Car Insurance Types to Consider for New Drivers
It’s smart to think about buying additional coverage for your new driver to can help ease the financial sting if they have an accident. Here are three types of car insurance that provide an extra layer of protection for accidents.
Accident forgiveness
Since new drivers are more likely to crash, accident forgiveness insurance can be a financial backstop for those with newly licensed motorists on their policies. Accident forgiveness insurance prevents your rates from increasing after you’ve caused an accident, as long as you meet eligibility requirements, which vary by car insurance company.
Some insurance companies offer accident forgiveness insurance as add-on coverage you buy, others include it automatically, and still others provide it through a combination of both.
Typically, you must maintain a clean driving record for a specified amount of time—such as three years—to qualify for accident forgiveness coverage. Some companies forgive your first accident if you’ve been a customer for a certain period of time.
For instance, you can qualify for accident forgiveness from Erie after you’ve been a customer for at least three years. USAA provides accident forgiveness for free after five years if the drivers in your household have had no at-fault accidents. You can buy accident forgiveness from Auto-Owners if drivers on your policy have been without at-fault claims or major violations for the preceding three-year period.
Gap insurance
If your new driver totals your vehicle, and you owe more on the loan or lease than your car was worth, gap insurance can help. When you file a comprehensive or collision insurance claim for a totaled car, your insurance company will pay you the depreciated value of your car, minus your deductible. Gap insurance pays the difference between your loan or lease balance and the value of the vehicle before it was totaled.
If you don’t have gap insurance and your outstanding loan balance is more than your car’s value, you’ll be responsible for paying off the loan for a car no one can drive.
New car replacement
If your teen is driving your new car or a new car you bought for them, it’s prudent to consider buying new car replacement insurance. Instead of getting the depreciated value of your totaled car after a wreck, you get the money for a brand new car of the same make and model, minus your deductible.
Ask your insurer about its requirements for the car’s age and mileage. Eligibility for new car replacement coverage varies by insurance company.
For example:
- Erie’s Auto Security add-on provides money to replace a vehicle that’s less than two years old with the newest model.
- Nationwide’s new car replacement insurance pays to replace your car as long as it’s less than three years old.
- Farmers’ new car replacement coverage provides money for a new car of the same make and model if your car is totaled within the first two model years and under 24,000 miles.