Insuring a Used Car

If you’re in the market for insurance on a used car, and you’ve either never insured a car before, or have only purchased newly manufacture automobiles in the past, you may not know what coverages you need, and which are required either by law or as part of the terms of your car’s financing arrangement.

What most people think of as “their car insurance policy” is actually a group of related, but differing kinds of coverage that work together to provide the level of insurance that is required, along with any optional or increased coverages you desire.

The Basics
In every state, drivers are required to carry at least a minimum amount of liability coverage. Liability coverage offer protection by paying against claims made against you as the consequence of an accident you caused. But keep in mind that a state mandated minimum might not be as much coverage as you would like your auto insurance policy to provide. You can adjust the amount of liability upward when seeking an insurance quote to see what extended coverage will cost you.

Next, you’ll want to consider medical coverage. Two of the most common types are medical coverage are those for making medical treatment payments and those that protect against medical expenses caused by uninsured and/or underinsured drivers. Medical coverage may or may not be required in your state, but even if it’s optional, it could prevent serious financial consequences for you should you have significant medical bills after an accident or are hurt by an uninsured or underinsured driver.

The last major component to be considered when insuring a used car is whether or not to include collision and comprehensive coverage in your policy. Collision and comprehensive insurance pays for damage to your car that is the result of collisions and various other incidents that can cause a loss, such as an errant golf ball breaking your windshield. While typically not mandated by law, some financing and other types of agreements, more typical for new and more recent, higher cost pre-owned cars may require this kind of coverage. Because, in addition to the cost it adds to your policy premium, there is almost always a deductible amount that you must pay before this coverage takes effect, you may not choose to carry collision and comprehensive on your used car if its’ overall value is relatively low.

Disclaimer: The contents of this and all articles provided by Insuredirect.com are for informational use only, as the specifics of any situation will vary with the circumstances. Do not consider the information provided in this article as a recommendation on purchasing any specific auto insurance, homeowners insurance or other type of insurance product, or to provide financial or legal advice. Without exception, all information is presented for information purposes only.

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Rev. V.1 - 11-14-2007