How to Buy Car Insurance For Your New Car

Congratulations! You're now the proud owner of shiny new set of wheels. The opportunity to take you just about anywhere you want to go-and a hefty car loan payment to take with you! As nice as it is to be out of debt it's not always possible, and signing on the dotted line for a car loan comes with its own set of car insurance requirements! Here's what you need to know about buying car insurance for your new car.

Types of Car Insurance

The first thing you need to know is what type of car insurance you're going to need to drive safely on the highways. If you're driving a car that still has a lien on it you're probably going to be required by your lender to carry full coverage up to and exceeding their minimum levels, which makes shopping easy. You don't have to make many decisions!

There are four types of car insurance you're going to need to know about when you're shopping for coverage for a new car:

1) Liability. When you cause an accident you're responsible for all the costs associated with that accident, including bodily injury and property damage. Since this can get really expensive, really fast you want to make sure you've got a liability insurance policy to pick up the cost (and rescue you from any lawsuits that happen to pop up along the way!).

2) Collision. Although your liability insurance is going to pick up the bill for everyone else's damages, it's not going to touch your own. That's why it's important for you to make sure you've got a good collision policy on your car. Collision coverage will pay for damages to your car after an accident you cause (including running into stationary objects-those telephone poles just jump right out at you).

3) Comprehensive. Sometimes no one is responsible for an accident. A tree limb falls, you get hail the size of your fist, your car starts burning from the inside out. These "Acts of God" are covered by your comprehensive policy so you're not left without a car for weeks on end while you try to scrape up the money for your repairs.

4) Uninsured/Underinsured Motorist. Courtesy of today's economy studies show that over 15% of licensed drivers are out on the roads without car insurance these days-and that's just the ones we know about! If you're in an accident with one of these individuals they're going to be responsible for your damages, but if they had money to fix your car they'd have had money to buy car insurance in the first place!

Uninsured motorist coverage will protect you if you're in an accident with one of these drivers. Keep in mind that "No Fault" states have a slightly different policy and do your homework before shopping to find your state's policies.

Why Your Lender Cares

Bear in mind that just because your car is totaled you're not excused from having to pay back your car loan. Finding the willpower to pay a car payment for a car you no longer have, and the money to get a new one, is incredibly difficult. Car insurance takes off some of the burden by cutting you a check for the value of your car you can use to pay off your debts and move on with your life.

By Michael F. McDonough