A new car is very valuable on many levels. For one thing, it is obviously a big financial investment for you. Whether you paid cash for the vehicle or took out a loan at the dealership to buy it, you have put a lot of money into purchasing this specific vehicle. You need to make sure that that investment is protected.
There’s also the emotional side. For many people, buying a car takes weeks or months. They go on test drives, they look up different makes and models, they consider what style they’re looking for and they make a list of features that they want to have. This can be a lot of fun and they may find themselves emotionally invested in this vehicle that they have finally selected out of a wide range of options. Once again, that investment must be protected.
How can you do it? It’s important to have the ideal insurance coverage for your situation. This is going to be different for everyone, so let’s consider a few of the options that you have and how they can help.
Is your car a lease?
The first thing to ask is whether or not you actually purchased your car, even with a loan, or if the car is a lease. You can buy specific coverage for leased and loaned vehicles. After all, you may have only expected to lease that vehicle for the next two years, so that was what you budgeted in for your investment. But if that car was totaled or stolen, the entire value of the car may hang in the balance. That total is much more than you are anticipating paying and you need to make sure that the insurance is in place so that you don’t have to.
New vehicle replacement
If you did purchase the vehicle, one thing to look into is whether or not you can get replacement coverage. Generally speaking, for the first 12 months after buying a new car, you can get the full value of that model. This means that you could return to the dealership and buy another one, entirely replacing your vehicle after the loss. This is not always possible with older vehicles, as the amount of financial compensation you get will just be tied to the vehicle’s current market value – the price it would sell for it prior to the accident. This could leave you far short of buying a replacement, which is why new vehicle replacement coverage is so important.
In some cases, people will put aftermarket parts on their vehicles. Maybe you swapped out the engine on your new hatchback, or maybe you put a new suspension on your off-road vehicle. You may have also used parts from a different auto maker. The type of parts you use could be much more expensive than the original equipment from the manufacturer, known as OEM equipment. If it is, this means that a totaled vehicle would be more expensive to fix or replace, as well. It’s important to note this in your insurance coverage. If not, your vehicle may only be insured to the factory model, and so repairs may not be made up to your personal standards.
Finally, there are people who put custom equipment inside their vehicles, such as putting in a brand new sound system, complete with an amp, stereo, speakers and wiring. Some people put in DVD players or entertainment systems for their children. Others put in LED lights or various decorative factors to change the aesthetic and visual appeal of the vehicle. In other words, all aftermarket parts are not going to impact the way that the car operates, but they can still be very expensive and important to your experience with that vehicle. You need to make sure that your insurance coverage is actually going to cover the cost of this other equipment.
Your unique policy
Getting the right insurance policy is essential. It’s also something that people often get wrong, perhaps because they don’t fully understand the policy they’re buying or because they don’t even know what type of coverage they need. It can help to work with an experienced team to ensure that the process goes smoothly and you consider all of your options to get the proper coverage.