Insuring a new car soon?

If a new car is in your future and you will be financing any part of the purchase price you should educate yourself on two often overlooked factors.

Auto Insurance Score

An insurance score includes information from your credit report combined with accident and claim history. Credit information can be very predictive of future accidents or insurance claims, which is why many insurance companies use this information to develop more accurate rates.

Why Does Your Credit Score Matter to Your Insurance Score?

Insurers first started using credit scores to help determine premium rates in the mid-1990s. They realized that there was a significant relationship between a customer’s credit score and how likely they were to file a claim

What a Auto Insurance Score Includes?

To calculate your insurance score, the insurer uses your:

  • Credit score
  • Accident history
  • Claim history

The latter information can be accessed via one of two databases: Automated Property Loss Underwriting System (A-PLUS) and the Comprehensive Loss Underwriting Exchange (CLUE).

Drivers who wish to know their insurance score may order a report from LexisNexis or contact their insurance carrier.

Gap Insurance: Owe more than you Own?

The idea that you can owe more than what your car is worth may be difficult to wrap your head around, but this is a fairly common scenario.

Depreciation of your new vehicle

Even as you’re making payments based on the value of your vehicle at the time you took your loan, your car is getting older and is worth less every day.

As soon as you drive the car off the lot, its value begins to drop, yet you’re still responsible for the full loan amount plus interest, so the gap between the value of what you own and what you owe begins on Day 1 of car ownership.

Financing your vehicle, is there a gap?

Gap insurance pays the difference between what a vehicle is worth when it is stolen or “written-off” (i.e., when the cost to fix the car’s damage is greater than the cost to replace it) and the balance on your auto loan or lease. In other words, it fills the “gap” between the vehicle’s current value and what you still owe on it.

Do I Need Gap Insurance?

If the amount you owe on your auto loan or lease isn’t greater than the current value of your car, you may not need gap insurance. Remember to account for the deductible you would pay in the event of a crash or theft (if any), as well as any of the items mentioned above as possibly not being covered by gap insurance.

What Is New Car Replacement Insurance?

If you’re buying a new vehicle, in addition to gap insurance, consider new car replacement coverage. With new car replacement coverage, if you total your new car before a set number of miles or a set period of time, your insurance company will replace the car.

To better calculate the cost of owning your new car we hope you consider your insurance score ahead of your purchase and any insured value gaps with your financing.

Questions – The Milburn Agency for Auto Insurance Quotes | St. Louis | St. Charles