Best Auto Insurance!

Do I need accident and health insurance on my car loan?

by Anita Johnston on 12/27/2010 07:45 AM

When buying a new car the majority of individuals are not often prepared for a few of the questions they will be asked when they enter the finance office at the dealership, such as if they want to add accident and health insurance to their car loan. Most just say yes or no without really understanding what the insurance is for and if they actually need this insurance. If you happen to be one of those individuals that wants to know what this insurance is and if you could benefit from the insurance, then this article is for you.

In order to understand this type of insurance you must first know what it does. When you receive a loan, the loan has to be paid back via monthly payments. This payment is expected to be paid even if you are injured in an accident or have become ill with no income. If the unthinkable occurs and you are injured or are admitted to the hospital and are not receiving your paychecks, you can miss a car loan payment or two, which can be devastating.

You can be thankful that your accident and health insurance will cover the costs of your medical bills and your hospital stay. But this coverage will not include paying other bills unless you have added these bills to your insurance policy, which includes the payment for you car loan.

While getting ready to sign the contract for the new car and you are asked if you wish to add accident and health insurance to your loan, this is the insurance that will make your payments if you are unable to pay them due to an accident or illness.

Yes, you do need accident and health insurance that will cover the car loan in the case you are unable to make the payments. However, this does not mean you have to agree to this in the finance office. In order to get the best rates for accident and health insurance that will cover your new car, you should talk with your insurance company or compare rates of other insurance companies. You will find that going through an insurance company instead of the car dealership is an excellent idea, as you will be paying a lot less for the same coverage.

The car dealership offers insurance, this is true, but they use a third party and are more or less the middleman between you and their chosen insurance company. The dealership will charge you an added fee so they are paid as well for you to accept this insurance. This is why the cost will be very expensive whereas through an insurance company the costs will be considerably less.