What kind of car insurance do you need?
The various types of auto insurance coverage can be divided into three categories:
- Your state requires insurance.
- Your car lender will require insurance.
- Optional insurance protection
The required amount of coverage is determined by state insurance legislation. Most states, for example, require liability auto insurance, while others need supplemental personal injury protection (PIP) or medical costs coverage (MedPay).
However, if you are leasing or making payments on your vehicle, your lender may require you to carry additional coverage. Most banks and lending institutions require full coverage and GAP insurance on auto loans.
Full coverage auto insurance protects your vehicle in case of an accident, natural disaster, theft, or vandalism, whereas GAP insurance covers the remaining loan balance if the car is totaled. Optional insurance coverages aren’t required by law or by a loan, but you may want to include them if you drive a newer vehicle, have younger drivers on your policy, or reside in a high-risk location.
The following are the most popular optional insurance add-ons:
- Roadside assistance
- Glass protection
- Comprehensive coverage
Because collision and comprehensive coverage are not needed by law, they are considered optional. However, if you want to be fully covered, you need to have collision and comprehensive coverage in your full coverage policy. This will increase your auto insurance rates, but it will save you money if you are in an accident.
What are the primary benefits of auto insurance?
Is automobile insurance required? Yes, but even if it wasn’t, the benefits of car insurance exceed the drawbacks. The following are the top three reasons why you should have auto insurance:
Personal accident insurance. Insurance protects against car damage and medical expenditures and provides dependable transportation.
Third-party liability insurance. Insurance protects you from negligent drivers and uninsured or underinsured motorists.
There is affordable insurance available. With usage-based auto insurance, you can save money on auto insurance by not filing claims, accumulating discounts, and recording excellent driving behaviors. There are countless other benefits to obtaining automobile insurance, so ensure you protect yourself and your vehicle with adequate coverage.
If you’re unsure how much auto insurance you need, start with the state minimums and then examine whether adding more coverage to your policy is wise. Remember that your car loan or lease agreement may require you to carry supplementary insurance. Fortunately, you may compare coverage options from several providers online to choose an insurance that meets your budget. We recommend comparing three different providers to obtain the most accurate vehicle insurance rates.