As new 2016 car models arrive and auto dealers clear their lots of 2015 models, shoppers planning to buy a new vehicle may want to consider updating their insurance policies to protect their purchases, The Hanover Insurance Group in Worcester, Massachusetts, advises.
The company said it recommends car shoppers take the time to talk with an independent insurance agent to assess their coverages before purchasing a new car.
“What many car buyers may not realize is that a brand new vehicle will often require different insurance coverages than a used car,” said Richard W. Lavey, president, personal lines and chief marketing officer at The Hanover.
“The instant a new car leaves the lot, it depreciates in value by about 9 percent and it will lose 19 percent of its value in the first year. But it’s still a new car, so making sure your insurance covers the full cost to replace and repair a new vehicle can help provide peace-of-mind and important protection for new car owners,” Lavey said.
The Hanover suggests new car buyers consider the following insurance coverages:
- Original Equipment Manufacturer (OEM) Parts – OEM parts are used in the making of a vehicle. If a car needs repairs, many insurance policies will only cover the cost for aftermarket parts, which are not designed specifically for that make and model vehicle, and do not always come with the lifetime guarantee included with OEM parts.
- Gap Insurance – Gap insurance covers the difference between the vehicle’s cash value and what a car owner owes on a car loan, including interest and fees. If a car is stolen or totaled, gap insurance protects the car owner by paying the difference between the assessed value of the car and what is still owed to the finance company.
- New Car Replacement Guard – If a new vehicle with less than 500 miles on the odometer at the time of purchase is stolen or totaled within one year or 15,000 miles, the cost to replace it with a new vehicle can be covered without a deduction for depreciation.
- Underinsured/Uninsured Motorist Coverage – As many as one in seven drivers are uninsured. This coverage protects drivers if they get in an accident with a driver with little or no insurance.
“Before driving that new car off the lot, make sure your insurance reflects your new purchase,” suggests Lavey. “An independent insurance agent should be a part of the purchasing process and can help identify additional coverages you may need to be well protected.”
Source: The Hanover Insurance Group
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