You know your new car will need gas, but it also needs the right kinds of Insurance as required by both the state and your lender. The cost of premiums must be figured into your budget along with loan payment amounts and, well, gas. And of course those Bigfoot bumper stickers!

Why we have to carry car insurance

First thing first, Oregon law requires every car to be covered by automobile insurance. (Oregon.gov)

More importantly, though, car insurance financially protects you and your property, and other people and their property, from loss, injury, and damages. Medical bills and repair costs from an accident can add up fast. Lawsuits are common, particularly in cases of injury, and can run to thousands and thousands of dollars.

Think of your car insurance as a shield against taking a massive monetary hit should you be involved in an accident. For the year 2021, the National Safety Council reported average incident auto repair costs of $5,700 per vehicle, while injuries or deaths can total more than $120,000 per person. That's a lot of moolah!

Types of Insurance

There are lots of coverage types, some mandated by the state and some required by your lender, both of which will tell you what to buy and keep in force for the duration of your loan.

1. Liability - Liability insurance protects you when you're at fault and is required in Oregon. This covers you for someone else's injuries or property damage that you cause.
2. Personal injury protection (PIP) - PIP is also required in Oregon and covers your injuries and expenses regardless of who's at fault.
3. Uninsured motorist - This will cover your vehicle damages in the event you're hit by an uninsured motorist. It is required in Oregon.
4. Collision - This insurance covers damage to your vehicle from an accident and is required by your lender. Collision ensures that your vehicle is restored to as close to original condition as possible in the event of an accident. You will need to keep this coverage current for the life of your loan.
5. Comprehensive - Comprehensive covers damage that is not related to accidents. Such causes include natural disasters such as hail, earthquakes, fires, and floods, among others. If your vehicle is stolen or vandalized or is damaged by contact with animals, comprehensive covers the damage. This insurance is required by your lender.
6. Towing insurance - Though this coverage is not a requirement, it is highly suggested. In Oregon, towing is largely unregulated leaving towing companies to come up with their own fees and add-ons like: "flat bed fee", "bed clean out fee", "gate fee", and "after hours dispatch fee". Your towing bill can quickly exceed $1,000 for what you may consider a "simple tow".  It makes sense to protect your vehicle and yourself from being stranded by an accident, flat tire, dead battery, etc. A dark and stormy night can get a lot scarier when you're broken down on the side of the road! Nice to know that the tow truck is coming and you're not going to be overly burdened by the cost!

Deductibles

All auto insurance policies assign deductibles. A car insurance deductible is what you will have to pay out-of-pocket before an insurance claim kicks in. Some people choose to carry more financial responsibility themselves, which might lower their insurance premiums up to 20% on a $1000 deductible instead of $500. Might sound tempting, but you must be very sure you know you can come up with that deductible amount to cover an accident.

Deductibles vary by lender. World Famous Autos requires deductibles to be set at or below $500 to minimize any loss you may experience due to unfortunate circumstances.

Who is Covered

Did you know that anyone who drives your car, even occasionally, must be named as a driver on your insurance? Most of us don't. Naming additional drivers on your policy protects you and them in case of an accident. Be aware, the insurance company will check each driver in underwriting when determining your rate.

How insurance premiums are calculated

The coverages you need will depend on lots of factors, including your age, your driving record, the age, type and cost of the vehicle, the mileage you drive, and if the vehicle is used for business purposes. The article Compare Car Insurance Rates, October 2023 (www.nerdwallet.com) provides good information about premium cost, taking these factors into account.

You can compare costs between insurance companies by shopping around online, but finding a local agent to work with face-to-face is highly recommended. Get a few quotes before deciding who you'll go with.

A Few More Wise Words

You must keep your lender informed about your insurance coverage and any changes you make.

1. ALWAYS inform your lender if you change insurance companies. ID cards are not considered proof of insurance. Your lender must be able to see deductible levels and named drivers on the policy. For this you need to request a binder or declaration from your insurance company.
2. ALWAYS keep your coverage current. Lapses in proof of coverage may result in you defaulting on your loan.
3. ALWAYS file a claim and alert your lender within 24 hours of an accident.
4. ALWAYS maintain documentation of changes made to your policy. A circumstance may come up that you need to prove your coverage levels.

Simple as mud, right? Remember: Until your loan is repaid, you and your lender own your car TOGETHER. Keep everybody happy by keeping them in the loop and keeping your coverages up-to-date.