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Q

What type of insurance covers my car payments if I lose my job?


A

There are a few options for job loss insurance to cover your car payments out there.

Payment Protection Insurance is available with some finance companies that bundle it with loans or offer it to those paying off a lease or loan that could help you with car payments if you lose your job. Payment Protection Insurance will normally pay your monthly payments on any motor vehicle finance agreement, mortgage, or any type of loan if you become unemployed or cannot work due to accident or illness.

Payment protection is normally paid monthly, at the same time as any finance repayment. Not everyone is eligible for it; if you have long-term sickness or self-employed, you may not be able to obtain this coverage.

There are also some companies that offer job loss coverage. One company called PayCheck Guardian offers this type of coverage. They offer three coverage options: $50 a month will give you $750 a month in payments if you lose your job, $60 a month for $1,000 in coverage per month or $70 for $1500. There are a few eligibility items you must qualify with to get the coverage or payout. You must be a dues paying member with this company for four months and employed for those four months in order to collect benefits should you lose your job after that four month period is up. And then those benefits will only last for four months.

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Hyundai is also offering a type of job loss insurance for those buying a new car through them. This is a program that has been in place in Canada since 2000 but has just started in the United States. They refer to this coverage as Hyundai Assurance and it is provided on every new Hyundai that is financed or leased through participating dealers. The insurance remains in effect for the first year of car ownership.

With Hyundai Assurance you need to have made at least two scheduled payments on your loans or leases before filing for the benefit, and it covers up to $7,500 in negative equity in a vehicle. So if someone returns a car worth $20,000 but still owes $25,000 on it, the insurance would pay the $5,000 difference. Any difference higher than the policy's $7,500 maximum would still have to be paid by the borrower.

You can check with your state's insurance regulator to get information on the type of job loss insurance your state has available to cover your car payments if you become unemployed and where you could obtain this type of coverage.

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