Understanding Car Insurance - Insuring A Vehicle Bought At Buy Here Pay Here Used Car Dealerships

Once customers decide which used car dealership they are heading to, they need to decide on the insurance that they will buy. Many buy here pay here dealers require proof of insurance to the vehicles before they give the keys to the cars. Understanding the different types of insurance is the first basic step.

Understanding Some Basics

Although not every driver is required to have his/her name on the insurance, the owner of the vehicle and his acquaintances that reside at the same address need to be on the insurance card. With this, we mean that if a friend uses a vehicle for a couple of errands, he is not required to have his name on the insurance but yet would be covered under the owner's insurance.

However, insurance companies try to not pay for accidents caused by such friends. They try to show that the friend has driven the vehicle for some time and not just a couple of times. If this was true, then the friend should have added their name on the insurance card and hence the insurance company would have grounds to refuse to pay for damages caused by such drivers. So if a friend uses the vehicle on a daily basis, although he is temporarily not registered in the same address as the owner of the vehicle, then that friend needs to be added to the insurance. This is to make sure that he would be covered if an accident does occur.

Type #1

The first type is what is called "liability" and it is the basic and common type. Most states require liability insurance for all vehicles, and charge a hefty fine for drivers that fail to show proof of insurance. With liability insurance, when an owner of a vehicle is at fault, his insurance is in charge of paying to fix the other vehicle and to pay for injury of passengers and driver of the other vehicle. The liability insurance would not cover the insured vehicle.

Type #2

On the other hand, the "full coverage" means that when the insured vehicle is at fault in an accident, both vehicles would be covered. Most insurance companies would require a deductible with full coverage. This deductible is often $500 and is meant to cover the initial cost required to fix the insured vehicle. So if the insured vehicle needs less than $500 then the insured driver would have to pay all the cost. However, when the damages need more than $500, then the insured person would pay the initial $500 and the insurance company would pay for the rest. This is why it is so important to ask ahead of time, what is the deductible as some companies offer low premiums only because they know that they can increase this deductible and not pay for some future costs.

Although this, more expensive, coverage is not required by state laws, some choose to pay for it to feel financially safer later on. Others do not have a choice and have to buy it. For example, new car dealerships require their customers, who finance their vehicles, to have full coverage to safeguard the vehicle till all the money owed is paid in full. But since buy here pay here dealers only sell used vehicles, this would not be the case.

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