If you plan on driving a vehicle, having a car insurance policy is a must. Regardless of what kind of car you drive, it is generally a good idea to have some kind of car insurance. Before you try to drive without insurance, consider a few reasons that it makes sense to buy a policy.
1. It’s the Law
One reason that you may want to buy car insurance is so that you can be in compliance with your state’s laws. Every state has its own rules in relation to how much car insurance you must buy. Every state requires you to have at least liability insurance on your car. This way, if you cause a wreck, any other motorists involved will not have to pay for the damage out of their own pocket.
If you are pulled over or are in a wreck and you cannot provide proof of insurance, you will typically have to pay a hefty fine.
2. Avoid Lawsuits
Another reason that you may want to purchase car insurance is so that you can avoid lawsuits. When you get in a wreck without some kind of car insurance, you leave yourself open to lawsuits from other drivers. The driver could potentially sue you for damages and for medical bills. If you are not independently wealthy, this could potentially bankrupt you. When you purchase a car insurance policy, the insurance company will pay up to the limits of your policy.
3. Help With Budgeting
Buying car insurance can make it easier on you when it comes to budgeting for car-related expenses. Without car insurance, you pay for any major expenses related to your car out of your pocket. When you have car insurance and your car is damaged, you will only have to pay the deductible, which is a fixed amount.
Then the rest of the repair bills will be paid for by the insurance company. Since you know how much your monthly premiums are and how much your deductible is, it is easier to plan for these expenses when they come up.
4. Protect Against Random Damage
In some cases, you can protect your car from random acts that damage your vehicle by purchasing insurance. One type of car insurance that you can get is referred to as comprehensive coverage. With this type of coverage, you get protection against anything other than a vehicle collision that damages your car.
It is very broad coverage and protects you against many different things. For example, if your car catches on fire because it’s parked next to a building that burns, this type of insurance would pay for the damages. It would also pay if a tree branch fell off of a tree and damaged the hood of your car. It covers against damage from vandalism, floods, animals and many other contingencies.
Typically, the deductible for a comprehensive claim is smaller than what it is for a collision claim, since this type of damage is random. While it does add to the cost of the monthly premiums that you have to pay, having this type of insurance is usually beneficial as it helps protect you from nearly every source of damage imaginable.
5. Replacing a Car
For most people, their car is a means of transportation to and from work. Because of this, insuring that means of transportation is essential. Without having some way to get around, you may not be able to earn money to pay the bills. If you have an insurance policy, you’ll be able to get a replacement car if yours is lost to a wreck.
For example, if you are in an accident and your car is wrecked, the insurance company may pay for you to get a rental car until you can buy a new one. The insurance company will also pay for the value of your vehicle before it was damaged. This means that you can take that money and use it to buy a new car or make a down payment on a new car.
Regardless of your situation, purchasing a car insurance policy makes a lot of sense. It can limit your personal risk and ensure that other drivers are taken care of at the same time.
This was a guest article written by Andy who is the co-founder of the CreditCardCompare.com.au credit card comparison web site where consumers can learn how to manage their money, compare the market using a suite of tools and ultimately save money. For more tips, follow him on Twitter.
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