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Don’t forget to let your insurer know that you will need cover for a different vehicle.
Otherwise, you could end up uninsured, which is illegal and will leave you high and dry should you need to make a claim.
Here’s our five-minute guide to making sure you stay protected when changing cars…
I’m buying a new car. Do I need to cancel my insurance policy and take out a new one?
You do not need a new insurance policy, as almost all insurers will allow you to transfer your current cover to your new wheels.
BUT it is imperative that you inform your insurer when you need the terms of the cover to change.
Failure to do so could result in your policy being invalidated, and any future claims being rejected, or at the very least paid at a reduced level.
Will there be a charge?
Yes, you will generally have to pay an administration charge to amend the terms of your cover. This should be stated in the terms and conditons of your policy.
Reckon on paying at least £25. If you are buying a more powerful or expensive car, you may also have to pay an extra premium due to the extra risk the insurer is taking on.
Top tip: If you think the charges you face for amending your policy are unfairly high, you can always complain to your insurer.
And if you are unhappy with its response, you can also take your case to the Financial Ombudsman Service.
And remember the general point – if there are any material changes affecting your insurance, you need to tell your insurer straight away, not at renewal.
So if you, for example, change address, modify your vehicle in any way or get a driving conviction, notify your insurer.
How do I transfer my policy to a new car?
To transfer an existing insurance policy to a new vehicle, all you need to do is call your insurer.
Getting a new car with a new ‘15’ plates? Grabbing a secondhand bargain from the increased selection at this time of year?
The standard amendment free should be set out in your policy terms and conditions, but your insurer should also be able to inform you of this over the phone.
Once you have given the company the details of your new car, you should be told the total cost of changing your cover.
If you are happy with this, you can then make the extra payment and wait for your insurer to send out your new policy documents either online or in the post.
Do I have to stick with the same insurer?
No. But in most cases, the cheapest option when buying a car will be to stick with your existing insurer and pay the administration charge to transfer your policy to the new vehicle.
This is because the cost of cancelling a policy to start a new one elsewhere will usually outweigh the admin fee.
There are exceptions, though. If, for example, your current policy is about to run out, it may make sense to simply take out a new one with a rival insurer rather than paying the administration fee.
This is particularly true if your insurer wants to up your premium significantly due to the type of car you are buying.
Top tip: MoneySuperMarket is the ideal place to work out which option will be cheaper for you. You can run quotes here.
When do I need to arrange cover?
If you are buying a used vehicle, it is important to arrange insurance that starts on the day you pick it up.
Otherwise, you won’t be covered should anything go wrong on the journey home. With a new car from a dealership, however, you might receive free insurance for the first few days.
Dealerships such as Peugeot and Hyundai, for example, offer free seven-day insurance to allow buyers the chance to arrange cover of their own.
BUT don’t forget to check you are protected before driving away!
What if I am offered free insurance with my new car?
Many dealerships offer incentives such as one year's free car insurance or breakdown cover.
If you already have cover in place, you therefore need to ask yourself if it is worth taking the free insurance or not.
The answer will depend on how long your current policy has to run – and how much extra your insurer wants to charge you to cover your new car, or to cancel it if you decide to go elsewhere.
Top tip: If you don’t need the cover, you may be able to negotiate a discount of the price instead.