Buying A Brand New Vehicle? 3 Things To Consider When It Comes To Auto Insurance

If you are purchasing a brand-new vehicle, you will want to make sure you have insurance on the vehicle before driving it off the dealer's lot. You will also want to make sure you have adequate insurance to protect the big investment you just made.

1. Call Your Insurance Company

When you plan to purchase a vehicle, you need to call your insurance company. Suppose you are trading in a vehicle and replacing one vehicle on your policy with another one. In that case, the same coverage you had on your previous vehicle may extend to your new vehicle. However, for this to happen, you need to call the insurance company.

Suppose you are not replacing a car on your policy and are instead adding an additional car to your policy or purchasing your first vehicle. In that case, you need to place a call to the insurance company. Let them know you want to add a new vehicle to your policy. Then, find out when the policy will take effect. It may take effect immediately, or it may take 24 hours. Don't drive the vehicle off the dealer's lot until it is protected by insurance, even if that means you have to come back a day later to pick it up.

2. Get Gap Insurance

When you are taking out an automobile loan to finance the purchase of a vehicle, it is smart to take out gap insurance as well. Gap insurance is specifically designed for individuals who are carrying a loan on their vehicle. If your car's current value is less than what you own on the vehicle, you should add gap insurance to your policy. You can find this out by using one of the many online tools that estimate the worth of your vehicle. 

For example, if your vehicle is worth $5,000 but you owe $8,000 on the vehicle, you should carry gap insurance. If you were to be involved in a car crash that ended up completely wrecking your vehicle, your car insurance would only be obligated to pay the deprecation value, which would be $5,000. That would leave you with $3,000 to still pay off on a loan for a vehicle that is totaled.

With gap insurance, your insurance provider will give you enough money to pay off your loan beyond the value of the car, or the $3,000 difference between the balance of your loan and the current market price of your vehicle. Paying off your loan will then put you in a position to take out another car loan and get a new vehicle. If you are still carrying a car loan on a wrecked vehicle, you may have a harder time securing a new car loan. 

Some car dealers will try to sell gap insurance as an add-on to your vehicle purchase; however, you can get gap insurance from the insurance company covering your regular car insurance needs, and you don't need to buy a separate policy from the dealership where you purchase your vehicle. Also, keep in mind that some insurance providers will only offer gap insurance if you are the first owner of the vehicle; they may not offer this benefit on a certified pre-owned car. 

3. Fully Protect Your Car

When you drive around in a brand-new vehicle, you want to make sure that it is fully protected. You will want to make sure that you are carrying both collision and comprehensive insurance on top of the liability insurance your state requires you to carry. If you get into a vehicle accident that is your fault or get into a solo vehicle accident, or if someone steals your car, or a tree branch falls on your new car, you will be fully protected with collision and comprehensive insurance policies. Additionally, if you are taking out a loan to finance your new vehicle, your lender may require you to carry comprehensive and collision insurance.

When it comes to purchasing a new vehicle, don't leave the lot until you have insurance on the vehicle. Be sure to get gap insurance if you take out a loan on the vehicle and carry collision and comprehensive insurance to protect your investment fully. Contact an auto insurance provider for more information.