There’s a lot more to purchasing your first set of wheels than settling on a make, model, and color. You also have to decide which kinds of—and what amounts of—car insurance coverage you need. Bryan Ochalla from QuoteWizard has some words of wisdom for the first-time car buyer.
Buying or leasing your first vehicle can be both a thrilling and daunting experience.
The thrilling part of the experience is pretty obvious, but the daunting part? It’s easy to overlook once you start down the road to car ownership.
Not only do you have to quickly figure out how you’re going to acquire your new set of wheels—you could buy a new or used car, or you could lease one—but you also have to figure out how much you can (or should) spend on it, how you’re going to finance it (if you’re not paying in cash), and how you’re going to insure it.
Why Car Insurance is So Important (and How it Makes Leasing Even Less Appealing)
That last task—insuring your new car—is an especially important part of the process. Not only does insurance have a huge impact on what you wind up paying for your vehicle, but it also impacts how protected you’ll be if you ever get into an accident or if anything else damages your car.
Something you need to know about auto insurance before we go through the basics of buying it: in the end, leasing a car usually costs more than buying a new or used one. And that’s true in terms of out-of-pocket costs as well as long-term costs (with the latter taking into consideration that the owner of a new or used vehicle can sell it at some point), according to Edmunds.com.
It’s also true in terms of insurance costs. That’s because leasing companies often require lessees to buy auto coverage that goes far beyond what their home states mandate. Most drivers are only legally required to have a certain amount of liability coverage. Those who finance their car purchases often have to get some amount of collision and comprehensive coverage too.
Still, it’s a pretty sure bet you’ll need those types of car insurance coverage if you lease a vehicle. Plus, you’ll probably also need to buy—or at least pay for—“gap” insurance, which covers the gap between what you owe on a car and what your insurer will reimburse you for if it’s totaled in an accident.
The Basics of Buying Car Insurance
Here’s what you need to know about car insurance before you head out and buy your first vehicle:
Think beyond liability coverage—Your state may only require you to buy liability coverage, but don’t stop there. (Unless, perhaps, you purchase an old car that isn’t worth much.)
Consider uninsured and underinsured motorist coverage too—These coverage types protect you if you’re in an accident with a driver who doesn’t have car insurance or doesn’t have enough car insurance, respectively. You’ll have to pay extra for this protection, but it’s usually worth it.
Don’t gloss over your deductible—The deductible is the amount you pay if you file a claim against the collision or comprehensive portions of your auto policy. So, if your deductible is $1,000, that’s what you pay before your insurer steps in to pay the rest of your repair or replacement bill. Given that, a really low deductible, like $250 or $500, is the only way to go, right? Maybe, but remember: the lower your deductible, the higher your monthly premium or payment. (And the higher your deductible, the lower your premium.) No matter what amount you decide on for your deductible, make sure you can afford it. Because if you can’t, your insurance company won’t cover any of your replacement or repair costs.
Shop around before you settle on an insurance company or a policy—Specifically, get rate quotes from a number of insurance companies and then compare them. This is important because insurers use different and unique methods to determine what you’ll pay for the kind and amount of coverage you want.
Beware of cars with salvage or rebuilt titles—It isn’t always easy to get insurance for a vehicle with a rebuilt or salvage title. (Salvage autos have been totaled. Rebuilt autos are ones that have been totaled and then repaired.) Some companies will issue you a policy, some won’t. And some will issue you a policy and then charge you sky-high rates.