How to Pick the Right Insurance Coverage – Newer Car Policies

Ok, by now, you are starting to become an expert on coverage’s. Heck, by now, you might have already called your insurance companies and made some changes to your policy that either saved you money, or made your policy better. Either way, I am going to go over some scenarios of how you may want to tailor your policy based on your particular situation. Remember, these are GENERAL suggestions, and I urge you to sit down with your agent to decide what is right for YOU.

First of all, let’s start this section by trying to clear up a common misconception. Just because a car is NEW doesn’t mean the insurance is more expensive. Just because a car is older doesn’t mean it is cheaper. As a general rule, these statements are more true than false, but the fact it, there are variables that go into the rating. For instance, your car may be brand new, but only cost $12,000 and is incredibly safe. Conversely, you may have a 10 year old car that is still work $30,000, has a turbo engine, and is a death trap. See what I mean? Be sure to give all the details of the vehicle to the insurance company and let them rate the vehicle. Don’t assume what the premium is going to be just because your car is new, old, expensive, whatever. MANY variables make up the premium. For these scenarios, we are going with the assumption that as a newer car, it is also more expensive as well. Ok, on to the policy. In general a newer car will be more expensive, and if you didn’t pay cash, you will have a lien on the vehicle. The bank will require full coverage. To recap, we are talking liability, comprehensive, and collision. Oftentimes, the bank will require a specific deductible. Pay attention to their requests. You may be able to choose your own deductible as well, but be sure our policy contains AT LEAST what the bank requires. They will receive a copy of the policy, and if it is incorrect, they can issue you a policy of their own if yours is insufficient. Those policies are usually much more expensive than simply getting the coverage through your own agent. As state before, pay attention to liability. That is  the one that protects YOU. Don’t skimp on that coverage…I will say it again, make your limits high, and protect yourself, your family, and your assets! A common scenario is, you buy a car, then call your agent to SWAP out cars on your policy. Keep in mind, the old coverage’s you had will stay the same for this new vehicle unless you change them. Make sure your agent reviews them with you at this time. A sleepy agent may not pay attention; the policy and car are YOURS…make sure YOU pay attention. If you do plan on getting rid of your old vehicle, keep in mind, if you do a car change, you will only have a certain amount of time to get your old license plates turned into the MVA. If not, you will receive a fine. You may have to put a policy back on your old car if you do not get rid of it as planned. If you are simply adding an additional car to your household, you are starting from scratch with a brand new application, so this scenario will not apply.

Bottom line:

  • Your policy on a new car will GENERALLY be more expensive, but not always.
  • If you have a lien, pay attention to the minimum requirements the bank is requesting.
  • If you are getting rid of a car and buying a new one, make sure to turn your old plates in to the MVA.
  • Make sure to review the new policy once you receive it and confirm all the coverage’s.

Photo credit/Flickr/Sammmm_

Photo credit/Flickr/smartvital

This entry was posted on Saturday, July 25th, 2009 at 3:15 pm and is filed under article. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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