You placed insurance on your new vehicle to protect it, but don’t forget the insurance to protect its value also.
Buying a new vehicle is always exciting. You get to drive something that is shiny, smells new inside and is most likely an upgrade from what you had previously. You are also the first owner of the vehicle so you aren’t inheriting any damages that are going to need to be repaired. If you are lucky there is no maintenance in sight for at least 6 months.
But, what happens if you were to get into a car accident after you drive your brand new vehicle off the lot? What if it was a bad accident and your new vehicle is now a total loss? Did you buy insurance to protect your new car’s value?
The amount that you paid for your new vehicle is only what the vehicle is worth while it is sitting at the car lot. Once you purchase the vehicle and drive it out of the lot the value starts to drop. New cars have their biggest price depreciation within the first two years of use.
If you were to get into an accident and took out a loan or a lease on a new vehicle, there could be a problem. The comprehensive and collision insurance coverage on your vehicle will only pay up to the value of the vehicle.
If the vehicle is a total loss and the value is determined to be less than what is still owed on the loan or lease, you have to make up the difference.
To make sure that you don’t find yourself still making car payments for a new vehicle that has been totaled, look into Gap coverage. Gap coverage is just like it sounds; it is insurance coverage that pays the monetary gap between what the vehicle is worth and what you owe on it.
Gap coverage is available through both your insurance company and also the car dealership. But, it is best to purchase the Gap coverage from your insurance company for two reasons.
One, the insurance coverage is cheaper through your insurance company. Two, if you purchase Gap insurance through the car dealer it is added to your total purchase price and makes your monthly payments go up. So even after you can no longer use the Gap coverage (usually only effective for 1st year) you are still paying for it. If you purchase the coverage from your insurance company you can remove the coverage any time you wish and not have to pay for it any longer.
Met Life Full Replacement
Met Life auto insurance has introduced a program that will protect your new vehicle even more than Gap insurance will. If your new vehicle is in an accident that renders it a total loss, Met Life will replace your totaled vehicle with a brand new one. All you are responsible for is paying your deductible.
However, this full replacement coverage is not available in every state so it is best to check with a Met Life agent in your area to see if it is offered where you live. The coverage is only good for the first 12 months that you have the vehicle or the first 15,000 miles that you drive it (whichever expires first). The coverage is also not available for leased vehicles or non-owned vehicles.
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