The Benton Agency Inc

There is still about two weeks left in the popular Cash for Clunkers or CARS program. This controversial program has helped boost sales for dealerships. It has also provided consumers some added value on their trade. I have even taken advantage of this program myself.

Before you rush out to buy a new vehicle under this program there are a few things that you need to consider in regards to your auto insurance policy.

1. Your insurance premium will go up. Your new vehicle will be worth more than the vehicle you are trading in. It only makes sense that you will experience a premium increase.
2. You will be required to carry comp and collision coverage. This is required for any vehicle in which there is a loan on. This will also cause your premium to increase. You can choose from several different deductible options. I would recommend keeping your comp deductible low ($100). This covers things like windshield replacement and if you hit a deer or animal. If this deductible is too high you will have little to no windshield damage coverage. The collision deductible is generally higher ($500 or $1,000). This covers repair to your car when you are in an at fault accident.
3. Consider replacement cost coverage or GAP coverage. Chances are your dealer will offer you this coverage. There is also a chance that your insurance agent can offer this coverage to you at a lower cost. Vehicles depreciate rather quickly. Normally if you total your car the insurance company will pay the actual cash value of the vehicle. This may not even be enough to pay the remaining balance on your loan. If you add replacement cost coverage to your auto policy and you total your vehicle the insurance company will pay the replacement cost of the vehicle. This coverage usually only costs around $60 per year and many companies will allow you to keep this coverage for five years. This is much cheaper than the GAP coverage the dealership will try to sell you.

The buying process in the Cash for Clunkers program is much more time consuming than buying a car in general. There is additional paperwork that must be filled out. The dealership also has to verify that you meet all of the qualifications of the program. It is important to understand how your auto insurance will be affected by your new vehicle. When in doubt, contact your insurance agent. That is what they are there for.