Cover yourself... and your car
Kevin M. Lynch, assistant professor of insurance at The American College, says, "If you are financing your new car, you need to consider a comprehensive auto policy."
Lynch notes that there are certain things a policy for a new car should definitely include. At a minimum, he suggests:
"Under no circumstances do you want to carry less than $100/$300/$50 in liability coverage."
- Liability coverage that protects others from you.
- Uninsured and underinsured coverage that protects you from others, including hit-and-run drivers.
- Collision coverage that protects your vehicle, should you run into something.
- Other than collision coverage (formerly called comprehensive coverage) that protects you from other damage to your car, from falling objects, theft, vandalism, etc.
Consider additional coverage
There are many other new-car insurance options new-car buyers should think about including in their coverage, such as:
- Personal injury protection first dollar coverage that covers medical bills, lost wages, etc.
- Medical payments in the absence of PIP, a less expensive alternative, offering only medical payments coverage.
- Towing and labor coverage in case you have a flat or need a tow.
- Rental reimbursement to provide a rental car while your damaged car is being repaired.
- GAP insurance — This important coverage pays your financial institution the difference between the insurance value, determined by your carrier, and the balance on your loan, in the event you owe more on the car than it is worth.
Lynch adds, "In addition to the proper coverages, [there] are proper limits of liability. Under no circumstances do you want to carry less than $100/$300/$50 in liability coverage. These numbers provide $100,000 per individual in an accident where you are at fault. It also provides a total of $300,000 in coverage if there are multiple persons injured. Finally, it provides $50,000 in property damage, which is sufficient for most cars on the road today."
Consider deductible options
Insurance expert Billy Van Jura adds, "Will your new car cost more to insure than your old car? In all likelihood it will. Your new car may, because of lease/finance, require comprehensive and collision. But your new car may have some safety features that your old car did not." Sometimes these extra safety features are accompanied by insurance breaks and discounts.
He also suggests, "If you need comprehensive and collision, ask about the deductible options you may have available. Taking a $1,000 [deductible] will save money but may not be right for you. Keep in mind $1,000 [won't cover] a lot of damage."
More on new car buying and insurance
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