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How car insurance affects Cash for Clunkers

posted by AskPatty - Auto Advice
Monday, August 17, 2009 at 5:55pm CDT

The government’s Cash for Clunkers program is back on track and many Americans are heading to car dealers to swap their older cars for new ones. What many people may not realize is that to trade-in an older car, it has to have had car insurance for at least one year before it is traded. Does your clunker have car insurance?

Car Insurance and Your Trade-In
One of the requirements of the Cash for Clunkers program is that trade-ins must have been covered with car insurance for at least one year before being traded. If you’re ready to dump your clunker for a new, green car, be sure your trade-in meets the program’s requirements:

Quick Cash for Clunkers Facts

• Your trade-in vehicle must be less than 25 years old
• Only purchase or lease of new vehicles qualify
• Trade-in cars must get 18 or less MPG according to NEW EPA standards, not the fuel economy on the original sticker (some very large trucks and cargo vans have different requirements)
• Trade-in cars must be registered and have car insured continuously for the full year preceding the trade-in
• You don't need a voucher, car dealers will apply a credit at purchase
• The program runs through Nov 1, 2009 or when the funds run out, whichever comes first
• Your trade-in is required to be destroyed. So the value you negotiate with the dealer for your trade-in is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle
• New vehicle MSRP must be less than $45,000 (additional options that raise the price over $45,000 are allowed)

New Car Owner
Since you’ll be purchasing a new car, you’ll need to make sure you have the right amount of car insurance coverage. The amount of coverage you had for your old car may not be enough for your new one. For example, many car owners decide to drop their collision coverage on older, less-valuable cars. But a new car will cost much more to repair after an accident. Collision coverage might be a good idea for your new car.

This is why it is so important to do your research. Compare multiple car insurance quotes from various providers. See what coverage options each company offers and at what prices. You can save money and still get the car insurance coverage you need. The AskPatty Car Insurance Center is a great place to start.

Article provided by InsWeb

Gina M. Scott is a Web writer and blogger for InsWeb. She has worked as a Web writer and journalist for three years, covering a variety of topics such as technology, government, and cyber security, since graduating from Sacramento State University with a BA in English—professional and creative writing. She now specializes in auto, home, term life, health and other insurance topics for InsWeb. Born and raised in Northern California, Gina enjoys traveling and creative writing.

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