Car Insurance Grace Period in Michigan: Are You Covered After Buying a Car?

What is a new-car insurance grace period?

A new-car grace period is a temporary extension of your car insurance policy that automatically covers new vehicles for a set period. You typically have between seven and 30 days before you must formally add the new vehicle to your policy. Grace periods only apply if you already have auto insurance.

If you’re buying a new or used car in Michigan, your current car insurance policy might have a grace period. But not all insurers offer a grace period, so check your policy before buying a car.

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How long is the grace period for a new car in Michigan?

Michigan law doesn’t specify a guaranteed grace period for drivers who purchase a new or used car. The availability and length of a car insurance grace period in Michigan vary depending on your insurance company and policy type.

Situation	Typical Grace Period in Michigan
Adding a new car	Seven to 30 days
Replacing a car	Seven to 30 days
No existing policy	No grace period

Are you automatically covered when you buy a new car in Michigan?

You don’t automatically have coverage when you purchase a new car in Michigan. Your current auto insurance policy might cover a new or used car if it includes a grace period. But the coverage depends on your existing policy and coverage type.

If you’re buying a vehicle for the first time and you don’t already have auto insurance, Michigan law requires you to buy insurance before you can drive.^[1] Most dealerships also require proof of auto insurance as part of the vehicle sale.

The minimum car insurance requirements in Michigan are personal injury protection (PIP), property protection insurance (PPI), and at least $50,000/$100,000 in liability coverage and $10,000 in property damage coverage for out-of-state accidents. You must sign a selection form for the minimum, as the state defaults to $250,000/$500,000.^[2]

What does new-car insurance cover during the grace period?

During a car insurance grace period, your existing coverage typically applies to the new vehicle. So if you currently have full coverage, collision and comprehensive coverage will probably transfer automatically, but it’s a good idea to verify with your insurer.

Your policy limits and deductibles may also differ during the grace period. If you’re planning to purchase a new vehicle, make sure to ask your insurance company what coverages will apply and if there will be any change to your overage limits and deductibles.

How to add a new car to your Michigan insurance policy

If you’re thinking about buying a new or used car in Michigan, follow these steps to add a car to your existing policy:

1. Contact your insurance company. Notify your insurer about the new vehicle purchase. You might be able to add the new vehicle online or through the mobile app.

2. Enter details about the new vehicle. Provide details about the new car, including the vehicle identification number (VIN), year, make, model, and mileage.

3. Choose your coverage and deductibles. Select the coverage types, coverage limits, and deductibles for the new vehicle.

4. See your new quoted premium. Adding a new vehicle to your policy could change your rate, so make sure you’re comfortable with the new amount before you confirm.

5. Confirm the new policy. Pay the first month’s premium to bind your coverage. Remember to swap your old insurance ID card for the new one.

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What happens if you don’t add your new car in time?

If you don’t add your new vehicle before the grace period ends, you’re driving uninsured. Driving without insurance in Michigan is a misdemeanor, which can lead to a fine of $200 to $500, up to one year in jail, or both. The state could also suspend your license for 30 days, or until you provide proof of insurance.

In Michigan, it’s illegal for auto insurance companies to charge higher premiums for drivers with a lapse in coverage.^[3] But you should still add a new vehicle as soon as possible to avoid other penalties.

Tips to avoid gaps in coverage when buying a car

Below are some tips to help you avoid a coverage gap when buying a new car in Michigan:

• Contact your insurer before buying the car. Let your car insurance company know that you’re planning to buy a new car, so it can make sure you have sufficient coverage ahead of time or that the grace period will provide temporary coverage.

• Set your coverage start date in advance. Many insurance companies allow you to purchase a car insurance policy and choose a future policy start date. That way, you can ensure your policy is in place before you buy the car.

• Don’t let your old policy lapse before you add your new car. If you’re buying a new car insurance policy, make sure the new policy is active before canceling the old one.

• If you’re buying from a private seller, arrange insurance before pickup. When buying a car through a private seller, confirm that the car has coverage before you take the keys. The seller’s policy won’t provide any protection for your vehicle.

New-car insurance grace period in Michigan FAQs