When considering one’s auto insurance policy needs, the age of the vehicle could be a factor. This could especially impact whether one purchases collision or gap coverage.
Is collision coverage beneficial to have on an auto policy?
One type of insurance for which the type of vehicle could influence whether a policyholder decides to carry it is collision coverage. This coverage helps pay for damages when involved in an accident with another car. After paying the deductible, coverage typically is available up to the vehicle’s actual cash value. Factors that impact the cash value of a vehicle include its condition, age and price.
However, if someone has an older vehicle, it may not be worth having this additional car insurance coverage. That’s because the deductible could be higher than the car’s worth. Let’s say the deductible is $1,000, but the vehicle’s actual cash value is just $700. It wouldn’t make sense to pay for this type of coverage.
Is gap coverage beneficial to have on an auto policy?
Gap coverage pays for the difference between a vehicle’s actual cash value and what is still owed on it. Whether the car is leased or the driver took out a loan, a settlement from an accident may not cover what the individual owes on it. Those who benefit the most from gap insurance are drivers of new (or newer) vehicles.
But there are other additional types of insurance that should be considered as well. For instance, uninsured motorist coverage can help if someone is injured in an accident with a driver who has no insurance. Underinsured motorist coverage can help if damages are greater than the other driver’s policy limits.
Talk to Jason R. Schultz in Peachtree City, Ga., if you’re filing a claim to recover damages related to a car accident.