Auto Insurance for a New Vehicle

Are you in the process of purchasing a new car, truck, or SUV and wondering about your options when it comes to auto insurance? Keep reading for some general information that may be useful for you as you shop for this coverage.

Insurance Coverages for a New Vehicle

Most automobile insurance policies have a number of different coverage options available. Some coverages may be legally required, whereas others are optional (but still ought to be seriously considered). Some of these coverage options include, but are not limited to, the following.

Collision Coverage

Collision coverage applies when you are involved in an accident with another vehicle. Subject to policy limits and conditions, collision coverage helps cover the costs of repairs, and possibly even cover the cost of replacing your vehicle, in the event of a covered accident. If you are financing or leasing your new vehicle, virtually all lenders will require you to have collision coverage as a condition of the loan or lease agreement.

Comprehensive Coverage

Comprehensive coverage goes into effect when there is damage to your vehicle from something other than a vehicle-on-vehicle accident, such as vandalism, theft, hail, fire, accidents with animals, and other “acts of God.” Similar to collision coverage, comprehensive coverage helps to pay for the costs incurred in repairing or replacing your vehicle in the event of a covered event (subject, of course, to policy limits and conditions).  Almost all lenders also require comprehensive coverage as part of a finance or lease agreement. 

Uninsured and Underinsured Motorist Coverage

Getting into an accident due to another driver’s negligence is bad enough – it’s even worse to find out that the negligent driver who caused your injuries or who damaged your vehicle was either uninsured or underinsured. Uninsured Motorist (“UM”) coverage and Underinsured Motorist (“UIM”) coverage are two separate but related coverages that are designed to help in such a circumstance. UM coverage applies when the at-fault driver lacks any automobile liability insurance, and UIM coverage applies when the at-fault driver has some auto liability insurance but in an amount that is less than your UIM coverage limits. UM and UIM benefits can be used to pay for your medical bills, property damage, pain and suffering and other damages caused by the negligent driver. UM and UIM coverage may be legally required depending on where you live, but even if you live in a state where it is not legally mandated, it is something that you ought to seriously consider.

Gap Coverage

Most automobiles significantly depreciate the moment that they roll off the dealership lot. If you’ve financed your vehicle, you could potentially owe more on the loan than your vehicle is worth. If your vehicle is totaled in an accident while you are upside-down on the loan, that could be an issue – many insurance policies will pay based on the value of the vehicle (taking depreciation into account) without regard to what you owe on the loan.  In other words, there could be a situation where the insurance payout for your totaled vehicle is less than what you owe on the vehicle, leaving you responsible for paying the difference to your lender. Gap coverage is a great option that you can purchase to help protect yourself from this situation, as it is designed to help cover the gap between the value of your vehicle and what you still owe on it.

Liability Coverage

Liability coverage is critical to have, and in fact it is legally required in most U.S. states. It applies when you are legally responsible for causing an automobile accident, and it can help to pay for the medical bills, property damage, lost income, pain and suffering, and other damages that you cause to others.

Insuring Your New Vehicle

The process of obtaining insurance for your new vehicle can vary depending on the circumstances. If you already have an existing automobile insurance policy in place when you buy your new vehicle, it is possible that your policy may provide a brief “grace period” in which temporary coverage is extended to your new ride. This gives you a little bit of time to work with your insurance company to have your new vehicle added to your policy. However, not all insurance policies include a grace period, and even among those that do include this coverage, the length of the grace period can vary. As such, you should be sure to carefully review your current auto policy to see whether it provides a grace period, and if so, how long it lasts and what coverages are included.   

If you have an insurance policy in place when you buy your new vehicle, the following are some proactive steps that you should take:

• Review your current policy ahead of time to determine if you have a grace period, and if so, to determine the length of the period and what coverages are included;
• Provide proof of current insurance to the seller;
• Gather new vehicle information and call your agent to update your policy;
• Review your existing coverages and make necessary or desired changes or updates;
• Ask your agent about potential discounts.

If you don’t have a current automobile insurance policy in place when you buy your new vehicle, you will have to arrange for insurance before driving it off of the lot. The following are some prospective steps that you should take to arrange for a new insurance policy:

• Gather basic personal and vehicle information;
• Research what coverages you may need and want when purchasing your new vehicle;
• Get multiple quotes from insurance companies;
• Ask about potential discounts;
• Complete payments and receive proof of coverage.

How Much is Insurance for a New Vehicle?

The price of insurance for your new vehicle can vary depending on a variety of factors. To help prepare you for getting your quote, here are some factors that you will need to discuss with your local Cross Insurance agent.

• The make and model of your new vehicle. A newer and more expensive vehicle will typically tend to raise your rates compared to an older vehicle.
• The state that you live in will also affect your quote. With each state having different laws and regulations that drivers must follow, this can alter rates.
• Where and how much will you be driving your new vehicle? Will you be using your vehicle for daily use such as to and from work, or for commercial purposes?
• The age, gender, marital status, and education of the driver can also affect your quote.
• Your personal driving record will also factor into your costs. Having prior tickets, violations or accidents can potentially raise your rates.

You should connect with a local insurance agent to discuss the unique features of your vehicle and to request a quote today.

 

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This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.