Buying a car is a memorable and exciting moment, but you can't afford to forget about getting the right insurance. Coverage rates vary based on what type of vehicle you purchase, where you live, and several other factors. Here are important points to know about different scenarios involving car insurance for a new car before you walk into an auto dealership.
Keeping Your Old Car and Buying a New One
Many people own more than one vehicle, such as one for commuting and one for leisure. Each state has its own regulations on how much auto insurance coverage you need to legally drive a motor vehicle. All vehicles you own must have minimal coverage to meet state vehicle insurance rules, even if they remain parked in a driveway or garage most of the time.
All states, except New Hampshire, require drivers to carry liability insurance, which covers accidents in which you are at fault. In New Hampshire, drivers must be able to prove they have their own sufficient funding to pay for losses to other motorists. Lacking minimal auto insurance coverage can lead to serious penalties in any state.
Replacing an Old Vehicle Completely
It's common for consumers to use old vehicles for trade-in value toward a purchase. You might also sell an old clunker to a junkyard for quick cash. As long as you are still insured for the old vehicle, you can temporarily use the old policy to cover your new vehicle during a grace period if the policy specifically allows for this transfer. However, this option may also require you to pay upfront cash for the purchase. You will then be able to drive the new car off the lot and set up a new insurance policy during the grace period.
To finance your vehicle through a reputable lender, you need three types of coverage: collision, comprehensive, and liability. If your old vehicle only had liability coverage, you would need to add the two other types immediately. Buying a used car with cash, however, does not require comprehensive coverage. You mainly need liability coverage.
Proof of Insurance
To drive a new car off the lot, you must show the dealer proof of auto insurance. That's why before you head to a car dealership, you should talk with your insurance agent to understand all your options. The dealer might delay your purchase until you can show specific coverage for the new vehicle.
Since every state has its own unique insurance regulations, learn about your state's requirements and options by visiting the DMV website. In California, drivers have the option of bypassing conventional insurance coverage if they post a $35,000 cash deposit to the DMV, which will then issue them a "self-insurance" certificate. You can also purchase a surety bond from a state-licensed broker in the same amount.
Fine Print for Leasing a Vehicle
When it comes to the fine print, many people do not want to be bothered with complex details about the new products they buy. While it is possible to get through life with this attitude, you definitely want to pay close attention to contract details when you decide to lease a car. Find out if the leasing agent offers insurance that is included in your monthly leasing fee. Another insurance option for leasing a car or financing a vehicle purchase is to buy GAP coverage.
Before rushing out and buying a car, take some time to think about your insurance needs. Paying with cash is the simple approach, but most people are only able to finance a new vehicle, which usually requires full insurance coverage. First, assess your coverage needs and then buy your dream car. Contact the experts at Fuller Insurance
today in Southern California to learn more about getting appropriate insurance coverage for your needs.