Everything You Need to Know About Car Insurance and Related Products

When purchasing a new car, you’ve likely thought about how you’re going to pay for the vehicle. Perhaps you’re taking out an auto loan through your credit union, arranging for financing through the dealership, or paying with cash.

There’s another critical aspect when purchasing a vehicle that often doesn’t receive as much attention: car insurance. Have you given thought to the kind of insurance that’s right for your new vehicle? What about related products, such as GAP (Guaranteed Asset Protection), warranties, and other add-ons commonly presented to car buyers?

With so many options available, determining what type of car insurance and other coverage you need can be overwhelming. Fortunately, gaining a better grasp of car insurance and related products can help you make a more well-informed decision. Before looking at additional coverage that may be available when purchasing a vehicle, let’s take a look at the various types of car insurance.

Types of Car Insurance

Car insurance is a contract between you and the insurance company, providing financial protection in case of accidents, theft, or damage to your vehicle. Here are the major types of auto insurance:

Auto Liability Coverage: This is the basic coverage required by law in most places. It covers bodily injury and property damage you cause to others in an accident. This ensures that if you’re at fault, the other party’s medical expenses and vehicle repairs are covered.

Collision Coverage: This covers the cost of repairing or replacing your vehicle in case of a collision with another car or object.

Comprehensive Coverage: Comprehensive insurance is for non-collision incidents, such as theft, vandalism, natural disasters, or hitting an animal.

Personal Injury Protection (PIP): PIP covers your medical expenses, as well as other documented losses, such as lost wages.

Medical Payments: This coverage takes care of your medical payments and those of your passengers, regardless of who is at fault.

Uninsured/Underinsured Motorist Coverage: This protects you if you’re in an accident with a driver who has little or no insurance.

Why Researching the Cost Matters

Now that you know the major types of auto insurance, you should do your homework and explore the cost because car insurance rates can vary significantly between providers. Consider obtaining multiple quotes and comparing the coverage, deductibles, and rates offered by different insurers. This will help you get the best rate for your money.

Researching the cost also helps you find a policy that suits your unique needs and budget. Car insurance isn’t one-size-fits-all; it should be personalized to your circumstances. For instance, if you drive an older car, you might opt for a more basic policy, while a new vehicle may warrant comprehensive coverage.

Finally, researching the cost of car insurance ensures that you are complying with your local laws regarding the minimum required insurance coverage. Failing to meet these legal requirements can lead to fines, license suspension, or other legal consequences. And you don’t want to do that, especially since you spent so much time finding your perfect vehicle!

GAP

After you’ve done your research and know which type of car insurance is best for you, there are other products that can protect you and your vehicle. One option is GAP (Guaranteed Asset Protection), which covers the difference between the current market value of your vehicle and the amount you owe on your loan. This can be a lifesaver if your car is totaled in an accident or stolen, as standard auto insurance may not cover the entire loan balance.

The Cost of GAP

The cost of GAP varies depending on the make and model of your car, loan amount, and if you go through the dealership or an insurance company. Some dealers offer it as a one-time upfront fee when financing, which can be added to your loan.

Extended Warranties

Extended warranties can potentially assist with specific vehicle repairs once the manufacturer’s warranty expires. However, they often come with a hefty price tag and don’t always cover everything that could go wrong with a vehicle.

If you’re purchasing a used car that’s no longer covered by the manufacturer’s warranty, purchasing an extended warranty can help save you money if your car needs a costly repair. You won’t have to worry about unexpected repair costs during the warranty period.

The Cost of Extended Warranties

The cost of extended warranties varies greatly depending on the product and the coverage. It can range from a few hundred dollars to several thousand dollars. Be sure to carefully read the terms and coverage details before purchasing.

Other Add-On Products

Aside from GAP and extended warranties, other add-on products are often offered. Here are just a few products that can simplify maintenance and repairs, while keeping your investment in top condition:

• Tire and Wheel Protection: This covers repair or replacement of damaged tires or wheels.
• Paint Protection: A service to maintain the exterior appearance of your vehicle.
• Maintenance Plans: Packages for routine maintenance services, like oil changes and tire rotations.
• Mechanical Repair Coverage: MRC is designed to save you money from unexpected breakdowns and repairs that aren’t covered by your warranty or occur after your warranty expires.

The Cost of Other Add-On Products

The cost of these products varies, but they are typically offered as one-time fees or subscription-based services.

Understanding the various types of car insurance and other related products is essential before purchasing your new vehicle. Before making any decision, carefully assess your needs and the costs involved. Research thoroughly, and don’t hesitate to ask questions. With the right insurance and add-ons, you can enjoy your new car with peace of mind, knowing you’re well-prepared for the unexpected challenges of the road.

If you’re ready to purchase a car, Scott Credit Union can help! Learn more about SCU vehicle loans and other add-ons, such as GAP and Mechanic Repair Coverage.