What Car Insurance Coverage Do I Need?

Decide how much liability coverage is enough for similar type of drivers.

Car Insurance For Financed Vehicles

You must have aspired to own a car at some time or the other. However, as it involves matters of a significant investment, probably you had to swallow the temptation. Fortunately, there are the financing schemes that will enable you to accomplish this aspiration, without the need to incur significant expenses, out of pocket.

However, as you are owning a car, you will require insuring it, before you can take it on the roads. In this regard, you will have to be very precise in evaluating the insurance needs as you will have to protect your car as well as cover the liability that you will owe to the financier. Here is the guide for buying the insurance policies for the financed cars.

The coverages that you will need for a financed car

While making the finance agreement, your financier will specify the compulsory coverages that you must take, so long the car will be hypothecated to the financier. You will have to comply with all those requirements. In general, the financiers ask for the following coverages:

  • Coverage for Minimum Liability: This is a compulsory coverage for the financed vehicles and it includes the coverage for personal injuries, liability for property damage, liability for Physical injuries, as well as coverage for the uninsured and under-insured motorists. In the majority of the cases, the financier is likely to request you to opt for higher values of coverage, above the minimum specified values in these cases. Another insurance that you will be taking is the coverage of the liability, owed to the financier. This will be included in the EMI that you will pay and it will take care of the repayment of the loan to the financier, in case you are not able to pay it yourself.
  • Comprehensive coverage: The extent of this coverage will protect all the damages to your car that are resulting from factors, other than collision. This coverage can protect the cars from threats like damages due to fire, theft, collision with animals as well as damages, arising due to the hands of God activities.
  • Collision Protection: This protection plan will cover the damages to your car, resulting due to collision with another vehicle or other properties.

You must note that the financier is likely to determine the highest ceiling for the value of deductible that you can mutually agree upon. This is a point that needs precise clarification at the onset as it will determine the extent of your out of pocket expenses for any repair and restoration of the damaged car.

Another point that will be highly relevant to state in this context is that your insurer is likely to quote you higher rates of premium. This is for the reason of the higher extent of the minimum liability protection that you will require to buy for the financed cars. However, if you are able to display a good credit score or an impressive driving history, consistently for years, the insurer is likely to offer you some concession.

Why should you buy the GAP insurance plan for the financed cars?

Though this is an optional coverage and it will enhance your total premium cost, still, it will be wise to include this plan. It is for the reason that the GAP Insurance coverage will insure the difference in the value between the actual value of your vehicle and the amount you owe to the financier. This will protect you from financial burden, should anything gross happens with your car, before you are completing its repayment in full. Hence, this plan has been very popular among the owners of the financed vehicles.

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