Covering Your New Car: How an Upgrade to Your Ride Affects Insurance

There's nothing like that new car smell—especially when it's your own new car. But before you drive off in your gleaming luxury vehicle, you'll need to consider the advantages of having car insurance that's adequate for your needs.

Luxury auto insurance is a bit different than the basic minimum auto insurance most states require because you're not only protecting a car that is more expensive to fix and/or replace, you're also covering your own vehicle and personal assets when it comes to any liability you may have in an accident.

New-Car Advantages

To start, some new-car basics: There are great advantages to buying new. Yes, these vehicles cost more than used ones and depreciate faster (but do look at interest rates—they're often a bit higher for a used car and you may just break even buying new).

One advantage is that a state-of-the-art ride uses less (or zero!) fossil fuels than older models. Also, there's much less that can go wrong mechanically with a new car—and if it does, you're covered by a warranty and the manufacturer can reach out to you directly to inform you of any recalls or upgrades necessary for the safety and performance of your vehicle.

In addition, if you have a new car with safety features, such as a backup camera, collision warning, side airbags, blind-spot warning and lane departure alerts, that may be reflected in your insurance premium.

Buying new also means you'll have better luck getting exactly what you want—you can generally build a car to your color, upholstery and feature specifications.

How Buying Auto Insurance Will Help You

The value of the car you drive isn't the only factor that determines your auto insurance rates. Your insurance will usually not cost as much if you live in a small town or rural area. Big cities have higher rates of theft, vandalism and insurance fraud. It's also more expensive to litigate and receive medical care in cities. Investing in anti-theft devices is one way to lower your insurance rate.

The Insurance Information Institute outlines other considerations that determine what you'll pay, such as your driving record, how much you drive or where you live and work.

When you have a new car, you'll want to be clear on the amount of insurance coverage your lender requires, as well as what you're getting for your dollar. If you cause a major accident, for example, will the amount of your liability coverage take care of everything you owe, or will you have to dip into your savings or assets?

The elements of your auto insurance policy include:

• Deductible: This is how much you'll pay on a claim out of pocket before your insurance coverage kicks in.
• Liability: Covers the expenses for someone else's property damage or medical care.
• Collision: If you crash into a structure, or another vehicle this covers damage to your car.
• Comprehensive: Natural disasters, theft, fire and other acts outside of your control, like hitting an animal, can damage your vehicle.
• Medical payments: If you or your passenger require medical care after an accident.
• Personal injury protection: If you're injured, you may miss work or need special equipment.

You can also opt in to coverage that can further help you after an accident. Rental reimbursement will help pay for a vehicle while yours is being fixed. Trip protection coverage can help you recoup costs in the event you're unable to travel. And in the event your new car is totaled in an accident, replacement cost insurance helps you get another new car of the same year and make, rather than just the depreciation value. Lease/Loan Gap insurance will help pay the difference between the value of your vehicle and the lease or loan you still owe.

As you research purchasing your new car, it's always a good idea to call your auto insurance provider to get a realistic take on the appropriate amount of coverage you'll need and how much it will cost you. A new, bigger car may cause more damage in a collision than a smaller sports car—and that will be reflected in your rates.

What's better than a new car? A new car driven with peace of mind that your insurance company's got your back. Connect with a Westfield Insurance agent to learn more about protecting your vehicle, yourself and your assets with Wespak Estate.