How kit cars are different, insurance considerations before and after building your own car.

Don't forget to insure your kit car before you start building!

A kit car may be the ultimate do-it-yourself project. It allows the hard core car enthusiast to build their own car from the ground up. But as with any car, kit cars need to be insured.

Given the unique nature of the kit car process, it’s insured differently as well. There are several kit car insurance considerations you wouldn’t even consider with standard factory-built cars.

How Kit Cars Are Different

Perhaps the important difference between kit car insurance and other types of auto insurance is the “builder’s risk” aspect of it. Whereas a standard automobile is built in a factory somewhere, and a classic car is built in a factory a long time ago, kit cars are by definition built by private individuals.

Auto factories carry a form of commercial insurance to cover their building process to protect against theft, damage and other perils that may hinder getting the finished product. In the same way, individuals constructing kit cars should insure during the building process as well.

Insuring the Kit Car Build

You should consider insuring a kit car before the first part is ordered. This provides coverage for such things as missing or damaged or parts during the building process. Without this coverage, a mishap involving parts could completely stop the build. After all, how much more useful is an unfinished kit car versus a totaled car?

Both cars just take up space.

Many traditional property and casualty insurers won’t insure kit cars (although some do). Even if your normal company doesn’t insure kit cars, they may have access to a kit car insurance market through a broker.

As with classic car insurance, there are several companies that specialize in the kit car insurance. Alternatively, you can shop for kit car insurance online. Check with your agent or broker for more details.

After Building Your Kit Car

Once the kit car is built, it’s insured in much the same way as a classic car. Material damage is covered at a stated value (generally the total amount spent to build the car) while liability is a secondary concern at best. State minimum liability limits must be satisfied to legally drive a kit car on the road.

If the car is meant to be primarily a display piece it’s not absolutely necessary. As with classic car insurers, most kit car companies won’t insure the finished product unless it’s used for primary transportation.

What is liability insurance, is it important, and is it required on your auto insurance policy?

Liability Coverage Is Required In Most States

Liability coverage is the main reason people purchase auto insurance. That’s because your state probably requires it. There are many coverages you can get on a car insurance policy. What exactly is “liability coverage”?

What Liability Coverage Does

Liability insurance or liability coverage is the part of your auto insurance policy that covers other people and property in case you cause an accident. In other words, if you accidentally ram another vehicle, you will be on the hook for the damages to the other car and the people in the car. If you cause an injury to someone in the other car, the other party could sue you for the damages you caused. In such an instance, liability coverage steps up to cover those damages.

Liability coverage does NOT cover damages you cause to your car or yourself. Comprehensive and collision covers the physical damage to your vehicle. When coupled with liability coverage, that’s also called “full coverage” insurance. Personal Injury Protection (PIP) or Medical Payment covers physical injury to yourself or anyone in your car. Some policies even have life insurance included. But liability coverage is completely separate.

Two Parts: Bodily Injury & Property Damage

There are two parts to liability coverage: bodily injury and property damage.

Bodily injury coverage covers the injury you cause to passengers in other vehicles in at-fault accidents. If you cause a wreck, you’re responsible to paying the other person’s medical expenses, emergency aid, loss of income, funeral expenses, legal defense fees, and more. These expenses can run into the tens of thousands of dollars – even hundreds of thousands of dollars.

Property damage coverage covers the property damage you cause in an at-fault accident to other vehicles, buildings, lamp posts, etc. Like bodily injury coverage, these damages can run into the hundreds of thousands of dollars – especially in a multi-car collisions.

The way it’s listed on your policy is three numbers separated by forward-slashes. Ex: 25/50/25 The first number relates to the bodily injury coverage for one person multiplied by 1000. In the above instance, there is $25,000 in bodily injury coverage for one person injured. The second number relates to the limit of bodily injury coverage in any one accident. Here, the coverage limit is $50,000 – no matter how many people are injured in the other vehicle. The last number relates to property damage, also $25,000.

Liability Coverage Required In Most States

Because of the potential damage one driver can cause, all states require you be financially responsible for any bodily injury or property damage you cause in an at-fault accident. Most states require drivers to carry liability coverage on your auto insurance policy to meet that financial obligation. Check with your agent to see if it’s required in your state.

Even if it’s not required, you are still responsible for paying bodily injury and property damage in at-fault accidents. You could be sued for damages if you don’t have liability coverage in place. To be safe, it’s good to at least have minimum liability coverage. In most cases, it’s the law.

What is Gap Insurance, how much does it cost, and do you really need it?

Bridging the Gap of Depreciation with Gap Insurance The 360 Bridge - Austin, Texas

Gap Insurance is unlike any other consumer insurance policy. Why? Because it covers the part of your car that only banks would think about: depreciation. That’s the part that goes down every month you own your vehicle. Still confused? Let me explain.

What is Gap Insurance?

You’ve probably heard it said, “once you drive a new car off the lot, it’s worth thousands of dollars less.” It’s true. Say you visit your local Nissan dealership. That new Altima is screaming your name, so you buy it. After handing over your down payment, the salesguy hands you the keys to your new ride. You just bought a $22K vehicle, but once you’re home, you could only sell it for $18,000. That missing $4,000 ($22,000 – $18,000) is the depreciation you incur by merely relocating the vehicle.

Unfortunately, a regular auto insurance policy does not cover a car’s depreciation. If, on the second day of owning your Altima you total your car, the insurance company would only pay you the actual cash value (ACV) for the car, or $18,000. But the bank still wants all the money you borrowed. Where are you going to come up the extra $4K? That’s why you need gap insurance, also called loan/lease gap coverage. If you want to cover the depreciation of your vehicle for the life of the vehicle, then get gap insurance. It sometimes even pays for your deductible.

How Much Does It Cost?

Since you’re not paying to insure your entire vehicle, a gap insurance policy is not as expensive as regular car insurance. However, since the policy is basically all-risk coverage, it’s not exactly cheap either. If you shop around, you can pay a one-time premium of $300 to $700. The price depends on the amount financed and sometimes the terms of the loan or lease. There are caps involved, but most new vehicles are eligible for gap insurance. Check with your finance company for an easy quote.

Do You Really Need Gap Insurance?

There are a couple of reasons why you might want gap insurance. For one, if you owe a significant amount on the car you should consider it. How much money? Dave Hurt, who sells gap insurance with Car Select, says, “Anyone who buys a car and finances 80% of the purchase price should buy Gap Insurance.” That’s probably a good guideline.

Second, you should consider gap insurance if it’s early in the life of your loan or lease. If you owe more money than your car is worth, you’re considered ‘upside down’. Gap insurance could ease you out of an ‘upside down’ situation if you total your car. It may not be required by your finance company, but it’s not a bad decision in certain circumstances.

It’s worth mentioning that gap insurance is not for every car. If you have an older vehicle, gap insurance may not be available for it. Check with the company who writes the gap insurance policy if you’re curious about your particular vehicle.

Finally, check to see if your finance company already includes gap insurance with the auto loan. When I worked with State Farm, their bank automatically included a gap insurance policy for new car purchases. True, their auto loan rates could be higher than dealer financing, but it was an added benefit of their auto loans.

If you have an experience with gap insurance, feel free to leave a comment.

Answering 4 questions about full coverage auto insurance: What it is – What it’s not – How to use it – and Do you really need it?

If you backed into something, would it be covered by comprehensive or collision?

A lot of people throw around the term full coverage auto insurance. A friend, a family member, or even your insurance agent may have said it before. Technically-speaking, full coverage auto insurance doesn’t exist. But it’s important to know what it means to most people.

One of my insurance trainers drilled into my head “there’s no such thing as full coverage auto insurance – there’s no such thing as full coverage auto insurance”. Still, consumers everywhere use the term “full coverage auto insurance”. So my purpose is to help you understand what full coverage auto insurance really is, what it’s not, what it does, and whether you need it.

Question #1: What is Full Coverage Auto Insurance?

Full coverage auto insurance refers to your auto policy when it has both liability coverage and physical damage coverage. Physical damage coverage is usually referred to as comprehensive (comp) and collision.

Collision covers the physical damage to your vehicle in an at-fault accident. That means, if you run a red light and cause an accident, collision covers the busted headlight on your car – minus your deductible.

Comprehensive (comp) covers physical damage to your car from acts of God and other such incidents. If you’re using comprehensive coverage, the damage to your vehicle cannot be your fault. For instance, if you’re driving down the road and a rock hits your windshield causing a crack, your comprehensive would cover the loss – minus your deductible.

Question#2: Why Isn’t It Really “Full Coverage Auto Insurance”?

As you can probably tell, it’s not exactly ‘full coverage auto insurance’. You still have to pay your deductible to use comp and collision. Sometimes your deductible is $50 and sometimes it’s $1000 – whatever it is, your ‘full coverage auto insurance’ won’t cover the deductible. You have to write the check for your deductible.

Also, you can’t intentionally wreck your car. In fact, there’s nothing that will cover that type of damage. So in case you’re standing at the edge of a cliff ready to send your old beater to its final resting place, you can back up now. There’s no auto insurance for intentional damage – maybe jail – but no coverage.

Question #3: How Do You Use Full Coverage Auto Insurance?

Hopefully you’ll never have to use your car insurance, but you might. If a tree ever falls on your car, or you sideswipe another car, then you want to notify your insurance company. This information is your proof of insurance in the glove box (you do keep a copy in your car, right?). Your insurer will help you through the process

Call them up and explain the physical damage situation to your vehicle. If another driver was not involved in the incident and you were not at fault, then it’s probably a comprehensive claim. If you were at-fault in the incident, then it’s probably a collision claim, Your auto insurance company will help you at that point. As always, claims are subject to policy guidelines.

Question #4: Do You Really Need a form of Full Coverage Auto Insurance?

That depends. Auto insurance companies usually recommend you carry comprehensive and collision coverage if you have a newer car. You might also consider getting full coverage if you can’t afford to replace the vehicle with cash. Finally, your bank requires you to maintain comp and collision on the policy if you’re financing the car. Banks like to be paid if you ever total your car.

If you have a later model vehicle, it may be time to drop your comp and collision. If you can handle the risk of a car worth a few thousand dollars, it could be worth it to drop full coverage to save some premium dollars.

Your insurance company should be able to guide you in such a case and advise you if having what everyone else calls “full coverage auto insurance” is in your best interest.

3 Things to Know About Your Auto Insurance When You’re Ticketed For Drunk Driving

Car Insurance after a DUI Can Be Tough

Car Insurance cancelled after a DUI or DWI? It could never happen to you, right?

You never drive after 2 drinks.  You always call a cab instead of getting behind the wheel.  But for whatever reason, things were different this time.  You picked up the keys and drove yourself home.  Before you knew it, you saw the flashing lights.  Against all odds, you have a DUI.

Whatever they call it in your state (DUI, DWI, OWI, or OVI) it all amounts to a similar thing.  Problems.  If you’re convicted of drunk driving, estimates suggest you’ll pay over $10,000 for attorney’s fees, car insurance premium increases, court costs, and related items.  It’s a serious matter.  Wherever you are on the road to DUI recovery, these three steps will help you get back on track with your auto insurance.

Step 1: Get Legal Counsel

I am not an attorney and this is not legal advice.  It’s just suggestions to help with your car insurance in a DUI situation.  Before talking to the court about your ticket, get an attorney.  Now is not the time to be the Lone Ranger in front of a judge.  There’s just no substitute for a good lawyer in a DUI situation, especially as it relates to your auto insurance.

For one, experienced attorneys will give you perspective.  You’re not the first person they’ve coached through a DUI or DWI, nor will you be the last.  Second, they will help you with all the little steps like filing necessary documents, to helping you show remorse in front of the judge (that high school drama class will finally come in handy).  Third, a good lawyer should help you get a lesser sentence if you’re convicted.  That alone will be worth the fees they charge, especially since you’ll be able to keep your car insurance.

One last thing relates to your car insurance: If you don’t have a driver’s license, you don’t have insurance.  If an attorney can save your license, then it’s worth every penny you pay them.  Who knows?  They may even be able to get you out of a conviction.  If so, then you’ll get to keep your policy with the same rates.

Step 2: Handling Your Car Insurance Policy

If you’re convicted of a DUI or DWI and you get to keep your driver’s license, you’ll probably need an SR-22 filing.  That means your state must obtain proof of liability coverage from an car insurance company for you to maintain your license.

Not all companies provide SR-22 insurance.  If you have auto insurance with a preferred company, they’ll either cancel your policy or non-renew it once it comes up for renewal.  A DUI and DWI are a big pain in this regard.  If you’re cancelled by your auto insurance company, you have some shopping to do.

At this point, you’ll need quotes for non-standard car insurance.  Either get a quote here or call up some local insurers for some quotes.  Either way, don’t wait until your auto policy is cancelled from your DUI or DWI.  Getting auto insurance afterwards will be even more expensive, if they can even write the policy.

Don’t forget.  When you’re talking with these car insurance companies or filling out online forms, be honest.  Being up front about a DUI or DWI will save you time and frustration when talking with an agent.  If they can’t help you, they’ll let you know, and probably get you in touch with someone who can.  The more open you are about your DUI situation, the easier it will be to get auto insurance.

Step 3: Drive Safely

I’m not gonna lie to you – you will pay more for non-standard (not preferred) auto insurance.  Such is the cost of a DWI.  But rest assured, DUI and DWI pricing is not forever.  As bad as it may seem right now, a conviction usually falls off your driving record within 10 years (sometimes sooner).  But, that doesn’t mean you’ll be hosed by your auto insurance company that long.

Typically, preferred companies want to see continuous coverage for 3 years with no SR-22 filings, even after a DUI.  Once you get 24-36 months under your belt with a non-standard policy and the state drops the SR-22 requirement, give some of the standby car insurance companies a call.  They may be more than happy to quote you again.  If they write your policy, even with a DUI 3 years ago, chances are you’ll save 25-65% on your car insurance.

Lastly, I can’t stress this one enough: drive safely.  Whatever caused your DUI or DWI, don’t let it happen again.  As bad as this situation is, it will be worse with a second DUI conviction, where jail time is often mandated.  If necessary, get involved in an AA class, or another related program.

Whatever you do, don’t drink and drive again.  You know how much a DUI costs – you don’t want to pay a steeper price with another one.  By driving safely, society and your family will enjoy the benefits and you’ll get it all back from your car insurance savings.

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