It’s hard to describe that little rush you feel when you drive away from the dealership in a shiny new car. Whether it comes from knowing that you’ve finally purchased the car of your dreams, feeling proud that you’ve found a safe vehicle to transport your growing family, or realizing that you now have payments to make for the next three to five years, you’re definitely feeling a surge of energy as you head down the highway for the first time in a new vehicle.
One thing you shouldn’t have to feel is concern about car insurance, but especially when you’ve purchased a new car – which can depreciate as much as 15-20 percent in the first few years – you’ll rest better knowing you’ve got the right coverage. Most personal auto policies cover ACV or “actual cash value,” which equals replacement cost minus depreciation. Factors including model year, mileage, previous damage and wear and tear are considered.
You may be eligible to increase your coverage beyond ACV by adding replacement cost coverage for a total loss. This coverage allows you to upgrade your physical damage coverage to replace your auto with a new auto of the same make, model and equipment in the event of a total covered loss. The payment for loss will be reduced by any applicable deductible for the scheduled vehicle. (Specific exclusions – including fire, theft or vandalism – may apply depending on your state or insurance carrier.)
Often, there are restrictions for how long you have to add this coverage after purchasing your car, or about how many times you can renew the coverage, so contact your independent agent for more information right away.
Finally, consider adding gap coverage to any auto policy, even if your car isn’t new. In the event of a total loss, most insurance policies pay the depreciated value of your auto, which may be lower than what you owe on it. This would leave you to “cover the gap” and pay the balance of any loans or leases, which could be thousands of dollars. By purchasing gap coverage, the difference between the value of your auto and the unpaid balance on your lease or loan agreement is covered if you experience a total loss.
Making sure you’ve got superior protection for your car will help you keep that “new car feeling” a little longer!