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What Is Gap Insurance? When you buy or lease a new car or truck, the vehicle starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20 percent of their value within one year. Standard auto insurance policies cover the depreciated value; in other words, insurance pays the current market value of the vehicle. If you finance the purchase of a new car and only put down a small deposit down, the amount of the loan may exceed the market value of the vehicle in its early years of ownership. Gap insurance is available to cover the “gap” between what a vehicle is worth and what you owe on it.   It’s a good idea to consider buying gap insurance for your new car or truck purchase if you:   Made less than a 20 percent down payment. Financed for 60 months or longer. Leased the vehicle. Purchased a vehicle that depreciates faster than the average. Rolled over negative equity from an old car loan into the new loan.   While the ...

Insuring a Leased Car If you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You will need to buy these coverages in addition to the others that may be  mandatory in your state , such as auto liability insurance. Collision covers the damage to the car from an accident with another automobile or object. Comprehensive covers a loss that is caused by something other than a collision with another car or object, such as a fire or theft or collision with a deer. The leasing company may also require "gap" insurance. If you have an accident and your leased car is damaged beyond repair, or "totaled," there's likely to be a difference between the amount that you still owe the auto dealer and the check you'll get from your insurance company. That's because the insurance company's check is based on the car's actual c...

Protecting Yourself against Uninsured Motorists Overlooked Auto Insurance Options About one out of every eight U.S. drivers does  not  have an auto insurance policy, even though it is mandatory to purchase this coverage in 49 out of 50 states (New Hampshire is the exception), according to the  Insurance Research Council  (IRC). In several states, more than one in five drivers do not carry coverage. If you’re involved in a serious accident with an uninsured motorist, you could be at risk for substantial financial losses. For protection from losses arising from an accident with an uninsured motorist, consider purchasing uninsured motorist coverage. A handful of states require that this coverage be included in all auto insurance policies. Regardless of state requirements, you may already carry uninsured motorist coverage, so check your policy or ask your insurance professional.   Types of Uninsured Motorist Coverage Specific options for uninsur...

Can I drive legally without insurance? NO! Almost every state requires you to have auto liability insurance. All states also have financial responsibility laws. This means that even in a state that does not require liability insurance, you need to have sufficient assets to pay claims if you cause an accident. If you don’t have enough assets, you must purchase at least the state minimum amount of insurance. But insurance exists to protect your assets. Trying to see how little you can get by with can be very shortsighted and dangerous. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident since accidents may cost far more than the minimum limits mandated by most states. If you've financed your car, your lender may require comprehensive and collision insurance as part of the loan agreement. For more information, see  Automobile Financial Responsibility Laws .

Infographic: Types of Auto Coverage Some types of auto insurance coverage are required, others are optional, but you’ll want to understand them all because they provide protection against several types of risk.

What Is Covered by a Basic Auto Insurance Policy? Your auto policy may include six coverages. Each coverage is priced separately. 1. Bodily Injury Liability This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission. It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings. 2. Medical Payments or Personal Injury Protection (PIP) This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover...

Why should I buy life insurance? Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations: Replace income for dependents If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death. Pay final expenses Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered b...