Finance - Loans

The Perks and Pitfalls of Car Insurance Add-ons

With millions of drivers on the road, each with a different driving record, it is almost impossible to fit all the drivers into one single box of auto insurance needs. Different people require different types of coverage. Some people need more, while some people need less. With so many different factors that can cause a car accident, damage your car, or leave you stranded in the middle of nowhere, you need more than just the plain ol’ car insurance.

This is where car insurance add-ons come in. Add-ons are extra coverage that you can get by paying a little extra. These add-ons are not insurance coverage by themselves, but these can be added to make your insurance coverage fit right for your needs.

But are all add-ons just plain great? Are there no downsides to getting insurance addons? This article will look at some of the most popular car insurance add-ons and find all the perks and pitfalls of these car insurance add-ons. Let’s get started.

Roadside Assistance 

One of the most popular car insurance add-ons is roadside assistance and it is very popular amongst people who take frequent long trips, go to the countryside, explore the unexplored, and are in their vehicles traveling most of the time.

Roadside assistance provides excellent support for things that you might need if your car breaks down in the middle of the road. If you are in a city with car workshops all around you, getting your car there or calling a mechanic is not a big deal. But what if you are in the middle of the Mojave road?

Roadside assistance will allow you to call for help, which includes getting your car fixed, or getting it towed to the nearest workshop. It also includes gas refilling, although it is limited to only once or twice per year. Different companies have different roadside assistance offerings.

Perks: Great for people who travel a lot. If you are on the road most of the time or go on cross-country trips every month or two, roadside assistance is a great way of ensuring that you don’t struggle if there is a car breakdown. It is worth the money it asks for and you should get it.

Pitfalls: Many insurance companies upsell roadside assistance to people who do not need it. With a little bit of fear-mongering and explaining to them the distant possibility of getting stuck on the road, helpless. But in reality, you do not need roadside assistance if you just use your car for commuting to work and rarely take it out of the city.

Uninsured Motorist Protection Policy

An uninsured motorist protection policy is perhaps the most useful auto insurance add-on that you can get. Uninsured motorist/underinsured motorist coverage is an add-on that you get for yourself in case the liability insurance of the driver at fault is either lacking or absent.

For example, if someone hits your car and causes damage to it, along with injury to your body, you’ll have to claim the other driver’s liability insurance policy. But what if the liability insurance coverage is not enough to cover the cost of repairs and medical treatments? You can sue the person but that’s a lengthy process.

UM/UIM insurance add-on will cover the lacking amount. This makes it so popular that almost everyone gets it. But it also has its fair share of perks and pitfalls.

Perks: Great for people who have expensive cars that require expensive parts and services. Also, if you live in a state where the minimum liability coverage limit is very less compared to other states, having UM/UIM add-on is a smart move.

Pitfalls: For states with a decent minimum coverage limit, and for people with collision car insurance with a higher coverage limit, UM/UIM add-on becomes redundant. Also, it can bump up the cost of your car insurance, so if you are leaning towards the lower cost of car insurance, UM/UIM add-on is not right for you.

Gap Insurance

Gap insurance is great coverage for people who either lease their car or buy a car on a loan. Here’s how gap insurance can be useful for you: Let’s say that you buy a car for $25,000, but since you got it on a loan, you owe the bank a total amount of $30,000 over 5 years.

If you get an insurance coverage policy that will pay for the actual cash value of your car in case you total your car. But the maximum amount the insurance will cover would be $25,000. Why would you pay the extra $5,000 when you don’t even own the car? This is when gap insurance comes in. This policy will pay for the extra amount that you owe to the bank.

Perks: Great for people who lease a car or get it on a loan. A gap insurance policy does not cost that much and provides great coverage. It can help you save a lot of money in case your car gets totaled.

Pitfalls: Many people still keep the gap insurance and pay the premium when their loan debt has been repaid. Once you have cleared the extra amount that you owe the bank, having gap insurance makes no sense.

Personal Injury Protection Plan

A personal injury protection plan is not considered an add-on in 12 states where it is mandatory to have this add-on with your car insurance policy. The personal injury protection plan is perhaps the only add-on that we think has no pitfalls. This is because it covers the cost of your medical expenses in an accident.

You can claim the liability insurance of the driver at fault, but chances are that their coverage limit can be lacking. And you do not want to end up paying for the treatment from your pocket. This is what makes PIP such a great add-on.

Perks: Great safety as it will cover the cost of your treatment in an accident. You can also use the other driver’s liability insurance along with your personal injury protection plan to pay for the treatments.

Pitfalls: There aren’t many as being extra cautious when it comes to medical treatment is always encouraged. However, sometimes, some people get PIP when their medicare already covers accidental treatment costs.


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