If you’ve recently financed a car, you may be wondering what type of insurance coverage is necessary. After all, your lender will have certain requirements for what kind of coverage you need in order to protect their investment. In this blog post, we’ll explore the different types of insurance you should consider when financing a car and why it’s important to make sure you’re adequately covered. Read on to learn more about how to properly insure your new vehicle and protect your financial future.
If you have a financed car, your lender will require that you have full coverage insurance. This type of insurance protects you and the lender if your car is damaged or totaled in an accident. It typically includes collision and comprehensive coverage, as well as liability coverage.
Liability coverage is important because it protects you financially if you are found at fault for an accident that damages someone else’s property or injures another person. Without this coverage, you could be sued for damages and end up having to pay out of pocket for repairs or medical bills.
Most lenders require that you have at least $100,000 in bodily injury liability coverage per person and $300,000 per accident, as well as $50,000 in property damage liability coverage. Some lenders may require higher limits, so it’s important to check with your lender to see what they require. You can usually add liability coverage to your existing auto insurance policy or purchase a separate policy if you don’t already have one.
Collision coverage is one of the most important types of insurance you can have if you finance a car. This coverage will help pay to repair or replace your car if it’s damaged in an accident. It’s important to remember that collision coverage only pays for damage to your own vehicle, not any other property (like a fence or building) or injuries you may cause.
Gap insurance is an optional car insurance coverage that can help pay the difference between what you owe on your car loan and what your car is worth if it’s totaled or stolen.
If you have a loan on your car, gap insurance is an important coverage to have. If your car is totaled or stolen and you don’t have gap insurance, you could be responsible for paying off the entire loan, even though the car is gone. That’s because most auto insurance policies only cover the actual value of your vehicle at the time of the loss.
If you’re financing a new car, your lender may require you to purchase gap insurance. Even if it’s not required, it’s still a good idea to consider gap coverage if you’re concerned about owing more on your loan than your car is worth.
Gap insurance typically costs a few hundred dollars per year and is often included in comprehensive and collision coverage plans. It’s important to note that gap insurance does not cover everything – it only pays the difference between the actual cash value of your car and what you still owe on your loan.
If you have a car loan, your lender will require that you carry comprehensive coverage. This type of insurance pays to repair or replace your car if it’s damaged in an incident that’s not a collision, such as by fire, theft or vandalism. It also covers damage caused by weather events, such as hail or flooding. Comprehensive coverage is optional if you own your car outright.
Uninsured and Underinsured Motorist Coverage
If you have a loan or lease on your vehicle, your lender will likely require that you have uninsured and underinsured motorist coverage (UIM). UIM protects you if you’re hit by a driver who doesn’t have insurance or doesn’t have enough insurance to cover the costs of your injuries. It can also protect you if you’re hit by a hit-and-run driver.
While UIM is not required in every state, it’s a good idea to add it to your policy if it’s available. Even if it’s not required by your lender, UIM can help cover the costs of your injuries if you’re hit by an uninsured or underinsured driver.
Right to Repair Law
In most states, it is required by law that insurance companies offer a right to repair law option for customers who finance their vehicles. This law gives the customer the right to have the insurance company pay for repairs directly to the repair shop of their choice, rather than being required to use a specific repair shop chosen by the insurance company.
The right to repair law is beneficial for customers because it allows them to choose their own repair shop and get the repairs done as quickly as possible. It also gives them peace of mind knowing that they are not at the mercy of an insurance company when it comes to getting their car repaired after an accident.
Owning a financed car brings with it certain responsibilities and considerations, one of which is the need to insure your vehicle. With the right insurance in place you can ensure that any major financial losses are avoided should something happen to your car. It’s important to do some research and compare different policies before deciding on the best option for you. By being aware of what type of coverage is available and taking advantage of discounts, you can make sure that you get the best deal possible while still enjoying all the benefits of owning a financed car.