Last updated on January 19th, 2018 at 03:30 pm
You’re eyeballing a brand new car. Congratulations! It’s a big purchase and there are myriad things to consider: options, color, sunroof, standard or automatic, sound system and, yes, car insurance.
You’re going to want to be certain that you’re fully covered. After all, you’re laying out your hard-earned cash and possibly signing a contract for financing. With a little preparation and planning you can drive off the dealership lot worry-free.
I was lucky enough to buy my first new car last year. I was driving a 13-year-old Chevy Malibu that was getting to the end of the line. It took me a lot of places and across many states, but the last place was the dealership where I bought my new car.
Since my Malibu was older, I only had liability insurance on it. That wouldn’t do for a new car, especially because I was financing a portion of it and the bank required full coverage.
Before buying, I had a conversation with my insurance agent to get an idea of what to expect. I was able to get an estimate of my new car insurance premium and make sure I was fully covered and prepared to drive off the lot; after I struck a hot deal, of course.
In addition to liability insurance, I picked up loan gap coverage, comprehensive insurance and collision insurance. That’s a lot of insurance terms, and there are many others, but here’s a brief lowdown on those:
- Liability: There are two types of liability coverage: bodily injury and property damage. Bodily injury protects you if you’re held responsible for injuring someone in a car accident, while property damage protects you if you’re held responsible for damaging someone else’s property in a car accident.
- Loan/Lease Gap Coverage: This coverage is an optional coverage to consider if you lease or finance your car. If you incur a total loss to a car on your policy, this coverage will cover the difference (if any) between what is owed on the car loan or lease, and the car’s actual cash value. The purpose is to protect you from having to make loan or lease payments on a totaled car that you can’t drive anymore.
- Comprehensive: This coverage pays for damage to your car that isn’t related to a collision with another car, such as fire, theft or vandalism. Accidents with animals are also covered under comprehensive insurance. The amount covered is the cost of the repair after your deductible. If your car is totaled, however, you will be reimbursed only for the actual cash value of your car.
- Collision: This coverage pays for damage to your car, and is designed to pay for the repair or replacement of your car in the event of an accident, no matter who is at fault. The amount covered is the cost of the repair after your deductible. If your car is totaled, however, you will be reimbursed only for the actual cash value of your car.
Depending on what coverage and insurer you currently have, it might be possible to drive your new car for a short time on your current policy. But, your insurance needs might change after your purchase, so contact your insurance professional as soon as possible, or, preferably, ahead of time.
Click here for more information about insurance in your state.