Supplemental Auto Insurance Coverage

Additional Coverage Available

In addition to the standard coverage options available to drivers, you can opt to purchase add-on coverage such as Towing and Labor Service, Rental Car Reimbursement Coverage, and Gap Insurance Coverage. When purchasing auto insurance, your auto insurance agent will ask whether or not you'd like these coverage options. They are not mandatory, but for a few dollars a month you can save a lot of time (and get peace of mind) should you ever get into an accident or find yourself stranded on the road.

Towing and Labor Service Coverage

Optional towing and labor costs coverage might differ slightly from one auto insurance company to the next, but in general this coverage may provide the following:

• Roadside assistance when needed
• Towing to a nearby auto repair shop
• Coverage of the cost of labor performed on your vehicle at the place where it became disabled
• Services to jump start a dead battery
• Locksmith services when you’ve become locked out of your vehicle

Some auto insurance companies have an approved list of repair shops where your vehicle must be serviced for the costs of labor to be covered.  In some cases, the repair shop will even bill the insurance company directly so you don’t have to worry about anything.  Additionally, the work that is performed on your vehicle, including parts, will likely be covered against future breakdowns.  So if your vehicle became disabled because a fuel pump broke, but the replacement pump also breaks, that would be covered by the towing and labor costs coverage as well.

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Rental Car Reimbursement Coverage

Many auto insurance providers offer rental car coverage for as little as $1-2 per month.  Even if you remain accident free for several years, and your vehicle continues to be in good working condition, just one accident can cost you.  Suppose you do have an accident and your vehicle is inoperable for a full week or more, you’ll likely need a rental to get to and from work.  The cost of paying for a rental car for more than a day or two can add up quickly.  Purchasing optional rental car coverage for a dollar or two each month may be worth it.

Non-Owner Auto Liability Insurance Coverage

An additional rental car coverage option that is available through some auto insurance companies is a non-owner auto liability insurance policy.  These plans are great for drivers who travel regularly.  You can purchase basic liability coverage directly from the car rental counter, but it can be expensive to do so.  Instead, consider purchasing non-owner auto liability insurance coverage.  The cost averages around $300 per year and is significantly less expensive than purchasing coverage directly from the car rental counter.

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Gap Insurance Coverage

Aside from purchasing collision coverage and comprehensive coverage, some leasing companies and lenders require you to purchase gap insurance.  Gap insurance protects you if the leased or loaned vehicle is totaled. When any vehicle is declared “totaled” the amount you receive from the insurance company will be based on the vehicle’s actual cash value, including depreciation. The amount the insurance company is willing to pay may be considerably less than the amount you still owe on the vehicle. The “gap” is the difference between the amount of the insurance check and the amount you still owe. 

In most cases you will not actually have to purchase a separate gap insurance plan.  Lease companies typically include the cost of gap insurance in the price of the lease agreement.  Most lease companies purchase a master policy that covers all the cars they lease.  The lease company then charges you for a “gap waiver” and adds it into your monthly lease payments.  So if and when your vehicle is totaled, you simply sign the insurance check over to the lease company and owe nothing else.

For individuals with an auto loan instead of an auto lease, it might be beneficial to purchase additional gap insurance coverage. This coverage is not automatically included in the loan as is often the case with a leased vehicle. Having gap insurance prevents you from having to cover the gap amount if your vehicle is totaled before you've finished paying for it.

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*Auto Insurance Options is a free information resource that provides content on auto insurance products and policies for informational purposes only, but is not an agency or insurer. Products and policies may not be available in all states.