New car buyers need to make sure that their new ride is insured properly before they drive it off the dealer’s lot. In most states, drivers must have a minimum level of insurance coverage in place and this is a good starting point for consumers.
Third party liability coverage (bodily injury and property damage protection) protects the policyholder from having to be personally responsible for paying for damages resulting from an at-fault accident. It pays for medical bills, lost wages and in some cases, pain and suffering claims made by the occupants of the other vehicle.
Uninsured motorist coverage is a type of protection which should be considered by new car buyers. It pays for injuries and damages caused by a driver who either doesn’t have coverage in place or who cannot be identified. Underinsured motorist coverage is also available from insurance companies and this type of protection is used to increase the available coverage when the at-fault driver has insurance but does not have enough protection to pay for the damages caused in the accident. His or her coverage is used first and the underinsured motorist coverage comes in at that point to make up the difference (up to its policy limit).
Physical damage coverage is also important for new car buyers. If the owner financed the vehicle, the lender will likely require that full coverage (collision and comprehensive) be kept in place until the loan has been paid off in full.