When you buy a new car, you need to contact your insurance company and complete a procedure called “vehicle replacement.” If you do not complete this procedure, you will not be able to apply your old car insurance coverage to your new car. We will introduce you to the knowledge you need to know about vehicle replacement when you buy a new car.
Table of Contents
- If you buy a new car, you will need to complete a vehicle replacement procedure.
- What are the conditions for vehicle replacement?
- The timing for vehicle replacement procedures is before the delivery date.
- Is it okay to drive an old car to get a new one?
- What do I need to replace my vehicle?
- What will happen to the grade and insurance premiums if I buy a new car?
- Even if you buy a new car, you can carry over the grade.
- If you buy a new car, your insurance premiums may change as well.
- Replacing your car is a good opportunity to review your insurance coverage.
If you buy a new car, you will need to complete a vehicle replacement procedure.
Auto insurance does not automatically change the contracted vehicle when you buy a new car. You must contact your insurance company or agent to complete the vehicle replacement procedures yourself. By replacing your vehicle, you can transfer your car insurance policy to a newly acquired car.
If you do not replace your vehicle, your insurance may not be paid in the event of an accident. Automobile insurance compensates for damage caused to the contracted vehicle. If there is no change in the contracted vehicle due to vehicle replacement, the newly acquired vehicle is the same as not being insured.
What are the conditions for vehicle replacement?
There are several conditions for vehicle replacement. If the conditions are not met, you will have to sign up for a new service instead of replacing your vehicle. The conditions may vary depending on the insurance company, but they are generally as follows.
- When acquiring a new car or borrowing for more than one year, or when owning multiple cars and scrapping, transferring, or returning the contracted vehicle
- Is the owner of the car after the replacement the same as before the replacement, the named insured, the named insured’s spouse, a relative living with the named insured or his or her spouse, or the dealer/lease company? The employer is the named insured, his or her spouse, or a relative living with the insured.
- The vehicles before and after replacement must be of the same purpose and are 8 private vehicle models*
*The 8 private vehicle types are private regular passenger car, private small passenger car, private four-wheel light passenger car, private four-wheel light freight vehicle, private small cargo vehicle, private regular cargo vehicle (maximum load capacity 0.5 tons or less), and private regular cargo vehicle. (Maximum load capacity is more than 0.5 tons and less than 2 tons), refers to special-purpose vehicles (camping vehicles).
Please check with your insurance company or agent for detailed conditions. Additionally, if you receive a car, you will first need to complete the procedure to change the name of the car. In this case, it is often more time-consuming than replacing the vehicle with a new purchase, so it is a good idea to check with your local transportation branch office about the process.
The timing for vehicle replacement procedures is before the delivery date.
Car replacement procedures should be completed before the delivery date of the new car. By setting the contract change date to the delivery date, you can apply insurance to your new car from the delivery date.
Even if you forget to complete the procedure and the vehicle is replaced after the delivery date, you can still complete the procedure. However, although the details vary depending on the insurance company, the approximate grace period is within 30 days from the day after you get a new car. If you exceed this limit, you will not be able to replace your vehicle and will need a new contract to receive compensation for your new vehicle.
Is it okay to drive an old car to get a new one?
If the delivery date is the vehicle replacement date, will I still be covered if I drive my old car to go pick up my new car? The answer is that you are eligible for compensation without any problem. Your old car will be covered until you go to pick up your new car, and once you drive your new car, your new car will be covered.
What do I need to replace my vehicle?
Vehicle registration for the new vehicle is required for the vehicle replacement procedure. Additionally, if you need to settle the difference in insurance premiums, bank account information will be required. Some insurance companies also require the vehicle’s odometer readings.
If you are unable to prepare a vehicle inspection certificate by the time the procedure is completed, prepare information such as the manufacturer’s name, vehicle name, model, registration number (license plate), chassis number, first registration date, owner, and user from the sales contract etc. please.
Depending on the insurance company, other documents and information may be required, so be sure to check when contacting your insurance company or on their official website.
What will happen to the grade and insurance premiums if I buy a new car?
Even if you buy a new car, you can carry over the grade.
Even if you buy a new car, if you follow the procedures for replacing the car properly, you can carry over the grade you had before you replaced it. As your grade increases, the discount rate on your insurance premiums will also increase, so you can rest assured that your grade will be inherited.
If you plan to change your insurance company at the same time as buying a new car, you need to be a little careful. You can carry over your grade even if you change insurance companies, but if you switch to another insurance company without waiting for the maturity date, your grade will be delayed. This is because in order to increase your rating, you must be accident-free for one year after switching to a new insurance company.
Also, if you were using insurance before the change and the grade drops at the next renewal, you will end up contracting with the lower grade when you change to a new insurance company.
If you buy a new car, your insurance premiums may change as well.
Even if the coverage and class are the same, car insurance premiums may differ if the contracted vehicle is different.
For regular passenger cars, small passenger cars, and light four-wheeled passenger cars, a “ model-specific rate class system ” has been introduced, which classifies risks by car model. Models with a high number of accidents and a high claim payout record tend to have high insurance premiums, while models with a low payout track record tend to have lower premiums. Therefore, insurance premiums may go up or down depending on whether you replace your vehicle.
If your premium becomes cheaper, your insurance company will refund you the difference. If your insurance premium increases, you will need to pay the difference. Payment methods vary depending on the insurance company, but the vehicle replacement procedure will not be completed until payment is completed, so be sure to pay by the payment deadline.
Replacing your car is a good opportunity to review your insurance coverage.
I don’t think you usually have the opportunity to review your car insurance coverage. However, if the car is new, the necessary coverage, such as the presence or absence of vehicle insurance, often differs. When it’s time to replace your vehicle, it’s a good idea to consider whether your current coverage is appropriate for your new car.
And, depending on the coverage, the premiums will also vary. There are some caveats to changing insurance companies before the expiry date, but it may be a good idea to get quotes from other insurance companies. You may also be able to save money on insurance premiums.