If you are in the process of buying a new car, you may be thinking about many details such as the interior material or if you would like to move to the all-wheel drive model. With all the excitement of buying a new car, you may be forgetting something essential: your new car insurance.
Did you know that a new model and brand can significantly change your insurance policy premiums? Can you also add the specific coverage you need to your plan? Before leaving the parking lot with your new car, consider these five tips for buying insurance.
Consider the policies of your insurance company
If you already have a policy, you may think you don’t need a new one. This is usually partially true, but not all companies have a grace period for adding a new car and it can vary from company to company.
Know your current coverage
Each person’s coverages are different, but your current policy must include the minimum coverage requirements. These vary from state to state, but some examples include:
Liability insurance. This coverage would help pay for bodily injury or property damage, should you be the cause.
Personal Injury Protection or PIP coverage, which is required in 12 states. PIP coverage will help you pay for medical expenses no matter who was at fault.
Decide if you need additional insurance
family buying a new car with insurance and seller giving the keys to the son
Uninsured or Underinsured Driver Coverage. This insurance would help pay for injuries or damage to the car if you are involved in an accident with an uninsured or underinsured driver.
Collision coverage, which will help pay for damage to your vehicle resulting from an accident, regardless of who is at fault.
Comprehensive coverage, which helps pay for damage to your vehicle that results from something other than a collision. For example, a tree branch that falls on your car or if it is stolen.
If you have a lease or loan agreement on your new car, you will be asked to add these coverages. If you bought your car directly, you should consider adding these coverages to protect your investment.
Consider extra coverage
Since you invested time and money to buy your new car, make sure it is fully protected. Certain coverages are not necessary, but are well worth considering, such as:
New car replacement coverage. While collision and comprehensive coverages help repair or replace your vehicle, unfortunately, they are affected by depreciation. This means that as soon as you take your car out of the dealership, its value will decrease. For example, if you bought a new car for $ 26,000 and paid for it in six months, your insurance could only pay you $ 20,000. New car replacement coverage would cover the full amount it costs to replace your vehicle with a new one.
Gap insurance. Gap coverage (also known as differential insurance) covers damage to the vehicle that depreciates it beyond its value. Consider the example of the $ 26,000 vehicle. If your car is destroyed and its depreciated value was estimated at $ 20,000, then your comprehensive or collision coverage would pay that amount. However, if you still owe $ 22,000 to your lienholder, then you would have to pay the remaining $ 2,000 out of pocket if you do not have Gap insurance.