Auto Insurance Add-ons Explained

Once you've picked out a car insurance policy, you'll have the option to purchase various auto insurance add-ons, including gap insurance and roadside assistance. Auto insurance add-ons aren't required by state insurance laws, but they can help reduce your deductibles and your out-of-pocket costs. Car insurance add-ons are likely to increase your monthly premiums, so it's important to comparison shop online before you buy a policy if you have add-ons you want to purchase. Start comparing auto insurance quotes now with our free comparison tool below.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Oct 30, 2020

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Choosing the right auto insurance company is tricky enough. Once you have chosen your auto insurance provider, however, you then need to customize your policy. How do you know what extra policy features and add-ons to buy, though? Which ones will fulfill your needs as a driver?

Most auto insurance providers offer additional add-ons such as Gap Insurance, Roadside Assistance, Vanishing Deductibles, and Uninsured Motorist Coverage. These extra features cost money though, how do you know which ones you can afford and which ones you could afford to do without? Continue reading below for a brief description of these popular car insurance add-ons.

About Gap Insurance

The longer you drive your vehicle and the more wear and tear it accumulates, the less it will be worth. This is the basis of depreciation. Every minute you are off the dealer’s lot you can practically see dollars dropping off drop the value of your car.

If your vehicle is leased or financed, there will be many periods in your history of “ownership” where you owe more than the vehicle is worth. If you get into an accident and total your car during one of these periods, you will be responsible for the remainder of the vehicle’s value. If you don’t want to be responsible for this difference, you might want to consider gap insurance.

To paint a better picture for you, imagine this. If you financed a car for $30,000 and totaled it shortly after getting it from the dealer, say, 2 months later. You are liable for the outstanding loan amount plus interest. If you have only paid off $1,000 and the insurer values the car at $25,000, then you need to pay an extra $4,000 plus interest. If you have Gap insurance, however, you will not be responsible for this $4,000 plus interest.

If you are wondering how much gap insurance costs, you might need to call your insurance agent to get an exact amount. However, we can tell you that you can expect to pay around $100 per year more or less. Many leasing and financial institutions require that you buy Gap insurance. If they don’t, it’s probably a good idea, if not a necessity, to purchase it if you lease or finance your vehicle.

Click here to read more about Gap Insurance.

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About Roadside Assistance

If you are ever stranded or broken down on the side of the road, roadside assistance coverage will provide you with emergency assistance. Services usually offered under this type of coverage include towing, flat-tire repairs, jump-starting your battery, and opening locked doors (if you are locked out of your vehicle). This type of coverage is generally inexpensive and readily available. If you lack basic mechanical skills, or will be driving long distances during your commute, getting this coverage is a good idea.

The most well-known roadside assistance provider is probably AAA. But, it’s actually made available by many organizations and companies. Who knows, you might already be covered? Credit card companies and mobile phone providers are increasingly offering this service. Before you buy this add-on from your auto insurance provider, call around and make sure you aren’t already covered.

Click here to read more about Roadside Assistance Coverage.

About Vanishing Deductibles

Many insurance companies offer a “vanishing deductibles” or a “disappearing deductibles” add-on, which is basically a safe-driving rewards program. The way this works is by offering an incentive to you for driving safe. As time passes without an accident or a blemish on your driving record, your insurer will reduce your deductible until it hits $0.

Call your auto insurance provider today to see if they have a vanishing deductible program, and if so, how much it will cost you to be enrolled. Most likely, it will run you around 5% the total cost of your vehicle.

About Uninsured Motorist Coverage

Many visitors here at probably already have uninsured motorist coverage. In fact, it is required by law in 29 states. This coverage will pay for damages resulting in accidents with uninsured people. Because of recent estimates by the IRC that nearly 1 in 7 drivers are driving without insurance, we recommend everyone have this coverage (even if it is not required in your state).

If you are ever involved in an accident with another driver and he or she doesn’t have insurance, you would likely have to pay for medical bills or damages to your vehicle out of your own pocket. If, however, you have uninsured motorist coverage, your insurance provider will cover medical expenses and vehicle repairs.

Click here to read more about Uninsured Motorist Coverage.

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Zero Depreciation

Zero depreciation offers full auto insurance coverage without taking into consideration the depreciation of your vehicle. When your car is damaged in an accident, the amount you will receive from your insurance provider is based on the current value of your vehicle, and depreciation is factored into the value. With zero depreciation coverage, you will receive the full value of your vehicle – without depreciation factored into the value.

This type of add-on coverage is intended for new car owners, particularly those who have financed, as it helps to fill the gap between owe on your car and what the car is actually worth. In other words, if your car is totaled in an accident, your insurance provider will offer you the full value of the car (what you purchased it for) instead of the depreciated value.

Personal Injury Protection

Personal injury protection (PIP) is an add-on insurance coverage that will help to cover medical bills and lost wages as a result of a car accident. This coverage will protect you or any passengers in your vehicle that were injured in an acceded. This coverage will also protect you when you are involved in an accident in somebody else’s car, or if you injury a pedestrian or a bicyclist with your car. Personal injury protection is also sometimes referred to as “no-fault insurance” because it pays out claims regardless of who is at fault in the accident.

Collision Coverage

Collision insurance offers coverage that will assist with the cost of repairing of replacing your vehicle when it is damaged in a collision with another vehicle or standing item, such as a tree, a light post, or a fence, or if it is involved in a single-vehicle accident (it rolls over, for example).

Liability insurance only covers damages to third-party vehicles and property. For instance if you are involved in a car accident with another vehicle and you are at-fault, your liability coverage will pay for the damages to the other vehicle; it will not cover damages to your own vehicle. If you have collision coverage, your insurance provider will pay for the damages to your car.

While collision insurance is generally considered an add-on coverage, if you are financing or leasing a car, your lender will likely require this coverage.

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Funeral / Accidental Death Insurance

If a car accident results in your death or the death of someone else, funeral / accidental death insurance will help to pay for the cost of the funeral, as long as the accident is covered by your policy. If a car accident results in your death, for example, this coverage will prevent them from having to pay for the expenses of your death of their own pocket.

This type of coverage is not required, and if you have another type of insurance that will assist with death expenses, it may not be necessary; however, if you do not have additional coverages that will cover death expenses, funeral / accidental death insurance is a wise investment.

Rental Car Insurance

Rental car insurance, as the name suggests, is auto insurance that offers coverage for a rental car. Car rental companies offer loss-damage waivers (also known as collision damage waivers), which will protect you from having to pay for any damage to or theft of a rental car.

If you have comprehensive or collision coverage on your own, check with your insurance provider, as the coverage will likely extend to a rental car.

All of the add-ons listed above would be smart additions to any car insurance policy. Many other add-ons, however, are not as wise of a purchase. If you have concerns about which add-ons you should purchase, please give your insurance company a call. Most insurance agents are qualified to customize an insurance policy that fits your unique needs.

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