I saw a car ad last night, and discovered GM/Chevrolet has a special offer on the purchase of some of their newer models for Oregon and Washington residents, where GM will give you free car insurance through Metlife Auto & Home insurance for the first year on the new vehicle.
Offers like this can complicate your auto insurance situation, if you own other cars. It is not usually a good idea to insure your cars separately, with different insurance companies.
1. You miss out on a large multi-car discount, which sometimes gets larger with the more cars you insure under one policy. It is a very rare situation when you can save money insuring your cars with separate insurance companies.
2. If you buy an additional car, many insurance companies exclude automatic coverage for it, unless all your cars are insured with the same insurance company.
Discounts, rates, and policies vary a lot among insurance companies, so be sure to research and find the best auto insurance company for you.
Let’s look at a situation to see what could happen:
Assume there is a married couple. The husband & wife each have their own car, insured with different car insurance companies. The couple decides to buy a third vehicle on a weekend. They spend several hours Sunday evening negotiating the purchase, and they drive home with it, but due to their unfamiliarity with the new vehicle, they get into a one-car accident, and there is a lot of damage to the vehicle.
The husband has his insurance, the wife has hers. Which company would pay for the damage to the new car? Probably neither company will pay for it, and the customer will have to pay the full cost to repair the car.
Many insurance companies extend coverage to a newly purchased car for up to 30 days, to give you enough time to notify the insurance company, and add it to your policy. But many insurance companies now do not provide this extended coverage for newly purchased cars, unless the insurance company insures ALL your cars.
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If the husband and wife had a joint policy for both of their cars with one insurance company, and one of the cars had Collision coverage, the damage to the newly purchased third vehicle would be covered, if the damage is greater than the deductible.
However, if the couple had a joint policy for both of their cars with one insurance company, but their cars are older, and they do not carry Collision coverage on either of the cars, the damage to the third car will not be covered.
When insurance companies extend coverage to a newly purchased car, you are covered with the same coverage as the car you insure with them which has the most coverage. So, if one of the couple’s cars had Collision, there would be coverage for the damage to the third car, but if both their cars did not have Collision, there would be no coverage.
Here is how can you avoid uncovered claims for newly purchased cars:
1. Don’t buy a car on a whim. Before you buy, contact your insurance company with the VIN(Vehicle Identification Number) of the car you intend buy, and tell the insurance company who will be the registered owner. In addition to getting price quotes for adding the vehicle, ask how the car will be covered if you buy it, but can’t contact the insurance company to add it right away. Be sure to tell the insurance company if you or your spouse own a car insured with a different insurance company.
2. Don’t risk the chance you may have been given inaccurate information about how a newly purchased car will be covered, and add the new car to your policy before you drive away with it. Almost all insurance companies have 24/7 customer service, so you should be able to call the insurance company anytime and add the car. Make sure the insurance company confirms with you the coverage you want for the new car, so you don’t find out the hard way you are not covered in the way you expected, or you have a $1,000 deductible, making you less than “fully covered,” as you thought.
Sometimes, it makes sense to insure one of your cars with another insurance company, like if you have a classic car needing a classic car policy, or a teen with a really bad driving record. Otherwise, keep all your cars insured with one company for the lowest rates and no unpleasant surprises when you buy an additional car.
Do you have questions about insuring a new car? Comment on my facebook page. Follow me on Twitter for important insurance consumer news & new blog entries at CarInsWatch. See auto & home insurance company reviews rating each company’s pricing, claims handling and customer service for over 40 different companies; customer complaint analysis for the major insurance companies in each US State; term life insurance rate surveys and more, on my website’s home page at smartshopyourcarinsurance.com.