Before purchasing car insurance, it is important that you understand which policies are worth the money.
the main points
- Drivers must purchase the minimum auto insurance required by their state.
- They can also choose to purchase additional protection.
- There are five types of additional coverage worth paying for, including collision, gap, and new car replacement.
Buying car insurance can be complicated. Most states require drivers to meet minimum coverage requirements, but there are also many types of auto insurance optional add-ons. And whether to buy this optional protection can sometimes be a confusing question.
While all sorts of extra protections aren’t worth paying for, there are definitely some very important policy protections out there. In fact, there are five things that are worth paying for.
1. Collision Cover
Collision coverage is one of the most important types of optional insurance. In fact, for people who have a car loan, it may not be as optional as lenders in general Requires This coverage because it is absolutely necessary.
Collision coverage covers the costs of repairing or replacing the vehicle if the policyholder causes an accident. Without it, the driver who caused the collision will be left to replace their vehicle on their own or pay for any necessary repairs without financial assistance.
That’s because drivers’ insurance that they are required to buy typically only covers property damage to other people’s vehicles if the driver causes an accident—does nothing to pay for the driver. king the car when something goes wrong.
Collision coverage ensures that the driver will not have to pay for everything if their vehicle is damaged or destroyed in an accident. It is one of the types of coverage that most motorists cannot do without.
2. Comprehensive coverage
Comprehensive coverage, like collision coverage, is an optional extra that many auto lenders require motorists to purchase. This type of policy protects the driver from any losses that are not related to a breakdown. For example, if a car is vandalized, a tree falls on it, or it is stolen, this will be the insurance that pays the bill.
Without comprehensive coverage, a motorist will be unlucky when something goes wrong that wasn’t an accident, so motorists will again need this protection in place so they don’t have to pay out of their pocket to get it fixed or replace the car.
3. Gap lock
Gap insurance is an important type of additional coverage for any motorist who has a car loan. Without it, drivers could end up in serious financial hardship if their vehicle was collected or stolen and not recovered.
See, insurance only pays the fair market value of the car at the time something happens to it. But the amount owed on the car loan may be higher than this amount. The driver still had to pay off the total debt owed even if the insurance didn’t pay that much money. Gap insurance will make sure you don’t pay that amount out of pocket, because it will pay the difference between what the insurance company says about the value of the car and what the driver owes.
Lenders usually require this as well, and with good reason because most people can’t keep making loan payments on a car they no longer have.
4. Paying car rental costs
Most drivers should also seriously consider purchasing rental car reimbursement insurance as well – although no lenders mandate this and it is not required by state law.
This policy add-on pays most or all of the rental car costs while the car is being repaired after a covered damage or while the insurance case is settled after a complete loss. Without it, a motorist may have to go weeks without a car, or pay out of pocket for a rental car.
5. New Vehicle Replacement Cover
Finally, new car replacement coverage is a great addition for motorists who own a newer model vehicle. Because new cars depreciate so quickly, insurance usually pays much less than the cost of replacing a completely new car. New Vehicle Replacement Coverage ensures the driver can get a similar new vehicle if something goes wrong.
Each of these different types of coverage adds a little extra cost to the premiums, but it’s worth adding to the policy to avoid serious out-of-pocket losses if covered problems arise.
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