Question

What insurance do i need if i am financing a car

Full coverage? I don't even know what that really means.

May 16, 2018 Englewood, CO

Answer
Ava Lynch

May 16, 2018

Dealerships and sometimes insurance companies thrown around the term full coverage but it really can mean a lot of things. Usually, it's referring to collision and comprehensive coverage. So, if you want roadside assistance, rental car reimbursement, or uninsured motorist coverage, you should specify you want these coverages. The coverage I recommend adding or considering is uninsured motorist coverage (both bodily injury and property) and loan/lease pay off coverage. The former provides protection if you're hit by an uninsured driver. In Colorado in 2016, there were an estimated 16% of uninsured drivers - 4% higher than the national average. The second coverage option I would consider, loan/lease payoff, looks like gap insurance. If you were to total your financed vehicle, your insurance company would only compensate you for the value of the vehicle minus depreciation. However, the loan you received from your bank doesn't factor in on this deprecation. So, loan/lease payoff helps prevent you from being underwater on a loan. If you're looking for more information regarding car insurance for a financed vehicle, see our guide here. Ready to start shopping? Get started here.

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