Blue CarCar insurance add-ons are an important part of any policy. Any car insurance policy will contain basic components, but add-ons help customers tailor a policy to fit their individual needs. However, it is important that customers understand how add-ons will impact not only their coverage but the price of their policies.

What Are Car Insurance Add-Ons?

Every policy must include basic liability coverage as required by the driver’s state of residence. There are two types of car insurance required by various states: liability or no-fault coverage. Both pay for damages caused in an accident, although they pay differently. Liability insurance pays if a driver injures another driver or damages a vehicle; no-fault pays for the insured’s damages up to a certain point. Carrying only the coverage required by the state with no add-ons is known as “minimum coverage.” This is undoubtedly the cheapest way to insure the vehicle but it is also the option with the least protection for the driver.

Add-ons are the extras beyond the required liability or no-fault insurance policies. There are several types of add-ons of varying coverage and costs, and policy owners must decide which they want. Taking out all of the available major add-ons is known as “full coverage.”

Add-Ons Add Value And Cost To Policies

Add-ons can help car policy owners cover various scenarios in which insurance may be helpful in paying expenses. The most common car insurance add-ons and their advantages and cost impacts are listed below.

  • Collision Coverage – Collision is one of the most expensive add-ons available to car insurance customers. This coverage pays for damage to the insured’s vehicle if he or she is responsible for the accident. If someone else is responsible for the crash, that person’s insurance usually pays for the damage. Collision coverage costs can be reduced by raising the deductible on the policy but this also means that the insured person must pay more of his or her own money if the car is damaged.
  • Comprehensive Coverage – Comprehensive coverage pays for all types of damage to the vehicle that are not caused by an accident. If the car catches on fire, is flooded or is stolen, comprehensive coverage is what pays to replace the vehicle. Comprehensive is usually slightly less expensive than collision but is still a major portion of the cost of a car insurance policy.
  • Uninsured or Underinsured Motorist Coverage – This add-on is considered essential by most insurance experts given the high number of uninsured drivers on the road. The cost for uninsured motorist coverage is relatively inexpensive and is a positive bargain compared to the losses a driver can sustain if hit by an uninsured or hit-and-run driver.
  • Gap Coverage – Gap coverage is usually relatively inexpensive but it serves an important purpose. Gap coverage pays the difference between what is owed on a vehicle and the vehicle’s “book value.” Anyone who has a vehicle that is financed should consider gap coverage, and some lenders require that the driver keep this coverage on the car until the loan is paid in full.
  • Personal Injury Protection – PIP coverage is required in no-fault states but is optional in other states. PIP coverage pays the medical bills of the driver and any passengers in the car if there is an accident, no matter who is at fault. PIP coverage is relatively inexpensive and is a great investment for drivers who do not have health insurance.
  • Roadside Assistance and Rental Car Protection – Many policies offer roadside assistance and rental car coverage for a very nominal fee. However, whether the driver will benefit from these forms of coverage is debatable. Rental car protection provides payment for a rental car if the driver’s vehicle is being repaired, but often pays only a small amount per day, leaving the driver to pick up the rest of the cost. Roadside assistance can be valuable if the car must be towed, but usually only applies if the car is damaged in an accident. Drivers may already have rental and roadside coverage through a credit card, cell phone plan or AAA policy, so it is important to review the coverage a driver already has before paying for this insurance add-on.

Adding on to car insurance policies makes coverage more valuable but also costs more money. Policy owners should carefully consider their add-ons to ensure that they are getting the right coverage along with a policy that meets their budget needs. With careful planning, car owners can find the right policies and coverage at a price they can afford.