Who doesn’t love the feeling of a new car? The clear glossy paint, the alluring smell of the new car and the thrill of impressing all your friends and family members! However, all this can be short-lived if something happens to your brand new car. Are you adequately insured to cover its repair bills? Many people find out a little too late that they don’t have adequate insurance, but by then the damage has been done!
If the third party (other driver) involved in the accident doesn’t have insurance, or has inadequate insurance, the government of the United States protects you and you can sue the other driver for damages. It’s no secret that court cases are not something either party can take lightly. Even though you are right, you will still need to pay for legal fees. Insurance claims that go to court don’t generally get settled quickly unless there is definitive evidence against one of the parties, or an eye witness who saw the accident happening and can identify whose fault the accident was. In the meanwhile, you will need to employ an attorney, miss out on personal and professional commitments and take leave from work on a regular basis. While the system may work and you may get reimbursed you will end up loosing a great deal more, especially if you were injured in the accident.
It’s imperative that you take a cover above the state’s prescribed limits. The limits prescribed by the states are yardsticks to give you a lower limit of the cover you need. Statistics prove that, in most cases, the state minimum doesn’t cover the damages involved in case of a new car. We would suggest that you get comprehensive cover, coupled with no fault insurance so that you are safe in the event of any kind of accident. It is highly advisable to take out a separate insurance policy for your health insurance and not club it with your auto insurance. When you club your auto insurance and medical insurance, your medical insurance covers you only from accidental injuries and not other medical procedures while affecting your insurance premium significantly. A good medical insurance policy will be much better, both in terms of cover and cost.
When you purchase a new vehicle on an installment plan, you owe the bank the total cost of the vehicle minus what you have already paid them till date. Now, if a vehicle that is a few months old is involved in an accident, the insurance company will give you a payout based on the current market value of your vehicle. A vehicle that has left the showroom is considered a second hand vehicle and is prone to depreciation regardless of the amount of usage. In such a situation, if your car is totaled, the insurance company will in all likelihood pay you an amount that is less than the amount you owe the bank; which means, that you not only lose out on your vehicle, but also a great deal of money. This is where GAP insurance comes in. GAP insurance covers the difference in values of the amount you owe the bank and the car’s market worth. Gap insurance is considered a must-have by most auto enthusiasts for a new vehicle.
Depending on your usage pattern and driving style, find a cover that gives you adequate protection from any possible financial losses.