There’s nothing quite like cruising down an open road in a brand-new vehicle with pristine leather seats and that new car smell. The only thing that can spoil the mood is stressing about not yet having coverage or, worse yet, getting into an accident before you’ve had time to put the new car on your insurance policy.
So, as soon as you get home, or better yet before you drive off the lot, it’s wise to insure your new car. But what insurance is required? Is there special insurance you should carry if your car is brand new? What if the car is not new but has a lease or loan? These are all great questions to ask.
Here’s a brief explanation of your car insurance coverage options for your new car.
Minimum Amount of Car Insurance
Did you know it is illegal to operate a motor vehicle without car insurance? The law does not necessarily care about insuring damages to your car, but lawmakers want to ensure that if you are found at fault in a car accident, you can cover the cost for damages you have caused. To make sure of this, each state has its own laws for what types of car insurance are a requirement and how much coverage you must carry.
In Arizona, there are insurance requirements in property damage liability coverage and bodily injury. You must carry a minimum of 25/50/15 in liability coverage. This means that your insurance should cover up to $25,000 for bodily injury per person, up to $50,000 for bodily injury per accident, and up to $15,000 for property damage.
It is important to note that these are the state-required minimum coverage limits, and in many cases, these may not cover the full extent of damage that occurs. These coverages also do not cover damage to your vehicle. Therefore, it is wise to carry more coverage than the minimum requirements.
Main Types of Coverage
There are many different types of insurance coverage. Some you must carry, and others are optional.
Every U.S. state requires some minimum liability coverage. This coverage insures damage that you are liable for if you are found to be at fault in an accident. Each state has a minimum requirement, but it is a good idea to consider carrying a higher amount than the minimum because it is common that an accident, especially those involving more than one vehicle, can cause more damage than is covered by the minimum. Carrying a higher coverage limit protects you from having to pay out of pocket for damage that you cause.
In addition to carrying coverage for other vehicles that may sustain damage, it is beneficial to you to ensure that your own vehicle is insured against damage, especially if your vehicle is new or new to you. Carrying collision insurance makes certain that you can repair or replace your car at a low cost. Most accident-related damage is covered under collision insurance, even if you are at fault.
What about the damage that occurs to your vehicle that isn’t accident-related or the fault of any human being? For instance, weather damage, a rock to the windshield, or damage from an animal crossing the road? Liability and collision insurance do not cover these types of claims. Therefore, it is smart to carry some level of comprehensive coverage as well for these types of incidents.
Aside from the main types of coverage, there are several additional coverages you can choose to carry on your new vehicle.
Uninsured/ Underinsured Motorist
It is illegal to drive without insurance. Unfortunately, not everyone follows the law. If you are in a car accident with a driver who does not carry any insurance, you may legally have a case against them in court to recoup repair costs, but this process can be very costly and may take a long time. To avoid this, you can choose to carry uninsured motorist coverage that protects you against a loss in an accident that is not your fault against an uninsured driver.
Additionally, if you are hit by a driver who does carry the proper minimum liability, but the damage caused is greater than the amount their plan allows, carrying underinsured motorist coverage will ensure that you can get the repairs you need without having to wait on their insurance for answers.
Adding roadside assistance to your coverage often does not cost very much monthly, but it can give you great peace of mind. If you are in a car accident or if your vehicle incurs damage, such as a flat tire or shattered window, your roadside assistance coverage will help to change a tire or tow your car at little to no cost to you. This coverage can prevent you from being stranded on the side of the road, unsure of who to call for help.
In many states, Personal Injury Protection (PIP) may be available as an insurance option. This coverage pays for medical bills, lost wages, and other damages that may occur in an accident. But in Arizona, this coverage is not offered. Instead, you may opt for Med Pay which does cover medical payments but not extra losses such as time away from work. This coverage is helpful for those whose health insurance deductibles are very high or for those who may not have health insurance.
Coverage for New Vehicles
Typically, most insurances are available to you whether your car is new or old. It is up to you to decide which types of coverage you would like to carry. You may choose to carry all types of coverage or only a few based on the deductible you would like to pay and the value of your car.
There is one type of coverage that is highly recommended for new vehicles that have a lease or a loan. That is GAP insurance. Guaranteed Auto Protection is wise to carry if what you currently owe on your car is more than the car is technically worth. This is often the case with brand-new vehicles since the value of a vehicle drops significantly once it drives off the lot. When you are insured with GAP coverage, your insurance will cover the difference between what you owe and what your car is worth if you are in an accident that causes significant damage or totals your vehicle. In some cases, when you buy a new car, your lender may require that you carry GAP coverage.
Finding the Best Insurance Rate for Your New Vehicle
The average cost of car insurance varies greatly depending on the type of car you drive and the types of coverage you choose to carry. If you have a brand-new vehicle or a vehicle that requires monthly payments, it is wise to ensure that you carry the proper coverage to protect yourself and your vehicle if an accident occurs.
It can be overwhelming to research all of your insurance options because there are so many options to choose from. At Independent Insurance Brokers Arizona, we make it our job to save you from the stress and hassle of researching yourself. We have relationships with and knowledge of over 40 local and national carriers.