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Many people prefer to sell their vehicle privately rather than to trade it in at the dealership, and one of the reasons for this is the perception that they will get a higher sales price for the vehicle by doing so.
If you are preparing to list your vehicle for sale, you may be wondering when you can cancel your existing insurance policy or if you need to upgrade coverage to account for the potential buyers who will be test driving your vehicle.
Compare car insurance quotes right here to find the best rate for the coverage you need. Enter your zip code above to begin.
Keeping Your Coverage Active until the Vehicle Is Sold
Each state has unique auto insurance requirements, but most require drivers to have at least a minimum amount of liability coverage on a vehicle at all times. This type of coverage is used to pay other parties for damages you cause behind the wheel of your car.
Some drivers also must maintain comprehensive or collision coverage if it is required by the car’s lender. This coverage requirement may need to be met until you have paid off the car loan at the time of the sale.
Some drivers may have already purchased a replacement vehicle and may not drive the car they are selling personally. With this in mind, it is understandable that you may think about canceling your existing car insurance policy to save money.
However, you can see the importance of keeping a vehicle properly insured at all times. Without coverage in place, you may be in default on your car loan, and you may face legal penalties related to violating state laws.
Adjusting Coverage as Needed
Canceling your auto insurance policy prematurely is not advisable, but there may be other ways to save money on your coverage.
For example, you can review your current coverage types and limits, and you can reduce these to the minimal levels required by your lender and by the state.
After all, you may not need extra coverage for towing service, a rental car, or other benefits if you rarely drive the vehicle yourself and if you have another reliable mode of transportation.
You may also qualify for an infrequent driver discount if you rarely use the vehicle now. This discount is only available through select providers, so make a direct inquiry with your current insurance company today.
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Checking Insurance for Potential Buyers
Another important factor to consider when listing your vehicle for sale privately relates to the potential damage that buyers could do to the car when they are test driving it.
Accidents can happen at any time, even when the vehicle is only being driven at a slow rate of speed around the block.
In addition, because you may be advertising the vehicle publicly and offering your address to any potential buyer, there is a chance that your vehicle could be stolen during this process.
You may face considerable financial loss if your vehicle is stolen or damaged by an uninsured driver during this process. Remember that your own policy likely will not cover another driver.
You should inquire with your current provider about this possibility before allowing someone else to drive it.
If your coverage will not cover another driver, consider requesting a copy of the other party’s insurance card before the test drive.
– Protecting Your Vehicle from Damage until It Is Sold
You may have high hopes of selling your vehicle for a great price and pocketing the return or using it as a down payment on a new vehicle. To accomplish this goal, you should take steps to protect your vehicle from damage until it is sold.
One idea is to drive in the vehicle with the potential buyer during the test drive. This scenario may not prevent all accidents, but it may encourage the other party to drive safely and to obey speed limits.
You can also store your vehicle in a secure, enclosed location for protection. This step may protect it from weather-related damage, theft, and other similar types of issues while you attempt to sell it privately.
Getting Coverage on Your New Vehicle
Many drivers who sell one car will need to buy a replacement car, and this means that you will need to line up car coverage for the new vehicle.
Some drivers will simply use their previous auto insurance provider for their new coverage needs. This is one option that may work well if you have a long-standing relationship with your provider, but it may not always result in the lowest rates possible.
Shopping for low rates available from a range of reputable providers may be a better option to consider.
– Considering the Need for GAP Insurance
GAP insurance is designed to pay off a car loan when regular insurance proceeds are not sufficient.
Remember that traditional auto insurance only pays out an amount up to the replacement value of the car, and the replacement value may decline faster than the loan balance can be paid off.
GAP insurance may be necessary if you plan to make a rather small down payment on your vehicle or if you are concerned about rapid depreciation.
– Understanding Coverage Requirements
Before you can shop for new rates for your next vehicle, you need to understand the minimum coverage requirements that you must comply with.
The first requirement relates to your state’s requirements for liability insurance and potentially other requirements depending on where you live.
The second requirement relates to an auto lender’s possible requirements for collision or comprehensive insurance.
Getting a quote for the minimal amount of insurance provided can result in a lower premium, but there are instances when upgrading coverage types and limits make sense.
Some optional coverage types to consider include towing service and rental car reimbursement coverage.
– Using Insurance Discounts
You understandably want to get the maximum benefits from your insurance policy, but it can be expensive to purchase more than the required coverage types and limits.
You may be able to save money on your car insurance by using various discounts offered by most providers.
Some of the more common auto insurance discounts that you find while comparing quotes include:
- A bundled policies discount
- A multiple vehicles or multiple drivers discount
- A claims-free or safe driver discount
- A student or senior citizen discount
- A military or occupational discount
- A safety features discount
- A low mileage or infrequent driver discount
Taking Action before Listing Your Current Vehicle for Sale
If you plan to sell your vehicle through a private listing, it makes sense to reach out to your current provider to learn about coverage revisions or updates that may be beneficial.
Now is also a great time to request quotes from your current provider and other leading insurance companies for your next vehicle.
Comparing quotes for new coverage today can help you to determine how affordable your next vehicle will be for your budget. Enter your zip code below to begin your comparison search.