You’ve just driven off the lot with your shiny new car, truck or SUV.  Don’t look now, but if for some reason that beautiful dream machine is considered totaled in an accident, you might be facing a financial debacle.

Big tree toppled down near a car and some houses

If you don’t have auto insurance that properly protects your sizable investment, you may regret it. The key danger: depreciation.  New cars are notorious for their rapid rate of value loss, catching many owners by surprise.

“Surprisingly, a new car depreciates up to 30 percent during the first year, and many insurers will take a deduction for depreciation during this time,” said Ron Moore, manager of product development at MetLife Auto & Home.  “That means that a person could pay $20,000 for a vehicle, but only receive $14,000 if it is ‘totaled.’ By asking the right questions, however, you can avoid some nasty surprises, and also, find ways to save money on the insurance you’re purchasing.”

Not every insurance policy is the same, and many consumers miss out on available car insurance discounts. So, before purchasing a new vehicle, determine what your auto coverage actually covers. For example, if your new car or truck is damaged beyond repair, will your auto insurer replace the vehicle with a new one or take that deduction for depreciation?

In addition, see if you can use auto accessories to your advantage. If your new baby is equipped with such things as anti-theft/alarm devices or anti-lock brakes, you may qualify for discounts. Insurers also offer discounts for a number of factors: driving record, certain safe driving courses, the number of drivers using the vehicle, low annual mileage, and whether the vehicle is kept in a garage overnight or parked on the street–so ask to see if you might qualify for these money-saving deals.

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