What Happens to Insurance When You Sell Your Car

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What Happens to Insurance When You Sell Your Car – Selling your car can be a complicated process, and there are a lot of things that you have to consider before making the sale. Apart from consideration, it is important that you do not have any unnecessary financial liabilities or risks. One of the aspects to consider is car insurance. When you sell your car, you do not only hand over the key; it also involves either updating or canceling your auto insurance quote.

What Happens to Insurance When You Sell Your Car

In the aspect of sale, it is important to avoid continued liability for a car or vehicle that you no longer own. You can still enjoy coverage until you get a new vehicle or are ready to purchase one. What happens to insurance when you sell your car? The only way to find out is to read to the end of this article for answers.

What Happens to Insurance When You Sell Your Car?

Here is what you need to know. When you sell your car, your car insurance policy and coverage do not transfer to the new owner of the vehicle automatically. On the other hand, you have to notify or tell your insurance provider of the sale of your car and either terminate or update your quote. Hence, you can still be legally responsible for the vehicle until the insurance quote is changed or canceled, even when the vehicle is no longer in your possession.

Do You Need Insurance on a Car You Are Selling?

The answer to this question is yes. You need to keep the vehicle insured until the transfer process to the new owner is official and complete. In other words, you need to have and hold the minimum required insurance on the car until the tile and registration are transferred and the sale is complete.

What Do You Do With Your Insurance Policy After Selling Your Car?

You should contact or get in touch with your insurance company to tell them about the sale after you successfully sell your car. You can also choose to cancel your policy if you do not intend to replace or buy a new vehicle, or you can transfer the coverage to a new car if you have plans to replace the old one.

How to Sell Your Car

Here are the steps you need to take to successfully sell your vehicle: If you are doing this for the first time, this step-by-step guide is just what you need:

  • Prepare all the necessary documents.
    1. Vehicle title.
    2. Accident history.
    3. Vehicle identification number (VIN).
    4. Vehicle registration.
    5. Make, model, and year of your vehicle.
    6. License plate number.
  • Find out your car’s worth.
  • Begin preparations for the car.
  • Decide on a price you would like to sell it at.
  • Put your vehicle up for sale.
  • Partner with a buyer.
  • Receive payment for the vehicle.
  • Complete paperwork.

And that is it. The vehicle will be transferred to the name of the new buyer.

How to Cancel Your Auto Policy

If you have sold your car and do not have plans to purchase a new one, it is only advisable to cancel your policy. If you need assistance with this process, here are a few helpful tips:

  • Review your insurance quote.
  • Choose a suitable time for cancellation.
  • Notify your insurance provider.
  • Provide the necessary information and documentation.
  • Get written confirmation.
  • Look for refunds.
  • Confirm cancellation.
  • If required, notify your state’s DMV (Department of Motor Vehicles).
  • Keep a record of everything.

And keep the records well. By using these steps, you will have no problem requesting a policy cancellation from your insurer.


Will my car insurance go up if I buy a new car?

It depends on the type of vehicle you purchase. If the new car is more expensive to repair, has a higher theft rate, or is considered riskier to drive, your insurance premiums might increase.

Should you buy car insurance after selling your car?

If you plan to replace your vehicle, it is wise to arrange for the new car insurance to commence before or immediately upon acquiring the new car. If you do not intend to buy another car immediately, you might not need to purchase a new policy.

Can I cancel my auto insurance with an open claim?

Yes, you can cancel your car insurance policy even if you have an open claim. However, the open claim will be processed and paid out under your policy’s terms at the time of the event.

Should I keep my car insurance after selling my car?

If you do not plan to own a vehicle temporarily, you might not need to maintain a standard auto insurance policy. However, if you plan to be without a car only briefly, it may be beneficial to maintain some level of insurance to cover non-ownership risks or to ensure continuous coverage, which can help keep rates lower.