Motorists can protect themselves from many eventualities by transferring the risks to an insurer with a car insurance policy and paying premiums in return. This way they are compensated when they suffer a substantial loss or face a large liability claim, as long as they have the corresponding coverage. This point is very important when buying vehicle insurance because you need to anticipate the possible losses you may have to deal with in a worst-case scenario and purchase a policy that may compensate you should such scenarios occur. In other words, you need to purchase the required coverage in readiness since you cannot go back and buy a policy just after an accident.
To clearly highlight the importance of car insurance and help you select coverage prudently, let’s discuss some of the key reasons why people need to buy certain auto insurance coverage.
- Meeting Financial Responsibility
- Complying with Legal Requirement
- Ability to Make Claims
- Protection of Your Assets
- Coverage for Accidents
- Other than Collision Coverage
- Supplemental Health Coverage
- Protection from Uninsured Motorists
- Alleviating your Burden
- Allows Sharing your Car
- Keeps You Mobile
- Comes to Your Aid
- Secures your Loan
- Offers Peace of Mind
Regardless of having insurance or not, drivers are financially and legally responsible for the injuries and damages they cause to other people in an accident they are at fault. Many people may consider some of the other reasons for buying vehicle insurance to be more important such as protecting their vehicles or complying with the laws so that they are not in trouble if a police officer stops them. But by far the most important reason for buying automobile insurance is to make sure you have the liability coverage to pay for the damages you caused to innocent people.
First of all, there is no way of knowing how big liability claims against you can be. Even if you are a very careful driver, on one unfortunate day, you may skid on an icy road, lose control of your vehicle and cause a big accident with injuries and damaged cars. Secondly anyone with a decent moral compass would want to make the damages they cause good, at least financially.
Virtually every state requires a minimum liability coverage that includes bodily injury and property damage components. If you want to drive a vehicle legally you must buy this coverage that provides a minimum level of financial restitution to people you may cause injuries or damages with your vehicle. If you don’t, you cannot register your vehicle or renew registration in many states. And if you are caught driving without insurance you may face fines, suspension of driver license and vehicle registration and even a jail sentence in some cases, depending on the state. Today, most states electronically match policies to vehicles registered in the state and find out if you insure your car or not and can penalize you for not having the minimum required coverage, even if you aren’t caught driving.
You can meet the legal requirements by buying a basic liability only vehicle insurance policy. However, you should always consider the financial responsibility and buy sufficient liability coverage so that everyone’s injuries and damages are paid when you are at-fault in an accident. Otherwise, you may have to pay the rest of third-party losses out of pocket once your coverage runs out.
In some states there are “no pay, no play” laws that prevent uninsured motorists from making certain claims on third parties who caused the accident. If you have such laws in your state, not having the state required minimum auto insurance coverage can cost you even when you are a victim.
If you don’t have sufficient liability vehicle insurance for the damages and injuries you cause, you may be sued by the victims and a court can order the seizure of your assets to pay for those losses. So, sufficient liability coverage discharges your financial responsibilities by compensating everyone and protects your assets.
If you have a car that still has some value, you may want to add Collision coverage to your auto insurance policy. It pays for physical damages to your own vehicle regardless of fault. Your insurer may pay for repairs or total loss.
There are many other perils that can cause damage to your automobile like fire, theft, vandalism, bad weather and hitting an animal and they are included under Comprehensive coverage that pays for repairs or total loss of your automobile.
Personal Injury Protection (PIP) pays for your and your family’s medical expenses after an accident regardless of fault. This coverage may be required in your state already. If not, this coverage can be bought by motorists who don’t have health insurance or as a supplemental coverage to it that pays for things your health insurance doesn’t pay like lost wages.
Uninsured motorists may be required or optional in your state. If it is optional, you can add this coverage to your policy. UM Bodily Injury coverage pays for your and your passengers’ medical expenses if the accident is caused by a driver who doesn’t have insurance. Again, if you don’t have PIP or health insurance, you may want to consider this coverage. And if you aren’t going to buy Collision coverage, you may consider UM Property Damage coverage in case you suffer damages to your car in an accident caused by an uninsured driver.
After an accident you may still count yourself lucky if you have good car insurance that can take care of most things for you. Often people just exchange insurance information, fill a claim for and let their insurer sort out everything. If you are at fault, they will pay for liabilities arising from the accident. Even if you are not at fault but have your own Collision coverage, you may choose to ask your own insurer for compensation instead of waiting for the third party insurers to pay for your losses. Then, your insurer pays for your damages and starts the subrogation process to get the money they paid to you back from other people or their insurers. Imagine the burden if you were to have to deal with every aspect of an accident and negotiate with all the parties involved and fight to get a fair settlement.
If you live in the same household, you add the drivers to your policy and they will be covered. Most insurers would want to know about the people of driving age in your household so that they can rate and include them in your policy. If they don’t live with you, standard car insurance policies typically cover permissive use drivers when a friend borrows your car occasionally. So, your vehicle can be driven by other people and your insurance may cover them.
Many people are highly dependent on their automobiles to carry out daily tasks and to go to work. If your vehicle is damaged and you don’t have the money to repair you lose the convenience of your car. Also, arranging Rental Car Reimbursement coverage makes sure that you can hire a car when yours is being repaired by insurance.
Arranging Roadside Assistance through your insurance company is usually cheap and provides you many additional services like towing or emergency help like bringing gas or sending you a locksmith if you lose your keys or lock yourself out of the car.
Car insurance serves as a safeguard for loans and streamlines the lending process. Without it, lenders might hesitate to provide loans for vehicles in motion. The assurance of insurance coverage against potential losses simplifies the lending process for them. Moreover, having Gap insurance ensures protection in situations where insurance payments fall short of covering the entire loan following a vehicle’s total loss. Gap insurance guarantees the complete settlement of your loan amount.
Unfortunately, no matter how good a driver you are you can still potentially get involved in an accident or suffer a loss where your car is parked from weather or other elements like vandalism. They can even steal your automobile from in front of your home at night. Furthermore, there are legal and financial consequences discussed above. Arranging a good vehicle insurance policy covering various scenarios that may lead to a loss allows you to sleep better at night and be more comfortable while driving.
While car insurance costs a lot of money, not having it can result in more severe consequences as discussed above. Most people can afford the premiums but not many people can handle sudden large damages to their automobiles or significant liability claims. That is why it is so important to be insured properly. Shopping around by getting a few quotes can help motorists find the best value and afford the coverage they need.