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Optional vs. Necessary Coverages

Coverage for Travelers
Roadside Assistance Coverage
Do I Need Optional Car Rental Insurance?
Raising Deductibles
How Long Should I Carry Gap Insurance?
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1. Coverage for Travelers
Are you looking for accident coverage to protect you while driving overseas? Unfortunately for many military members and other foreign travelers, American insurance protection usually ends the moment your car touches foreign soil. You will need affordable coverage from a local company at your destination. If you are going to Europe you need to arrange for a local policy before you can drive your car. EU laws require compulsory insurance coverage for all drivers just like in the United States.

Your EU-based policy may offer an automatic extension of affordable custom coverage to protect you while driving to any EU destination, but this coverage may be limited and you may have to pay an extra premium for full coverage outside your primary driving area. Paying the additional premium for full coverage is a good idea. Accidents are often caused when drivers try to operate in other countries where the local highway customs are unfamiliar and confusing. Top

2. Roadside Assistance Coverage
Affordable custom coverage options on your auto insurance policy often include some type of roadside assistance, towing insurance and other conveniences designed to help when you are stuck on the side of the road. These optional coverages are good, but make sure you aren't paying double for roadside services. If you aren't a member of AAA or another club offering roadside help, adding these custom coverage features to your insurance policy is a good idea.

Always read the fine print on your car insurance policy to see what specific services are covered by a roadside plan and if you must be involved in an accident to receive these covered services. You may find that tire repair and the actual towing costs are included but other services are not. Or you may have a plan that will pay for any help given on-site but not for tire repair back at a garage or gas station. It all depends on the terms of your insurance. Know what is covered before you call the tow truck. Top

3. Do I Need Optional Car Rental Insurance?
Some drivers carry additional custom coverage on their car insurance policy to cover the cost of car rental in case of an accident. This can be helpful if your car has had major damage, but did you know some repair shops offer free loaner vehicles for customers with large repair jobs? Check out the repair centers in your area before deciding on this type of additional custom coverage. If you don't near a repair shop with a free loaner policy, car rental coverage may be very helpful.

If you choose this optional coverage, be sure to read closely the terms of coverage. Most policies offer a set dollar amount to reimburse you the cost of the rental vehicle. If your rental costs are more than the set rate, you'll be responsible to cover the extra cost. Be aware that the policies usually require you to pay in advance and then later submit the bill for reimbursement at the end of your rental period. Top

4. Raising Deductibles
When trying to lower your insurance costs or shop around for more affordable coverage, there are two ways to save money. The first is eliminating optional coverages you feel aren't necessary. The second is to raise your deductible coverage so that the amount you pay out of pocket after an accident is higher, while the amount you pay every month gets lower. This strategy is especially helpful if there are optional coverages you want to keep. They give you peace of mind, but raise your rates too high. Raising the deductible on mandatory coverage can help offset the price of the options.

When raising deductibles to create more affordable coverage, examine your policy and change the parts of your insurance you think you will be the least likely to use. A high collision deductible may not be as advantageous as a higher comprehensive deductible--especially if you keep your car in a garage or other protected area. Affordable coverage is within your reach if you make smart choices on your deductible coverage options. Top

5. How Long Should I Carry Gap Insurance?
Gap insurance is a smart addition to your affordable custom coverage package if you have recently purchased a vehicle. It's smart to carry this additional auto insurance in the early days of your auto loan. It is important to read the terms of your car insurance policy regarding gap insurance. This type of policy is meant to pay the difference between what you owe and what the vehicle is actually worth after depreciation if the automobile is totaled in an accident. It does not cover repair costs to get a vehicle back into working order.

As you get closer to paying off your auto loan, periodically re-evaluate your coverage and end gap insurance when it's clear that the amount left on the loan and the actual market value of the car are more or less equal. You may also consider ending this additional auto insurance when it won't hurt you financially to pay off the remainder of your loan should the vehicle be damaged beyond repair. Top

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