July 1, 2010

Extra Insurance That May Be Needed for Brand New Vehicles

You bought that new car you’ve been having your eye on. Now what? With a new vehicle, you need an insurance policy to cover it which can be pretty pricey. Before you purchase a new car, you should compare rates for the vehicle you have in mind to find an affordable auto insurance quote.

Buying insurance for a new car is different from insuring an older vehicle with a lower value. New vehicles require full coverage to protect the value in the event of an accident. With older vehicles, you are only required to have liability and no-fault coverage at your state’s minimum requirements. However, for a new vehicle the coverage requirements also include comprehensive and collision.

Comprehensive coverage will protect your vehicle from any damage caused by ‘non-collision’ sources such as theft, fire, or flood. Suppose the vehicle you plan to purchase is on the list of ‘top stolen vehicles’. This would put your car at higher risk for theft and therefore you must have adequate coverage if it should get stolen. Collision coverage is to cover the damage caused upon physical contact with another vehicle.

You are only compelled to have your state’s minimum requirements for each of these types of coverage; although you may want to purchase more depending on your car’s value in order to cover it. The higher the value is for the vehicle the higher your premiums will be. It’s wise to compare rates for the insurance coverage needed for the vehicle you plan to buy. You may change your mind on a safer, mid-sized car for a more affordable auto insurance quote.

If you’re taking out a loan or leasing your new vehicle, another type of auto insurance you may need to consider is gap insurance. Some dealerships may require gap insurance when you lease a new car.

As soon as you drive your new car off the lot, the value depreciates from what you paid for it. Car insurance companies go by the value the car is actually worth in an accident. If you lease or get a loan with little to no down payment, gap insurance will cover the gap between the amount you owe and the total value of the vehicle. This ensures the bank or the dealership will receive the vehicle’s total value if you happen to total it or it becomes stolen.

How much insurance you’ll need for a new vehicle depends greatly on your state’s minimum requirements. The key to finding a reasonable auto insurance quote for the coverage needed on a new vehicle is considering the type of vehicle to purchase. Remember, sportier cars will require more coverage.