.
Buying a used vehicle
In Ontario, you have six days to temporarily switch your licence plates and insurance to a new car before needing the ministry’s approval. This grace period is handy for purchasing your vehicle outside regular office hours or on weekends. There are some requirements, however, which include:
- Valid auto insurance
- The vehicle’s Safety Standards Certificate
- The buyer’s portion of the vehicle registration, signed and dated by the seller
- Used Vehicle Information Package (UVIP)
To learn more about buying or selling a vehicle privately, please click here.
Important: If you are buying a vehicle from a private seller, they will not usually request proof of insurance before leaving with the new car. Purchasing a vehicle through a private sale means a trip to a ServiceOntario office to register the vehicle in your name with the government. The previous owner must sign the back of the ownership of the vehicle in order for you to register it in your name.
Getting insurance quotes for your new car
Most insurance companies will provide you with quotes pretty fast and in most cases, you can usually obtain new insurance in 24 hours or less. In some cases, you may be able to call an insurance representative to find coverage right from the car dealership. Also, if you already have insurance on a different vehicle, you may be able to show proof of that insurance. This is usually a requirement whether you are buying a used or new vehicle. Additionally, even if you choose a lease, you will still need proof of insurance.
Different car, different coverage
Once you provide your isure broker with the details of the vehicle that you’re buying, they will calculate your rates. Your premium may increase or decrease based on the value of the new car, as well as the value of your previous vehicle. If you are buying a vehicle that is worth more than your previous one, or if you’re taking out a loan, then you may be required to have full coverage, which includes comprehensive and collision coverage.
However, basic insurance protects you if you damage someone else’s vehicle in an accident, full coverage also covers your damages and medical bills. The good thing is that if your current provider raises your rates too much, or if you want to see what other companies have to offer, you don’t have to stay with your current provider. Talk to one of our isure brokers today about options for switching insurance coverage.
If you do decide to go with a different provider, make sure you buy your policy before cancelling your current one. Not only do you want to avoid driving uninsured, but new insurance companies may quote you higher if you have a gapin insurance coverage. Why? Because they will consider you to be a higher risk driver.
Keeping a vehicle without auto insurance
It is not against the law in Ontario to have a vehicle you are not currently driving without having auto insurance. However, keep in mind that it would be wise to purchase comprehensive auto insurance in the event your vehicle is vandalized, damaged from falling trees, or any other event that can happen to a parked vehicle.
Fines for driving without insurance
Although it is not a criminal offence, Section 2(1) of Ontario’s Compulsory Automobile Insurance Act states, “subject to the regulations, no owner or lessee of a motor vehicle shall operate [it] or cause or permit the motor vehicle to be operated on a highway unless the motor vehicle is insured under a contract of automobile insurance.” While you are not committing a criminal offence and no demerit points are involved, you’ll face some serious penalties:
- Your fine for driving without a license starts at $5,000
- The Ontario car insurance regulator, FSRAO, will charge an additional 25% surcharge to your fine
- Your licence suspension lasts for a minimum of 30 days, and up to a year
- Possible impoundment of your vehicle for three months
How does a “driving without insurance” conviction affect your insurance?
The fines and penalties you will be guilty of for driving without insurance are serious. This conviction stays on your driving record for three years. Not surprisingly, your conviction will affect the cost of your insurance in the future. Your insurance company will treat your conviction as seriously as a conviction for impaired driving. It is possible you may find:
- Many insurance companies refusing to insure you.
- You are classified as a high-risk driver, which makes it difficult to obtain insurance.
- If you do find an insurer that will offer you a policy, the cost won’t be cheap. It may perhaps cost you thousands of dollars per year for insurance.
Can you drive a new car home without insurance?
No, you cannot drive a vehicle in Canada without a valid auto insurance policy.
Is it necessary to buy auto insurance directly from the dealer?
No, you can purchase auto insurance from the company of your choice in most cases.
Can you purchase car insurance without owning a car?
Yes, in Ontario you can purchase non-owner car insurance. Non-owner auto insurance is a liability-only coverage for those who are licensed, but do not own a vehicle. Non-owner car insurance is also referred to as secondary coverage. This is because the owner of the vehicle’s policy will be used first to pay out any damages or medical bills. If the owner’s policy isn’t enough coverage-wise, then the non-owners’ auto insurance will come into play.
So, can you buy a car without insurance?
The safest thing you can do when you are purchasing a new or used vehicle is to contact your isure broker or insurance provider as soon as possible. You can obtain an insurance quote prior to purchasing the vehicle, then can provide your insurance company with the particulars about the specific vehicle. Speak to one of our isure representatives if you are thinking of buying a car without insurance in place to ensure that in the end, you have the proper coverage.