Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Insurance and Purchasing Used Cars
Whether your shopping for a new or used car, the fact is — you’re going to need to insure it. And once you’ve got your sights set on the car, it’s time to get organized and pick up a policy that takes care of you best. In the days leading up to the purchase, you’ll want to be in touch with your insurance agent to learn about coverage for your used car.
But what’s the best way to pick up auto insurance on a pre-owned vehicle? The answer to that all depends on the car, its purchase price and how well you want to protect it.
Your insurance needs will be driven largely by the financing you use to make your used car purchase. Your lender may require that you purchase specific additional coverages like collision or comprehensive insurance. But other factors can impact your car insurance needs, particularly if you need gap coverage for certified pre-owned vehicles — other relatively new or expensive cars.
Do I Need Full Coverage Insurance on a Used Car?
Full coverage auto insurance can really help you if you ever get into an accident. If you’re still wondering whether you need it or not, consider the financial strain you’d be under without it. Full coverage can help protect your finances in several important ways — over and above the state-required minimums.
Having an active full coverage policy on your vehicle — regardless of its age — can really help insulate you from financial losses that can add up quickly, if you’re ever found at fault for a car accident. From property damage to paying for other’s medical expenses, this is key protection. Full coverage typically consists of a combination of several car insurance products:
This optional coverage helps pay the cost of repairing or replacing your car after being damaged in an accident, regardless of fault. Collisions can involve anything from hitting another vehicle to hitting an object, like a tree, guardrail or mailbox.
Comprehensive car insurance covers damage caused by accidents that don’t involve colliding with another vehicle or object. That means this type of smart coverage, minus the cost of your comprehensive deductible, pays for damage caused by things like:
- Collisions with animals
- Fires or explosions
- Hail or natural disasters
- Certain falling objects
Bodily injury liability insurance
This coverage helps cover medical bills associated with injuries to your passengers, the driver and passengers of the other vehicle. Liability coverage like this can also help pay for bodily injury to pedestrians. If you are taken to court over an accident, bodily injury coverage can also help pay for legal fees.
Do I Need Insurance Before I Buy a Used Car?
If you’re new to buying a car, getting your insurance just right can be challenging. First off, you’ll definitely want to be covered with a good auto policy. But if you’re currently insured, you may be able to drive for a period of days on the active policy that you’ve already got. Check with your agent about the details in your insurance company’s policy.
Can You Get Gap Insurance on a Used Car?
As the word “gap” implies, this coverage helps to pay for the difference in the actual cash value of your vehicle and the amount you owe on your auto loan. If you total your car in a covered accident, you may find that you owe more on the car than your vehicle’s actual cash value, or what your car is worth. That’s when additional gap insurance coverage can really save the day.
Yes, getting gap insurance on a used car is possible and your lender may even require it of you in order to approve your financing. If you find yourself needing to carry gap coverage, reach out to your American Family Insurance agent and talk about coverage in the event of a total loss.
You don’t have to buy gap insurance from the dealership. In fact, you may be paying too much for it if you do. Cars depreciate quickly, sometimes as much as 20 percent in a single year. Gap coverage can really help to keep your finances in order after a major accident.
Last question: Where do I get more resources like this? Check out our New Car Buying Resources page for expert advice and tips to buy a new vehicle with confidence.
Learn More About Auto Insurance Requirements for Used Cars
Getting the right coverage for your car is all about making an informed decision. And that’s where the expert advice of your American Family Insurance agent can make all the difference. While you’re still shopping for cars, get in touch with your agent and learn about the best ways to protect your investment. You’ll find coverage that can bring you real peace of mind and help to insulate your savings — when you need it most.
This article is for informational purposes only and includes information widely available through different sources.