Buying a new car is an exciting experience — even a brief whiff of that famous "new car smell" can transport us into a reverie.
And that's perfectly understandable. A car is one of the largest purchases most people make — and we may spend more time inside it than just about anywhere else, other than our home or office.
Because our car is such a valuable item, it's imperative to make sure it's properly insured. To help you with this, let's review some helpful considerations when insuring a new vehicle.
Car owners are required to carry insurance, but the minimum amount of coverage varies from state to state. Typically, most states will require you to carry liability, and perhaps personal injury/medical and uninsured motorist insurance.
Liability coverage typically pays for damage or injuries that you're responsible for in a collision. Personal injury and medical coverage typically pays for the medical care of those involved in a collision. Uninsured motorist insurance typically pays to replace your vehicle or treat your injuries if you're involved in a collision with an uncovered motorist or one who has a limit lower than yours and when the damages or injuries are more than they have coverage for.
Owing more money on a loan than a car is worth is one of the more unfortunate situations a car owner may find herself in after a collision. In this scenario, your insurance payout may not be enough to pay off your loan in the event your car is a total loss.
There is a solution to this, however - gap coverage (Loan/Lease gap coverage). This is a form of insurance that could cover the "gap" between what you owe on your loan and the actual value of your car. While auto dealers will often try to sell new car buyers gap coverage during the sales process, it may be less expensive to purchase it directly from your own insurer. (This type of coverage typically will not pay for loans carried over from other vehicles or penalties for being behind on payments.)
If you're insuring a new car, you'll have some decisions to make about things such as your deductible and various other policy features.
Your deductible is the portion you'll have to pay on any claim you make against your policy. Lower deductibles generally mean higher monthly payments.
Before you take your new car home, you should reach out to your current insurer. After providing some basic information about your vehicle, you can add it to your existing policy. (Most policies will automatically include coverage for a new vehicle for a small period of time should you not be able to make changes, such as on a weekend.)
Buying a new car is an exciting experience. Make sure you protect yourself with the appropriate auto insurance policy. Contact your insurance agent today to discuss your options.