If you’re considering a new car, you should also consider 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, to drive the vehicle off the lot or from the point of personal sale, 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. Moreover, you must have insurance to register and plate a vehicle for driving, not merely to complete a purchase. Registration tied to driving requires insurance. If you already have car insurance for your old vehicle, some insurance companies may allow a grace period to get everything in order. As soon as you sign the paperwork to purchase a new vehicle, contact your isure broker or insurance company immediately.
Buying a New Vehicle
There is no statutory grace period in Ontario law; temporary coverage depends on the insurer’s policy. 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 keep your sales documentation and proof of insurance (from your previous vehicle) on hand at all times. If you don’t, you may incur a fine, and a serious driving violation may appear on your permanent record. Depending on the dealership, you may be required to provide proof of insurance before taking your new car home. Dealerships use a form letter to send to your insurance company, outlining all the details of 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, which handles your vehicle’s registration with the government.
Buying a Used Vehicle
In Ontario, there is no legislated grace period for driving a newly purchased vehicle without insurance or registration, or for a new car, before the ministry’s approval is required. This 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)
Read our blog to learn more about buying or selling a vehicle privately.
Important: If you are buying a vehicle from a private seller, they will not typically request proof of insurance before you leave 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 vehicle ownership document 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 provide proof of coverage. This is usually required, whether you are buying a used or a 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 vehicle details, they will calculate your rates. Your premium may increase or decrease based on the value of the new car and your previous vehicle. If you are buying a vehicle worth more than your previous one, or taking out a loan, you may be required to have full coverage, including comprehensive and collision.
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 decide to switch providers, ensure you purchase your new 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 gap-in 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 by 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. Unsurprisingly, your conviction will affect your insurance costs 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 are 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 cost you thousands of dollars per year in insurance premiums.
Can You Drive a New Car Home Without Insurance?
No, you cannot drive a vehicle in Canada without valid auto insurance.
Is it Necessary to Buy Auto Insurance Directly from the Dealer?
In most cases, you can purchase auto insurance from the company of your choice.
Can You Purchase Car Insurance Without Owning a Car?
Yes, in Ontario, you can purchase non-owner car insurance. Non-owner auto insurance is liability-only coverage for licensed drivers who do not own a vehicle. Non-owner car insurance is also called secondary coverage. This is because the vehicle owner’s policy will be used first to pay any damages or medical bills. If the owner’s policy isn’t enough coverage-wise, then the non-owner’s 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 before purchasing the vehicle and then provide your insurance company with the vehicle’s particulars. Speak to one of our isure representatives if you are considering buying a car without insurance in place, to ensure you have the proper coverage.
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