Five Questions to Answer Before Purchasing Auto Insurance

LBP Insurance gets it—purchasing auto insurance can feel a little daunting. And with so many coverage types and options to consider, where do you even begin? Perhaps, you should ask yourself a few critical questions first.

Question 1: Are you financing or leasing your car?

If you’re financing or leasing, your auto insurer will likely require you to insure the vehicle for its market value. Aside from carrying liability coverage, you may be required to have collision and comprehensive coverage to cover the costs of any potential damages fully. Collision coverage covers the costs of damages to your vehicle in the event of an auto accident. In contrast, comprehensive insurance covers vehicle damages from other incidents such as theft, vandalism, or damages caused by weather. Leasing and financing agreements can also require you to have guaranteed auto insurance(GAP) insurance to cover any potential remaining costs after a total loss. Gap insurance covers the difference between a vehicle’s current worth (which your standard insurance pays) and the balance you owe on it.

Question 2: Are you using your car for work?

Driving your car to and from work is one thing, but if you’re using your vehicle to perform work-related tasks, you need a commercial auto insurance policy. Remember, a personal auto insurance policy does not cover you when you’re driving to complete commercial tasks or if you are working for a ride-share, food-delivery, or courier service.

Question 3: Who else drives your car?

Most policies will cover the occasional driver. However, insurers often require you to list any drivers you live with on your policy, including a spouse, housemate, or teen with a permit. So keep in mind your insurers determine your premium partially by the drivers (and their driving records) listed on your policy.

Question 4: What’s your risk tolerance?

Every state requires you to carry a certain amount of liability coverage on your car. (In Massachusetts, there are four compulsory coverages) However, you may want to think about purchasing additional liability coverage depending on your level of financial risk tolerance and the number of assets you wish to protect.

Umbrella Insurance is another option to consider when looking for an added layer of protection against financial and legal uncertainties.

Question 5: What and where do you drive?

The type of car you own can impact the price of your insurance based on several factors, and your insurer has the data to back it up. A sports car, for example, is more susceptible to theft and may have custom bodywork; those two factors alone could likely increase your coverage needs. Meanwhile, where you live not can also impact your insurance rates and coverage requirements. For example, if you park on a busy city street, it may be wise to consider comprehensive coverage to protect yourself from potential theft or vandalism.

Ready to choose the auto policy that’s right for you? Contact LBP Insurance today for a free quote.