Why Do You Need Car Insurance?

A car insurance policy has many benefits, especially if you are involved in an accident. When you don’t have insurance, you may have to cover the damages out of your own pocket and deal with the aftermath alone.

​What is the purpose of car insurance? Is it mandated by the states? How does auto insurance protect our vehicle, house and even our relationships? Why should you be happy to purchase it in any state you live in, even in the two states where it isn’t required? 

Here are seven reasons why you need auto insurance, no matter if you’re unsure or simply curious.

The Law Requires Car Insurance

One of the main reasons you need car insurance is to protect yourself as well as your vehicle. If you are caught driving without car insurance, you may face a big fat fine — or even jail time in several states. Beem, America’s first Al-powered Smart Wallet App, can help you understand the significance of car insurance in your states.

For instance, based on the vehicle and the person driving it, Georgia’s state law punishes those driving without auto insurance. It includes suspension of your license and vehicle registration for at least 60 days. Furthermore, depending on the circumstances of why you were pulled over, you could be jailed for up to 12 months. If it’s your second offense, your license and vehicle registration will be suspended for 90 days, you will be fined $85 and there is a greater likelihood that the judge will jail you.

In many states, you face the same punishment for a subsequent offense, plus the possibility of going to jail and having your driver’s license suspended permanently. Well, law enforcement isn’t very forgiving of the uninsured motorist.

There are two states where driving uninsured is legal. As an alternative to paying the state minimum, Virginia allows you to either a) pay a $500 Uninsured Motorist Fee or b) post a big cash bond to prove you can cover out-of-pocket costs in the event of an accident.

New Hampshire says you’re not required to have auto insurance if you “show that you can provide sufficient funds” to pay for at-fault accidents”. In New Hampshire, there are just 6.1% uninsured drivers, one of the lowest rates in the nation. 

Coverage For Damage Caused To Someone Else

A driver can experience a great deal of stress in the event of an accident. You may be responsible for the costs when the accident is caused by your fault. If the injured person is unable to work due to their injuries, these expenses may include legal fees, medical expenses and lost income. It may be possible to pay for these costs with liability coverage. These costs would likely have to be paid by you out of pocket without liability coverage (or adequate liability limits).  There are certain types of insurance that pay regardless of who is at fault, such as collision insurance and personal injury protection.

Compensation For Damage Caused By Someone Else

If someone accidentally hits you while driving, you are protected knowing that the government required them to carry insurance.

You may have to wait a long time to get the compensation you’re entitled to if an uninsured driver hits your vehicle. Your credit score, as well as your sanity, are on the line as you pay for repairs, medical bills and more.

This is put together under liability coverage, which means, in the event of an accident, the other driver is responsible for covering damage to your car (property liability coverage) and for your medical bills (bodily injury liability coverage).

Collision and comprehensive coverage provide a great deal if you are looking to protect your vehicle against the unforeseen.

Getting Your Car Fixed with Car Insurance

Liability insurance is required by all drivers, but collision and comprehensive insurance is only required by some.

The purpose of collision insurance is to cover the costs of replacing or repairing your car in case of an accident or if you cause the accident yourself (or if the other driver’s policy doesn’t cover your repairs at all).

An accident under comprehensive insurance may occur as a result of vandalism, theft, floods, falling trees, rogue deer, aliens, etc.

Are you responsible for your own collision and comprehensive insurance? Could you pay for repairs – or even a replacement – out-of-pocket if your car was seriously damaged tomorrow?

You can prevent a large financial burden and enjoy some peace of mind if you pay for collision and comprehensive insurance upfront. You should take this into consideration if your car plays a significant role in your personal health or income.

Depending on the value of your car, you may be able to pass on collision and comprehensive insurance if you have a few grand to spare.

Protection Of Assets with Car Insurance

Suppose you cause an accident that costs $50,000, but you only have $5,000 in your bank account. Additional assets in your name can be legally seized by the other driver’s lawyers to cover your debt.

Investments, cars and houses can all fall under this category. Car insurance can bring significant peace of mind to you and your family by providing financial protection, which is simply the only thing you may require in case of an accident. 

Covering Your Passengers

If you’re found responsible for an accident, you’re liable for your passengers’ bills too. Medical expenses and property damage can both be included in this category.

Imagine you are in the car with a friend bringing expensive camera equipment for a photo shoot. The damage to their property and injuries they sustain are the result of your negligence.

In such a scenario, their medical bills and fancy equipment replacement become your responsibility.

Lenders May Require Car Insurance

It is possible that your lender may require you to purchase collision and comprehensive coverage if you are financing or leasing your vehicle. While you make payments on your vehicle, your lender or leasing agent holds a lien on it. These coverages may help protect their investment. If the vehicle is damaged in a covered loss, comprehensive coverage or collision coverage may help pay for repairs or replacements.

In the event, your vehicle is wrecked or stolen, and you still owe more than the vehicle’s depreciated value, gap insurance helps you pay off your car loan. There is an optional gap insurance policy that often works with collision and comprehensive coverage.

Car Insurance For Holiday Drivers

Drivers who are coming home for the holidays and who will be driving should have car insurance. Even if your kids don’t have a car with them when they go to college, you should keep them on your insurance policy. As they return home for holidays and vacations, they are probably going to want to use your car. Make sure they are properly covered when driving yours or any other car. 

It can even happen at school where a friend’s car is underinsured; they might be asked to drive it. It’s important that they’re covered if an accident occurs, regardless of the car they’re driving.

Conclusion

Despite the fact that insurance can sometimes seem like a scam, it truly keeps society turning. By protecting livelihoods, cultivating peace of mind and keeping our courts clear, car insurance can not only ensures our vehicle’s well-being, but ours as well.