If you buy a new car and you have insurance on the one you are trading in, your existing coverage will automatically transfer. However, many car dealers require buyers to have proof of insurance coverage. Showing your old insurance card may help. In many states buyers trading in their old car and purchasing a new one have between 7 and 30 days to notify the insurance company that they have purchased a new vehicle. The issue that may crop up is if they only have liability insurance on the old vehicle and need full coverage for the new one.
Not notifying your car insurance company leaves the new car buyer with a problem. Should something happen to the new vehicle before notifying the insurance company, depending on the type of coverage the old car had, the new car's owner may have to cover some of the cost of repairing their vehicle. The safer move is contact your insurance company and make them aware of the new purchase before driving the vehicle off the lot. If you are financing the new vehicle the lending institution requires the buyer carry full coverage and provide proof of it in order to get the loan approved.
Without making sure to notify their current insurance company the new car buyer runs the risk of the insurance denying their claim should they be involved in an accident. This can be a very expensive problem. The good thing is that Maine requires drivers to have a specific amount of coverage on any registered vehicle they own. A bigger problem would be if the neglect to contact the insurance company before the grace period expires. Ideally, someone that is on the way to purchase a new vehicle should contact their auto insurance agent before they complete the transaction.