Reader question:

I bought a cash car recently. It works okay, but it’s old and not perfect. I don’t want to go over the top with it with the insurance, but what should I get?

Ira

Great question, Ira.

Used cars put a lot of people in a fix when it comes to insuring them. Usually you have to pay a lot more for repairs, but at least you aren’t paying a car note; all the same, it’s still a little hard to afford the insurance payments. Still, every car needs some kind of insurance. With a car that you didn’t pay all that much for, though, you’re okay with going a little lower on the insurance line.

All states require at least liability on cars, maybe more. This protects you against liability claims against yourself when you or somebody else is the cause of a car crash that damages property or injures somebody. Most state minimums don’t come close to covering the costs of claims from serious accidents, so if you want to protect yourself, get higher than the minimum. This part of your insurance policy remains important regardless of the kind of car you have.

As for further coverage on your vehicle, consider how much you paid for it and how much it’s worth, period, before deciding whether to add them. If you bought a cash car for $1000, and you’ll be paying $2000 premiums every year for full coverage, it doesn’t make a lot of sense.

The best way to go, then, is to protect yourself with the most liability coverage you can, but take the rest of the coverage as you go.

Cheers,

Fashun Guadarrama.

Reader question:

I got an older car and want to add a bunch of features to it, basically make it like new and make it awesome. Is there anything I should keep in mind regarding the insurance?

Darnell

Always think about insurance before making changes to your car, Darnell.

Granted, this doesn’t extend to something simple like getting a fuzzy pink cover for your steering wheel or some leopard-print seat covers, but once you start paying bigger money into the changes on your car you want to make sure you know what your car insurance company covers and also make sure that your company knows what you’re adding to your car so that they can put it in your policy.

Talk to the company before you start adding things to your ride. They’ll tell you what they do or don’t cover and what the cost will be if they take your car with all the enhancements. If they don’t cover the customizations, you’ll probably have to get an endorsement for your policy. An endorsement is when you extend the comprehensive and collision part of your policy. If you don’t have those in your policy, you’ll likely have to upgrade. Even so, most plans for endorsement only cover up to $5,000, so if your sound system alone costs that much, you might want to try a different route.

Even though most regular insurance companies can’t cover the more extended amounts of customization, there are specialized companies that do. The best part of going to a specialized agency is that they understand a lot more than your regular car insurance company the value of things as small as your special paint job. These companies are a little harder to find, but are worth it in the end.

Make sure you know in detail everything you have added, because if you don’t state it, it won’t get covered. It’s also important that you keep a list of when a feature was added and by whom. In order to be covered, your car has to be safe, and car insurance companies don’t trust do-it-yourself jobs.

Cheers,

Fashun Guadarrama.