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UPDATED: Mar 13, 2020
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If you own a car, you have no choice but to comply with auto insurance laws.
As much as you don’t like paying for auto insurance premiums, it’s an expense that you must be willing to cover if you want to hold onto the legal privilege of being a vehicle owner.
The law isn’t in place just to make it more expensive to own a car, it’s in place so that everyone is afforded at least some protection.
Many people assume that having insurance is enough to satisfy the law. In their minds, as long as they’re paying premiums to some licensed company, they can’t get in trouble with the law.
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Unfortunately, that’s a major misconception about how insurance works. It’s not just about carrying coverage, it’s about carrying coverage in the right state. Here’s what you need to know about buying insurance in another state:
Where do you live and where have you established residency?
If you reside in only one state, determining where to buy insurance isn’t all that difficult. It’s when you live between two or more states and you own a vehicle that things can get a little difficult.
Generally speaking, you need to be a full-time resident in the state where you’re registering your car.
A full-time resident is someone who lives in the state for 184 or more days throughout the year. It’s also someone who pays state taxes within that state (if applicable) and has a domicile there.
If you’re going from one state to the other throughout the year and you’re worried about insurance, you will have to focus on buying insurance in the state that you’ve chosen to register the car in.
Auto Insurance Laws and Requirements Aren’t Universal
Insurance is a requirement but there aren’t generic rules that all drivers must adhere to. For decades, the task of setting insurance laws and then overseeing how these laws are enforced has been placed in the hands of state government agencies.
The Federal government plays no part in setting mandatory requirements or licensing insurance companies and producers.
Since auto insurance laws aren’t universal, you can’t pick and choose where you want to buy insurance. While the laws are similar in some states where motor vehicle liability coverage is compulsory, that doesn’t mean that you have to carry the same limits.
It also doesn’t mean that the insurance carriers have to include the same terms or provisions in their policies. Since the letters of the law aren’t universal in the US, you have to always comply with the rules in your state.
You Must Buy a Policy from a Carrier Licensed in Your State
Insurance companies are issued an NAIC license number. This is a number that’s granted by the National Association of Insurance Commissioners so that the regulatory body can watch over the dealings in the country and keep track of consumer complaints.
If a provider does business in multiple states, they will have a different number for each state.
When you’re buying insurance, you must obtain quotes from a carrier that’s licensed in the state where your car is currently registered.
If you’re about to move and then transfer your registration, you’ll be buying insurance in the state where it’s about to be registered effective the date that you’ll be moving your registration.
It’s critical that you check to see if the company that you’re soliciting quotes through is currently licensed in the state where you need coverage.
Carriers can do business all across America, but if you buy the coverage from a carrier with a license in the wrong state the DMV won’t accept your coverage. You may be able to file a claim for your damages if the policy is active, but at the end of the day, you’re not satisfying the law.
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What will happen if you have insurance in the wrong state?
If you do make a mistake and you buy insurance in your old state as opposed to a state that you’re moving to, you could be forced to pay some stiff penalties. The penalties aren’t even always monetary.
You will have to pay a fine, which varies by state and by case, but you’ll also have to spend some time sorting everything out. Penalties include:
- Fines assessed by the courts when you’re cited for driving with no insurance
- A Class C misdemeanor (in some states) which stays on your record three years
- A mandatory vehicle impoundment plus requirement to pay storage, towing, and policy department impound fees
- Suspension of your registration if you don’t respond to the notification sent by the DMV
- Reinstatement fees
- Suspension of your driver’s license for multiple no insurance convictions
- Requirement to maintain an SR-22 for three years
- Higher insurance premiums because you’re considered a high-risk applicant
Steps to Take to Buy Insurance When You Move
If you’re taking the leap and you’re going to move to a new state, you have a lot of extra tasks to do before you can sigh in relief. Out-of-state moves are much more involved.
You have to move your health insurance, your home insurance, your ID, your registration, and most of the time your job. You also have to move your car insurance.
Updating your car insurance after an out-of-state move involves more than just changing your address.
You might be able to update your mailing address temporarily, but when you go to the DMV to get new tags and surrender your old plates you’ll also have to activate new coverage.
You can’t change your address, you have to cancel the old policy and buy a new policy written for your new state of residence.
You can’t have an auto policy in another state unless you live there and your car is registered there. There might be some scenarios where you’re insured in a state you’re not currently living in, but they are few and far between.
If you’re not insured in the wrong state, get quotes now for a new policy. You can shop for coverage only, get instant quotes, and then apply for insurance all in a few minutes. Enter your zip code below to begin.