3 Surprising Types Of Auto Insurance Coverage To Consider
Auto insurance is a legal requirement for all drivers operating vehicles on public roadways. The laws in most states require only a basic auto insurance policy to ensure compliance. Basic policies typically cover collision and comprehensive liability, but these types of coverage may not be sufficient.
Consider adding some coverage to your existing policy if you want to fully protect your financial liability when it comes to caring for your vehicle.
1. GAP Insurance
Guaranteed Auto Protection, more commonly known as GAP insurance, is essential for drivers who own new model vehicles. The cost of purchasing a new vehicle has climbed in recent years. To make monthly payments more affordable, you may choose to extend your loan out a few years past the norm.
This can appear to make sense initially, but when you consider the financial ramifications associated with your vehicle being totaled in an accident, you may think otherwise. A basic insurance policy will reimburse you for the current market value of your vehicle. This value may be significantly less than what you still owe on the auto loan.
GAP insurance steps in to cover the difference between the market value and what you owe so that you won't have to make payments on a vehicle that is no longer operable.
2. Umbrella Insurance
Umbrella insurance is a type of liability insurance that you can add on to your existing auto coverage. You may wonder why having additional liability insurance is necessary. The umbrella policy is designed to act as an added layer of personal protection once your basic policy coverage limits have been reached.
Individuals who have a high net worth can benefit most from umbrella insurance, as this coverage will protect against the loss of personal assets in lawsuits filed in connection with an auto accident.
3. Custom Equipment Coverage
It is not uncommon for drivers to spend a lot of money installing aftermarket parts and accessories on their vehicles. If you like to customize your ride with expensive aftermarket components, you will want to ensure that your investment is protected.
Many basic insurance policies don't factor in the value of custom equipment when determining a payout following an auto accident. Custom equipment coverage allows you to specifically detail the aftermarket parts you have installed on your vehicle so that you can recoup the cost of these components if your vehicle is totaled in a collision.
To learn more, contact your local auto insurance coverage service.
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