Every car owner looks for ways to lower their auto insurance premiums. But are you slashing costs at the expense of protecting yourself and your assets?
Learn more about the auto insurance you need and the auto insurance you might want in this guide for optional car coverage.
What auto insurance is required?
Most states require every driver to carry auto insurance liability. This includes bodily injury liability as well as property damage liability in the case that you are found at-fault for an accident and the other party sues you for damages.
About half of the states often also require uninsured/underinsured motorist coverage in the case that another driver isn’t carrying the necessary liability insurance (even though they should be).
What auto insurance is recommended?
Personal Injury Protection covers your own medical expenses due to an auto accident, regardless of who is at fault. Only 15 states require PIP, but it’s typically recommended as a targeted auto supplement to your health insurance.
Collision and comprehensive insurance are not usually mandated by the state, but they’re highly recommended. If you’re loaning or leasing your car, your financer will usually require it as well. These cover damages to your own car if you collide with another car or object (collision) or if your car is damaged or lost by theft, vandalism, or natural disaster (comprehensive).
What optional auto insurance should I consider?
But aside from mandatory and recommended policies, insurers offer a lot of other ways to protect your assets. Check out these optional coverages to consider for additional security for your car.
Guaranteed Auto Protection (Gap)
Gap insurance ensures you are paid enough to settle debts on your car in a claim in the case that you have a total loss.
Your vehicle starts to depreciate in value the moment you drive it off the lot. In most cases, auto insurers only pay the car’s actual cash value at the time of a complete loss (like the car was stolen or totaled). The actual cash value takes depreciation into account, which means your claim payout could even be less than what you owe on a loan or lease.
Gap insurance pays for the “gap” or difference between the balance of your car loan and what your car is worth. This ensures you are never paying off debt on a totaled car that you can’t use.
Roadside assistance is an optional coverage for emergencies if you are locked out of your car, need a jump, run out of gas, or need a spare tire. It will also help cover the expenses of tow to a nearby garage if necessary.
Roadside assistance can be more costly than expected, ranging from $75 to $700. Roadside assistance insurance can also give you priority with local emergency services by working on your behalf. The insurance is usually a minimal cost raise to your premium, so it’s often worth the additional peace of mind.
Mechanical Breakdown Insurance
If any part of your car breaks down or needs repairs, mechanical breakdown insurance can help cover the costs. It works in a similar way to a warranty or service contract, but it lasts as long as you pay for the monthly premium (rather than an upfront lump sum).
If your car is in the shop or inoperable, rental reimbursement insurance will pay the costs of your rental car in the meantime. There may be limits on how many days or the type of car you can rent based on your insurer, so it’s important to discuss these details before starting a rental period.
Note: This does not cover the cost rental cars while on vacation. This is specific to rental cars used while your car is in the shop getting repairs for which you’ve made a collision or comprehensive claim.
Some insurers offer specific policies just for glass replacement. Auto glass can be expensive to replace—ranging from hundreds to thousands of dollars. Glass might be covered in your comprehensive coverage, but additional glass insurance can help make sure you are fully covered.
Personal Umbrella Policy (PUP)
PUP insurance is broad-based liability for both your home and auto. An umbrella policy adds more coverage in the case that you are sued for damages. Click to find out more about when you need an umbrella policy.
You want to make sure your car is fully protected against all on-road dangers and costs. Car costs can quickly rack up if you don’t have the insurance to help you cover the finances.