By: Gov Auctions | 10 September 2017

How Should Buyers Arrange Auto Insurance For Cars Purchased At Auction?

One of the most common misconceptions buyers of auction cars have is that their financial responsibility ends once they have paid for the vehicle. That only happens if:

  • They have paid the car in cash.
  • They do not have to spend for hauling or transporting the vehicle.
  • They have no plans of driving it.

Let’s focus on the last point. All types of cars, whether they are purchased at an auction or not, need to be covered by insurance, especially if there’s an intention to drive. Although the rules may slightly differ among states, they are one in agreement that insurance sees to it that if something happens on the road, like damage to property or bodily injury, the aggrieved party can look forward to a claim.

The question is, what kind of insurance can buyers of auction cars have? Or is it possible for auction cars to be covered by insurance?

On the first question, the basic answer depends on the statutes of the state. They may have determined the minimum amount for general liability or collision insurance, as well as the possible deductible that can be had to reduce insurance premium. For example, in New York, a driver needs to have insurance coverage worth at least $10,000 for property damage in one accident, and that is different from the figures in the accident results in death.

The kinds of insurance available also depend on the state. The standard is, of course, general liability and collision coverage. Some insurance companies have also packaged auto insurance with either life or health insurance. Any person who decides to buy insurance should exercise due diligence to determine not only whether the premium is affordable but also whether they need the other insurance.

It is also possible to secure temporary insurance, which works if the vehicle will be driven infrequently. Mind that this type of insurance has a very short duration.

What Cars Can Be Covered?

The second question, meanwhile, is another matter because of both state laws and discretion of the insurance company. Take, for example, a salvage car in New York.

A salvage car is a vehicle that has been totaled and the estimated value of the damage is more than a certain threshold. In the mentioned state, a car is considered salvage if the damage is over 75 percent its value, in addition to the vehicle eight years or newer. Further, before this vehicle may be driven again after it gets fixed, it should be executed a salvage title.

A salvage car, in general, can still be insured, but again, it is all up to the insurance company. A buyer should be warned, however, that the process can be difficult.

How to Get Auto Insurance

Some auctions are comprehensive that buyers can already arrange for auto insurance on-site through third parties. In certain instances, the auctioneers themselves arrange for the coverage. Otherwise, you haul the vehicle and shop for insurance later. You can use online comparison tools to get as many quotes as you can and find the best deal within your area.