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Credit card benefits don’t cover your car


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Question: I bought a car with my credit card. I heard that credit cards have insurance coverage; is this true?  Do I still need to buy a car insurance policy?

Answer: Yes, you still need to buy your own personal auto insurance policy. 

When you used a credit card to buy a car, we hope you got a lot of points, frequent flier miles or other perks -- because personal auto insurance is not a benefit from doing so.

While some credit cards do come with car insurance benefits, it isn’t the insurance you can register your car with or show as proof of insurance to police officers.  The car insurance benefits that credit cards may offer are for rental vehicles.

Most car rental agencies require a credit card, so credit card companies have added in benefits for using their credit card in the transaction.

The rental car insurance benefits offered vary from one credit card to the next; however, in general, most only will pay for collision and theft of the rental car and as secondary coverage.  This means your own personal auto insurance policy would be primary if you had collision and comprehensive coverages on it.

Liability insurance, the coverage usually required by a state to drive a car, is not something credit cards typically offer for a rental car, let alone your own personal vehicle.

When buying a new or used vehicle, via cash, financing or credit card, you need to buy a car insurance policy from a car insurance company.  Many states require you to show proof of your valid auto insurance policy so that you can register it.

Even if proof of car insurance isn’t mandated when you register a car, nearly every state’s financial responsibility laws require that you have a car insurance policy with the state-required liability coverages on the vehicle to operate your vehicle legally on the roadway. 

If you’re already driving around the car you purchased with your credit card, you need to stop until you get the vehicle covered by a proper car insurance policy. The fine can be hefty.

We typically recommend comparison shopping for car insurance rates before purchasing a car – to make sure you can afford both the car and the cost of car insurance for it.  However, since you already have the car you shop around quickly to find the coverage you need.   

You can obtain multiple car insurance quotes from well-known car insurance companies on comparison sites, such as CarInsurance.com, and immediately get covered.  Before you do, don’t drive your car unless since penalties for driving without insurance can range from a large fine up to jail time and suspension of your license and registration, depending upon the state in which you are driving.

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