The Lesser Known Auto Insurance Options You Might Need

Auto insurance comes in two parts: the coverage you're required by law to carry, and the optional coverage you can select to meet your needs.  The best-known optional coverages are comprehensive and collision—although even those aren't optional if you have a car loan.  Beyond the basics, there are several other add-ons for your policy that can make a world of difference to you in the event of a claim.  These lesser-known coverage options cost little and can save you a lot of money.

Roadside Assistance.  CAA isn't the only option you have to help you out in the event of a roadside emergency.  For a nominal fee, you will have coverage for towing and other roadside emergency needs.  The towing coverage applies even if there's no claim involved, and it is separate from claims coverage.

Accident Forgiveness.  When you have been in an accident and you are found to be at fault, your insurance rates will go up as a result—unless it qualifies for accident forgiveness.  Many car insurance companies now offer this optional coverage to allow good drivers a little leeway on their first accident.  Accident forgiveness prevents your insurance rates from going up as a result of a qualifying accident. A few things can disqualify you for the coverage, such as an accident involving a DUI or other major violation.

Waiver of Depreciation.  New cars lose value right off the lot and go down quite a bit in the first few years.  Insurance policies cover vehicles not for the replacement cost new, but for the actual cash value of the car.  That means that if your new car is totaled, a standard policy will pay out on the depreciated value, and you won't be able to buy another new car—unless you add Waiver of Depreciation coverage to your policy.  This coverage is available on new car purchases and is usually good for the first two or three years of ownership, allowing you to get the full cost new of the car rather than the depreciated amount.

Rental Car Coverage.  Many people don't realize that this coverage might not be included in their policy automatically, but in truth it's often an option.  When driving a rental car, you have two choices: use your existing insurance policy to cover the car, or buy the insurance company's policy.  If you rent cars frequently, it makes good financial sense to add this coverage and use your own policy instead.  Daily rates on rental car policies are much higher than the small extra premium for adding coverage to your insurance policy, such as with Canadian Direct Insurance.