When you purchase a car insurance policy, you understandably expect that policy to provide you with coverage for all potential financial losses you may incur. However, the reality is that car insurance actually only covers stated loss events up to the specified coverage limit. There are many types of losses that are common in accidents, theft situations and more that are not covered by a standard insurance policy, and these holes in your coverage create the possibility for financial loss. By learning more about these holes in your policy, you may be able to determine if you need to invest in more coverage.
Personal Property in the Car
There are many times when you may have valuable items in your car, such as your laptop or other electronics, a wallet full of cash you just pulled out of the ATM machine and more. Theft and accidents alike can result in partial or total loss of these items. Your standard auto insurance policy does not provide coverage for personal property, but you can upgrade your policy so that it includes personal property coverage up to a specified limit. Your insurance agent can recommend a reasonable amount of property property insurance to purchase.
All Drivers in Your Home
You may think that your auto insurance policy would cover all drivers in your home equally. The typical auto insurance policy will only honor a claim if an approved and insured driver is operating the vehicle at the time of the event. If you have recently gotten married or if your teen has started driving, ensure that you add these new drivers to your auto insurance policy to avoid having to pay for loss events out of your own pocket.
The Full Amount of Your Auto Loan
One of the primary purposes of auto insurance is to pay off your car loan after an accident or theft so that you can afford to purchase a new car. However, a standard auto insurance policy only pays off the loan up to the amount of the coverage limit. The coverage limit typically equals the current market value of the car. If you owe more money on the car loan than the vehicle is worth, you may find out that you are responsible for paying off the remainder of the loan and that the insurance company also may not give you any extra money to use as a down payment on a new car. Both new car replacement insurance and gap insurance can be added to your policy to avoid this type of situation.
Many people make after-market customizations to their vehicles, and these can be very expensive in some cases. A vehicle customization may be something as simple as adding leather seats to the interior, or it may include retrofitting the car to accommodate your disability needs. You will need to add a special rider or endorsement on your auto insurance policy to cover damage or loss to these after-market customizations you have added to your car.
Business-Use of the Car
You understandably expect to be able to use your car for any purpose, and this may include making money. Whether you are delivering pizzas, using your car for ridesharing to make money or have other business-use activities for your car, you may need a special rider or endorsement. Otherwise, any losses you incur while using the car for business activities may not be covered by your policy.
A base amount of car insurance is required by most states in order for you to be legal on the roads, and some auto lenders have their own additional coverage requirements that you must meet. However, when you purchase these base coverage options, you may still not be fully insured. You can see that there are many scenarios that very realistically could happen to you, and your current policy may not approve your claim. Because financial loss related to a car accident, theft and other similar events can be substantial, it is important that you understand the holes in your current policy. Take time to discuss optional coverage available to help you fill these holes today so that you can drive more confidently with the full protection you need.