8 insurance points to consider before buying a car

Most people know they need insurance for their new car, but in the excitement of buying a vehicle they may not research it as carefully as they should. Skipping over this detail may cause financial problems almost as soon as you drive off the lot.

“You need to shop for insurance before you ever step foot on the lot to negotiate buying a car,” says Penny Gusner, consumer analyst at Insure.com. “Sure, look at cars and narrow down what exact make and model you may buy, but keep your car insurance costs in mind during this time as well.  When you have your choice of car narrowed down to a few, it’s time to shop around for insurance.”

Waiting to buy a vehicle until you’ve sorted out your insurance needs may save you hundreds of dollars because some vehicles, such as sports cars, can carry higher insurance rates. While a new vehicle payment might be affordable, you need to consider auto insurance as part of the cost. Protect yourself, your car and your finances by considering these key points from Gusner before you buy:

1. Determine how long your current car insurance will cover your newly purchased car. “If you’re replacing a vehicle on your policy, typically the same coverage will extend to your new car,” says Gusner. “It can be as short as 24 hours or as long as 14 days, so check before you buy to find out what it is rather than assuming you have coverage. Also, if you’re not replacing a car, then you may not have any coverage at all.”
2. Don’t assume the dealership will take care of the insurance paperwork for you. Not only is the staff busy, it is not its responsibility to call and add a car to your policy.  “If they look at your insurance card and let you drive off, it’s because they are assuming you checked and know that there is coverage under your current policy,” says Gusner. Keep in mind that, if you’re financing or leasing a car, the lienholder will mandate that you have not only liability insurance but also comprehensive and collision coverage," she adds. " So if you have liability-only coverage but need comprehensive and collision with your new car, get it added before you leave the lot – it doesn’t get automatically added for you.”
3. Understand what’s needed. When buying a car, you need to know the cost of the car, of course, but you also need to understand what coverage, limits and deductibles you must buy. For example, lienholders usually ask for deductibles that are $500 or below, say Gusner. Talk to your insurance agent.
4. Liability coverage is the basic insurance you need to drive on the roads. Most states require you to have this coverage to pay for damages or injuries to others you may be responsible for when driving your car, says Gusner.
5. Personal injury protection (PIP) PIP is required in no-fault states as part of your basic car insurance policy. It pays for your medical expenses up to its limits, regardless of fault in an accident. Again, talk to your agent. Also, make sure you know what coverage, limits and deductibles are (comprehensive and collision have deductibles you must choose) when shopping for insurance so you get the correct rate quotes, she said.
6. Gap insurance is a must if you owe more than your vehicle is worth. Cars depreciate as soon as you drive off the lot. There are many examples of car buyers having their cars totaled soon after purchase and owing thousands more than their insurance covers. “Gap insurance  pays the difference between the value of the vehicle at the time of its total loss and what you still owe on it,” says Gusner.
7. Protect yourself with collision insurance. What if you drive off the lot and are hit by another vehicle or object such as a shopping cart? Collision insurance  protects your car. That’s why lienholders require that you carry it: the car is still the asset of the lienholder, says Gusner.
8. Comprehensive insurance covers your car for weather-related damages. Live in an area often hit by tornadoes? In a flood zone? Comprehensive coverage  is a smart buy, even if you don’t experience extreme weather. It protects you in case the car is damaged by fire, theft or vandalism. Again, expect the lienholder to insist you have this coverage so the vehicle can be repaired or paid off if it is a total loss.

A great place to start is by working with your agent to help you identify the best coverage for you and your new car.