There are several reasons why you might need auto insurance if you own a car, such as: protecting yourself from liability in the event of an accident, making sure that your car or your other property isn’t damaged in the event of an accident, or simply protecting your investment in case of damage to your vehicle. This article explains everything you need to know about auto insurance and why it’s so important to own if you own a car.
Who needs auto insurance?
If you’re reading, it’s likely that you own or lease a car, which means you need auto insurance. In fact, almost all state laws say that car owners must be insured for liability and physical damage caused by an accident. And because most states require drivers to have insurance before they can get licenses, there are serious penalties for not getting covered.
Just look at what happened to one woman in Oregon who was caught driving without insurance—she had her driver’s license suspended and could pay up to $2,500 in fines (nearly five times more than she would have paid if she had purchased coverage). This is why it’s so important to always make sure your insurance policy is current.
What are your liability limits?
What is my auto insurance liability coverage? If you get into an accident, liability insurance pays for any damages you cause to another person or their property. It also covers your legal defense costs if you are sued over an accident. Although state laws vary, there are typically three different limits of liability coverage options: $50,000/$100,000/$25,000 ($25k per-person / $50k per-accident).
The higher your limits and deductible (the lower your premiums), it’s a good idea to talk with your agent about where those should be set. One thing that can help keep rates down is a low mileage plan.
How much will I pay?: How much will this cost me? Your premium varies depending on the type of car you drive, how old you are, what other coverages (like uninsured/underinsured motorist) you have and your deductible amount. A cheaper vehicle in someone’s name that has no other coverages might cost less than say a luxury car in someone else’s name that has all kinds of coverages added on. If your own insurance company offers discounts like bundling home/auto/life policies together, this could lower the monthly rate as well!
What happens in an accident?
Accidents happen, even to good drivers. It’s important to understand what happens when you’re in an accident and what your insurance covers. Here are some things you should know: First and foremost, remember that you have no legal obligation to stay at an accident scene once it’s clear everyone is okay (including yourself). Police will typically show up if someone calls 911—if not, do it yourself. If one or more people ask for medical attention, be sure to identify which party requires care.
Speak with the other driver/passenger(s) as soon as possible to determine how the collision occurred and who was at fault. Get their contact information so that you can reach out later with any questions. In the event of serious injury, call 9-1-1 right away! Once all parties are identified, document who was present by taking photos of those involved on both sides of the vehicle.
How much does it cost to buy vehicle liability coverage?
A variety of factors determine how much auto insurance costs. These include your personal driving record, where you live and if you use your car for business purposes. In most states, liability coverage for bodily injury or property damage is required in order to drive legally on public roads.
While many factors influence auto insurance rates, some of which are within your control, there are steps you can take to reduce both how much and what type of coverage you need. Consider taking one or more of these four actions 1) get informed about the basics of vehicle liability; 2) shop around for the best price; 3) consider a higher deductible; 4) ask about discounts that may apply to you. By knowing the basics, shopping around and asking questions, you can save time and money by finding the right car insurance policy for your needs!
What other types of coverage might you want?
The next step to buying auto insurance is figuring out what kind of policy will best meet your needs. Your state’s Department of Motor Vehicles (DMV) website can help you determine exactly what coverage you’re required to have. In general, these are some common types of policies: Liability : This type of insurance is for financial protection against claims of injury or property damage resulting from automobile accidents in which you’re at fault.
It covers both bodily injury and property damage and pays for such expenses as medical treatment, lost wages, and court costs. Physical damage : This type of coverage pays for physical damage to your car caused by collision with another object or an accident in which it was not your fault.
Your teen driver deserves special coverage
State minimums are basic coverage, and they may not meet your needs. A high deductible can leave you paying for big expenses like comprehensive coverage or collision insurance until you have saved up enough to cover it. To make sure your teen driver is covered in case of an accident, raise that deductible to $1,000 or more.
This will lower their premiums and free up some cash to help them with gas and incidentals while they’re learning how to drive. Just be sure you’re prepared if something happens! We know it’s hard when you want to protect your child but also want them to learn the ropes without any risk.
However, there’s no way around the fact that driving requires responsibility and good judgment which is why so many states require teens to go through formal instruction before they get behind the wheel. The best way we know of doing this responsibly is by insuring them – providing protection from accidents and other unforeseen events that could occur on the road.
When buying auto insurance for your new teenage driver, think about what type of coverage you need: Comprehensive? Collision? Accident forgiveness? Third party liability? Medical payments? How much does each one cost per year? What does each type do for you?
Special considerations for newer cars and SUVs
Newer cars are more expensive to repair and can cost thousands of dollars to replace. For that reason, you might want to consider an insurance policy with additional coverage, like comprehensive and collision damage.
Younger drivers tend to be more reckless than their older counterparts; if you fall into that category, you should make sure your policy is comprehensive enough to protect your new vehicle from people who might not always think before they drive. People under 25 usually pay higher rates because they’re statistically more likely to file a claim. Be sure your chosen company provides discounts for good driving records and other aspects of your history.