Search

Why Do You Need Car Insurance ? – Know the Reasons

Liability is one of the main reasons you need car insurance. If you are responsible for injuring another person, you need to pay for the damages you caused.
Why Do You Need Car Insurance
Why Do You Need Car Insurance ? – Know the Reasons
In most states, buying car insurance is required by law. It is a crucial way to protect yourself and your family from the potential costs of a major accident claim.
In this article

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 do you need car insurance, no matter if you’re unsure or simply curious.

Why Do You Need Car Insurance?

In Most of the states of USA Car Insurance Becomes Mandatory as it was like Minimum Liability Protection would be one of the Primary reason for the need to take it.

A poignant reason to get car insurance is to protect yourself and your vehicle. If you get caught driving without car insurance by the policy, you may face a hefty fine— or even jail time in a number of states.

For instance, based on the vehicle and the person driving it, Georgia’s state law punishes those driving without auto insurance. It can result in a suspension of your driving license and vehicle registration for about 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. Virginia allows you to either pay a $500 Uninsured Motorist Fee or post a cash bond to ensure to cover out-of-pocket costs following 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). Certain types of insurance pay regardless of who is at fault, such as collision insurance and personal injury protection coverage.

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 are liable for an accident, you will be required for paying 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. 

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

👍👎

Author

Picture of Aniket Kulkarni

Aniket Kulkarni

A seasoned Product Manager specializing in car insurance content, Aniket has a passion for simplifying complex insurance concepts. His strategic approach to content development reflects years of experience in the product development industry, coupled with a commitment to providing accurate, reliable information.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts
What is a Deductible in Car Insurance?
A deductible in car insurance is the amount of money you will contribute to the insurer before the policy coverage kicks in. It's often deployed to auto-cover collision policies, which are compulsory when buying or taking out a loan. But why? We explain.
car insurance in Homestead
Car Insurance In Homestead, FL
Understanding car insurance requirements in Homestead is not just about compliance with the law; it’s about protecting yourself and others on the road. Let’s take a deep dive into the world of car insurance in Homestead, FL.
Car Insurance in Rocky Mount
Car Insurance in Rocky Mount, NC
Car insurance in Rocky Mount is influenced by age, gender, driving record, vehicle type, and mileage. Factors like credit score, location, and coverage choices also impact rates.
Car Insurance in Dublin GA-2
Car Insurance in Dublin GA
Car insurance provides financial protection if your vehicle has been damaged or stolen depending on the policy you choose. The insurance helps meet the minimum coverage requirements mandated by the state or required by a lender. Let's understand the details related to getting the best car insurance in Dublin GA to make an informed decision.
does gap insurance cover transmission
Does Gap Insurance Cover Transmission?
The term "gap" refers to the disparity or gap between the loan or lease balance and the vehicle's fair market value. So, does gap insurance cover transmission?
Best Car Insurance in Lakeland, FL
Best Car Insurance in Lakeland, FL
In Lakeland, FL, the average yearly vehicle insurance cost is $2,154, providing insights for drivers navigating the market; read on to learn how to acquire ideal coverage at competitive prices!
Features
Essentials

Get up to $1,000 for emergencies

Send money to anyone in the US

Ger personalized financial insights

Monitor and grow credit score

Save up to 40% on car insurance

Get up to $1,000 for loss of income

Insure up to $1 Million

Coming Soon

File federal and state taxes at low cost

Quick estimate of your tax returns

Get up to $1,000 for emergencies

Send money to anyone in the US

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: