You may have spent months or even years trying to figure out what type of car you want to buy. You’ve looked at different makes and models, you’ve gone to dealerships to take test drives, and you’ve watched YouTube videos and reviews to find out what would be the ideal vehicle for you. You finally have made your choice and purchased your brand new car.
This may feel like the end of the process, but it’s just the beginning of a different process. This car was a major investment for you, whether you bought it with cash or you took out an auto loan. Either way, it’s going to have a big financial impact on your future, you need to make sure that you protect this vehicle. It’s also essential for things like going to work or taking the children to school, so it’s important to know that you have all the right protections in place. Let’s take a look at your different coverage options when you get insurance on your new vehicle.
You still need coverage if it’s a loan or a lease
One thing to remember is that taking a loan or leasing a car doesn’t mean that you can go without insurance. You certainly want to talk to the dealership, which will probably require you to carry insurance on the vehicle that they are leasing you. Auto loan lenders also require this. If the car is stolen or totaled, the full value of the vehicle has been lost, and that liability would fall on you. Your car insurance helps to protect you because you can simply budget to pay your lease or loan payment without worrying that you’ll be on the hook for the entire value of the car.
You may want new vehicle replacement coverage.
Another key point to keep in mind is that new vehicles drop in value significantly as soon as you drive them off of the lot. This means that your vehicle is not always worth the same amount that a new replacement would cost. Even if you bought it yesterday, if you drove it off the lot and totaled it, your insurance company may want to pay you less than what you just paid the dealership.
The way to get around this is to ensure that you have new vehicle replacement coverage. This lasts for the first year that you own the vehicle, when that drop in value is most dramatic. If you have this coverage and something happens to your vehicle, such as it being totaled in an accident, you will get the full value from your insurance company. This allows you to go back to the dealership and buy a replacement vehicle when that is what you need the most.
Replacement parts: Aftermarket versus OEM
There are two basic types of parts that people put on a vehicle, known as original equipment from the manufacturer (OEM) or aftermarket equipment. The OEM equipment is exactly the same as what you got when you first purchased your vehicle, and it was designed specifically for it. If you’ve had repairs made at a dealership, these parts were probably used.
However, many people will add aftermarket parts to their vehicles that could be worth quite a bit more. If you upgrade your car, you need to consider the value of all of these upgrades. You may have a new suspension, new tires, a new sound system and much more. This makes it more expensive to replace your car than if it was a stock model, and you need to make sure that your car insurance reflects that.
How do you find the right coverage?
The best way to find the right coverage for your vehicle is simply to look into all of the options that you have and carefully add your personal details into the equation. In other words, everyone’s situation is different, so you should never use cookie-cutter options. You need insurance that has been designed specifically for you and your vehicle. We would be happy to help here at Frisco Insurance, and we have decades of combined experience helping people find the perfect coverage plans for their new cars. Call us today to learn more.