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How To Plan Car Insurance Coverage When Buying A Vehicle
July 31st, 2010
Purchasing a vehicle is an exciting time and when people think of costs, thoughts usually turn to the sticker price on the window. Car insurance coverage is an externalized cost that should be considered when adding a new automobile as an asset. There are important factors to consider while getting car insurance quotes when buying a vehicle like legal requirements, type of coverage needed, and the vehicle type.
The legal requirements for car insurance coverage are regulated at the state level. Most states do require, at the minimum, liability coverage. The few states that don't mandate insurance coverage do demand that there be a certain amount of asset accumulation on behalf of a driver to bypass insurance requirements. Legal sanctions should not be the primary motive behind acquiring insurance because it is a blanket amount designed for bare minimum defrayal of damages and not replacement value.
Vehicle type factors that are considered by insurers when giving car insurance quotes are the year, make, model, car body type, and engine size. Insurers use statistical information to adjust rates that are quoted. Car insurance quotes may be higher for expensive vehicles, or lower if safety features are equipped, like air bags or running lights.
The type of car insurance coverage needed when buying a vehicle should be determined by its value. Obviously, the value of a new car is far higher than a used car in typical cases, and this should be reflected in the amount paid to protect a vehicle of substantially higher value than a cheaper used car. If there is a desire to protect against theft or collision, a used vehicle is considerably cheaper to replace which makes it a lower risk and of lesser concern to the insurer. Used and older cars costs less to repair and as a result will have a lower deductible and lesser premium. Sometimes deductibles will be higher than the value of older cars in collision coverage, so it might be better to just carry liability insurance.
Car insurance coverage is a major expenditure to car buyers that can fluctuate dramatically in costs according to the factors discussed. It is an expense that is mandated by law, but is beneficial to have. When getting car insurance quotes, a buyer should think of it as investing in protection of assets as opposed to an unpreventable expense. Often people try to save money by cutting corners through insurance coverage upfront, but when there is a loss suffered, the expenses are multiplied beyond what an initial upfront setback would have defrayed.
