Buying a new car is an exciting time. There are so many important decisions to make. What model should I choose? What colour looks the best? Do I want a 2-door or 4-door? It’s easy to get wrapped up in all the fun and exciting aspects of getting a new vehicle. But, many people get so consumed with their purchase, they overlook one extremely important thing; car insurance coverage. We get it, and we’re definitely not offended. Car insurance is not exactly at the top of anyone’s priority list, and it’s definitely not as exciting as picking the interior options for your new ride. However, proper car insurance coverage is still a very important part of your new vehicle purchase.
So, if you’re considering upgrading your wheels in the near future, check out some of these tips first, before you get caught up in all the excitement.
Important insurance considerations when buying or leasing a new vehicle:
Get some quotes before you buy
Most of us have a budget when buying a new car. However, many people don’t consider the amount they’ll be paying for insurance. It’s important to keep in mind that every vehicle is rated differently. So, there can be significant differences in monthly insurance costs between similar vehicles.
That’s why if you’re considering more than one type or model of car, it’s a smart idea to compare insurance quotes. It only takes a few minutes for your broker to compare the insurance cost of the different vehicles you’re considering. A quick call to compare rates could have a big impact on the vehicle you choose. Who knows, you may even have a few extra bucks to add some extra options to your new car!
Call your broker ahead of time to make the change
Once you’ve made your decision and signed all the paperwork, the next call you should make is to your broker. If you’ve already done your homework, and reviewed your quotes ahead of time, it should be as simple as letting him or her know which car you’ve decided to purchase. A good broker will be able to quickly confirm a few details with you. Then, contact the car dealership directly to take care of all the rest. Once the change has been made to add the new vehicle to your policy, your broker will send the dealership everything you need to pick up your vehicle.
Although this can all be done in the same day, it’s a good idea to give your broker some notice so there are no delays picking up your new car.
Review your coverage. A new car may mean new insurance needs
One thing we can tell you from our years of experience is that changes in vehicles often result in changes in coverage. This can easily be overlooked, and definitely requires the professional advice and guidance of a licensed insurance broker.
Are you leasing or financing?
The lender will require you to carry physical damage coverage. As part of the contract, lease or finance companies will make specific car insurance coverage mandatory. Most of the time, this includes carrying both collision and comprehensive coverage, with a maximum $1000 deductible. Many drivers choose not to have physical damage coverage on older vehicles, so there is a chance this was not on your previous policy.
Is the vehicle brand new?
As soon as you drive it off the lot, the vehicle’s value will depreciate. What happens if you have an accident or the vehicle is stolen (knock on wood). It happens more than you might think. The problem is, because of the rising costs of vehicles and the lengthy financing terms that people are taking, it is not uncommon for a customer to owe more than the vehicle is actually worth for the first few years. This is called being “upside down” in your finance term. What it means is that if your vehicle was stolen, or you were in an accident that resulted in a total loss, you would not get enough money back from your insurance policy to cover what you still owe the financing company.
The good news is, there’s an optional coverage you can add to your car insurance policy that is designed to protect you from this exact situation. It’s called OPCF 43, or removing depreciation coverage. Essentially, this coverage will waive any depreciation in the event of a total loss or theft of a new vehicle. Depending on the company you’re insured with, this option could protect you for up to 48 months from the purchase date.
In the end, it’s easy to get sidetracked by all of the exhilaration that comes with buying a new car. After all, it’s supposed to be an exciting and gratifying experience. Have fun with the process, and pick the perfect vehicle to meet all your wants and needs. However, don’t’ forget the importance of a good car insurance policy to protect yourself, your family, and your new pride and joy!
If you have any questions, our team is here to help 7 days a week. Give us a call.
Drive safe and enjoy your new ride.