- It is important not to cancel insurance on a car you drive until after you actually sell the car and transfer the title to the new owner. After you receive payment for the car and transfer the title, you will not drive the car again, so you don't have to worry about being insured. If you haven't actually completed a sale, you should keep your insurance policy active in case you happen get into an accident before you complete the sale.
- When you sell a car to another person, they will likely want to test-drive the car to see how it handles and how it runs. Keeping your insurance until you actually complete a sale is necessary because it will cover you against damages that occur while potential buyers test-drive the car. Drivers who aren't used to using your vehicle will probably be more likely to get in to an accident than you would.
- Another reason to wait until after you actually transfer the title of your car to a new buyer to cancel insurance is that sales of large-ticket items like cars can easily fall through even if you think you have an agreement. For example, if someone promises he will buy your car, but he is unable to come up with the cash to pay for the car, you could be left without coverage if you cancel early.
- When you purchase a new vehicle, you should add it to your auto insurance policy as soon as possible, since the previous owner will either not have coverage on the car or cancel coverage as soon as you buy it. Wells Fargo states that it may also be possible to transfer an insurance policy to a new owner.
