New Drivers’ Guide to Less Common Coverages

Roadside assistance can get your car towed for repair without cost, other than policy premiums. (kauffstowing.com)

In our third part of the New Drivers’ Guide to car insurance, we’re going to take a look at some of the less common coverages you may wish to consider. You’ll recall that in part one, we conducted an extensive examination of liability coverage, which in 49 states, represents the minimum level of car insurance every driver must have.

In the second piece, we focused on collision and comprehensive coverages. These, unlike liability, protect your own automobile. Collision protects in any crash or collision, as it’s name suggests, while comprehensive is often referred to as “other than collision” insurance since it covers most other situations.

But now, we’re looking at some coverages that aren’t as common. There are many types of insurance coverage available. Some of the types can be considered options or add-ons. They include:

Gap Insurance

We’ve discussed the near-instant depreciation a new car experiences as soon as it’s driven off the dealer lot. While the actual amount of loss depends on the specific make and model of car. Thus, it’s easy for someone to be upside down on their insurance policies.

Wreck your brand new car where you financed the majority of the car’s price, and you’ll be in for an unpleasant surprise in the event of a wreck, likely over the majority of the loan, if it financed for greater than 48 months. You’ll be responsible for the amount you owe on the car, but your insurance company will only pay the actual cash value, leaving you on the hook for the balance.

Gap insurance is another add on that does exactly what it sounds like. It makes up for the gap in the car’s actual cash value and what you owe to your lien holder. In some cases, this can be thousands of dollars. Thus, gap insurance can help prevent this happening. This is especially important because you’ll have to get a new car to replace the one lost if you’re in an accident where it is totaled.

Personal Injury Protection (PIP) & Uninsured Motorist Coverages

With health care as it currently exists in the United States, costs can escalate to the six-figure range in the event of a catastrophic accident. And the same can be said of a wreck with an uninsured or underinsured driver. Both can be significant financial events.

PIP is normally a required part of a policy in states with no-fault laws and regulations, and is an add on in other states, although not all insurers will offer this. But in the event that you’re in a wreck with underinsured or uninsured drivers, having the coverage is easier than dealing with the civil court system.

Rental Reimbursement

One of the most common add-ons is a rental reimbursement rider. In the event your car is damaged or stolen, you’ll be provided with a rental car without cost, although you can certainly pay the difference and upgrade your rental car.

If your car cannot be driven and needs repair, you’ll have a rental car to replace it. Same goes for situations where you’ve been the victim of an auto theft. This coverage is normally just a couple of dollars a month.

Roadside Assistance

We’ll admit right away there may be no reason for you to have this on many occasions. If you’re a member of AAA, have a service like OnStar, or have a new car under a manufacturer’s warranty that includes roadside assistance, take a pass. You already have roadside assistance, and there is no reason to pay for it again.

For those of you who do not fall into this category, and you’re apt to travel and take road trips, you might want to consider roadside assistance, if offered, from your auto insurance company. Roadside assistance will pay for your costs in the event of a breakdown or other situation that leaves you without an operational car. This coverage would also cover the costs of towing or delivery of water and gas.

Roadside assistance is normally a very reasonable added cost of just a few dollars a month to your auto policy, depending upon your insurance company. Most also cover embarrassing slips like locking your car with the keys in the ignition. And people have done this with their cars running, too.

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