Most people are excited to put their first down payment on a car. Then, they see the insurance bill. Many dealerships in Reading, PA require people to obtain full coverage auto insurance before they drive the car off the lot, and there are a few reasons why.

Your Car is the Collateral

When you get a car on payment, you have to take out a loan for the vehicle. Then, you pay payments on that loan, including interest. The vehicle acts as collateral for that loan. So, if something happens to the vehicle, and you don’t have full coverage, the collateral is gone, and the lender has to take a loss if you don’t keep making payments. Typically, a lender will sue you for the remaining balance because that’s the only way they can recoup their money.

Financial Security

This can also act as financial security for the person with the car. If the car is totaled, you still owe the remaining balance on the loan, even if you no longer have the car. Full coverage insurance policies will usually pay out the amount the car is worth. It may not be enough to cover interest, but this payout can go a long way in paying off your loan.

Forced Auto Policies

Most lenders write in the contract that you must keep full coverage insurance on the vehicle. If you don’t work with a company like Berks County Insurance to get a policy, they can get one for you. This policy is typically more expensive, and they can tack the cost of the policy onto your car payment or bill, giving them the right to repossess it if you don’t pay it.

Instead, it’s best to contact one of the experienced agents here at Berks County Insurance to get a policy. We’ll work with you to get you the necessary coverage. Contact us today. We’re currently serving the Reading, PA area.

Collision Insurance Coverage

If you’re involved in an accident, the other driver may not have adequate insurance coverage to cover the repair costs. Similarly, if you’re involved in a solo accident with no other vehicles, you may find it difficult to afford the necessary repairs. Collision insurance eliminates the guesswork by providing coverage for the repairs needed to restore your vehicle. With collision insurance, your policy will reimburse you for the bodywork required to get your car back in shape.

Steps for Filing an Insurance Claim

Filing an insurance claim should be done as soon as possible after an accident. The claims process may vary depending on the severity of the damage. The first step is to have your vehicle inspected.

An insurance adjuster will typically perform the initial inspection to determine which parts need to be repaired or replaced. If your vehicle qualifies for repairs covered under your policy, a mechanic will also inspect the vehicle and provide a quote for the necessary work. You’ll be kept informed throughout the restoration process.