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UPDATED: Jun 18, 2020
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When someone decides it is time to trade in their old reliable car and buy new a new one, they will need to purchase a new car insurance policy. Selecting the best policies requires knowing and comparing your options.
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Most people cannot afford to buy a new car outright. They need to use a financial institution to help them pay for that new car. In most cases, the financial institution will insist the car buyer carry a certain amount of insurance.
Full Coverage on New Car Insurance
A financial institution generally makes the new car owner carry full coverage on the new car. Whether it is a Kia or a Jaguar, as long as they hold the note on it, the car owner has to pay.
Before he was carrying the legal limit; now he has to go to full coverage.
Full coverage usually consists of liability, comprehensive, and collision insurance.
In some states, PIP will be necessary.
All states are different as to what their legal limits are.
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New Car Insurance Policies
The financial institution is interested in protecting their new investment. Regardless of what the car owner thinks, the bank owns that new car. This is what the new car owner will have to carry in coverage:
- Bodily Injury Insurance – This pays for other people’s medical expenses. No one in the car buyer’s car will be covered under this policy, including the car buyer if it is the car buyers fault.
- Property Damage Liability – This pays for damages done to someone else’s property. It pays nothing towards damages done to car owner’s brand new car. This applies if the car owner is at fault.
- Personal Injury Protection – This policy covers new car owner’s injuries and anyone in his car.
- Uninsured/Underinsured Motorist Coverage – Helps cover costs related to uninsured motorist accidents.
- Collision – Will pay for new car owner’s car damages relating to an accident.
- Comprehensive – Will pay car owner if his car is stolen or damaged without being in an accident.
Another insurance policy that is handy for the new car owner to have is GAP insurance. GAP insurance will cover the difference between what the insurance company pays for a car that has ben damaged beyond repair or stolen, and what is still owed on it.
This insurance is meant specifically for vehicles that have an obligation to a financial institution.
This option only makes sense to have if the owner of the car expects to owe more than what the car is worth. People who pay low down payments that have a high-interest rate, or bought a car that depreciates quickly might want to consider carrying GAP insurance.
Buying a New Car Insurance Policy
When it comes time to buy new car insurance, the new car owner has a lot to think about. It is important that a car owner really considers whether just carrying the minimum amount of liability insurance is a wise idea.
With today’s prices, having a car repaired can cost thousands of dollars. If the liability insurance is not enough to cover it all, the rest comes out of the responsible drivers pocket.
This potential cost is why you should assess your driving habits and calculate your insurance needs based on your risk.
With a new car, you should have comprehensive and collision insurances. These both carry a deductible. To make insurance premiums cheaper, the car owner can get the highest deductible affordable.
It is easier than ever for the car owner to get new car insurance now with the internet. Getting quotes car insurance quotes online is simple and quick. Simply type your zip code into the free rates box and start comparing today!