How to find out if you really need car insurance and what kind of coverage to consider
Whether you just got your license or recently bought a new car, you may be asking yourself whether you need car insurance. If you have a car and you drive it in the US, you need car insurance. But what kind of car insurance do you really need? And how much coverage can you get away with having?
Basic liability car insurance is mandatory
In every state except New Hampshire and Virginia, bodily injury liability and property damage liability are mandatory.
Bodily injury liability insurance covers pedestrians, cyclists and passengers against medical costs from disability, injury, death. And this can also cover you against being sued into the ground after running someone over, injuring one of your passengers in an accident or similar.
If you accidentally damage property, like hitting a mailbox or crashing into a garage, it’s safe to assume that the owner of that house will be going after your wallet with a vengeance. With property damage liability insurance, your insurance company may take the hit in your place. It works the same for houses as it does for other road hazards like BMWs. Scratch the paint on one of those and it’s on you. You don’t want to know how much that stuff costs, and with property damage liability insurance, you might not have to find out.
About half of all US states also require uninsured driver coverage. This protects you if another driver is at fault in an accident and doesn’t have enough insurance to cover the damages to you and your vehicle.
More coverage isn’t mandatory – but it’s a pretty good idea
Other than bodily injury liability insurance, you technically don’t need car insurance. It’s perfectly legal to hit the road without any other coverage. But that doesn’t mean it’s a good idea to go without.
It’s safe to say you’ll want extra protection beyond what’s covered by liability. In car insurance, this is known as collision coverage. Unlike liability coverage, collision coverage pays for your property damage, even if you’re at fault in an accident.
Do I still need extra insurance coverage even if I’m a safe driver?
Going beyond the bare minimum is still a good idea. Accidents can happen to anyone. Say you’re driving and you have a heart attack, are bitten by a spider or get rear-ended at a red light and crash into the car in front of you. You might still be found liable for resulting vehicle damage.
There’s also insurance fraud to worry about, or he-said-she-said situations. You’ve probably heard stories where a driver got into an accident and it’s entirely the other driver’s fault, but the other driver doesn’t just admit to everything and offer to pay for all the damage.
These are the types of situations that can end up with you in court. That’s one more case where liability insurance can help, since this coverage can help pay for legal costs on the way.
My liability insurance comes with lawyers?
Yes. The insurer doesn’t want to pay for it either, and proving that the other driver is at fault means they probably don’t have to. You and the insurer are on the same side here.
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When you may or may not need car insurance
Bodily injury and third party property damage liability insurance are essential, but neither of those will really cover damage to your own car.
That’s what comprehensive car insurance does. Hail, flood, fire, vandalism, theft, accident, accidental vandalism by hailstone-wielding thieves, etc.
Conveniently, it also includes liability coverage, so you don’t need to shop for that separately. Instead, all you have to do is decide whether it’s worth paying extra for collision coverage or comprehensive car insurance, or if you just want the cheaper liability-only option.
How do I decide what type of car insurance is best for me?
As a general rule, the less valuable your car is, the less coverage you need. If you’re driving a 30-year-old minivan with 200,000 miles, you might as well stick with liability-only coverage, since repairing it won’t cost a whole lot.
If you really can’t go without your car, like if you need it to drive to work, comprehensive car insurance or at least collision coverage might be worth it, just to help make sure you can get it repaired fast if needed.
If you drive a brand new vehicle or an expensive car, repair costs can be steep, and comprehensive coverage might be well worth it.
Are there any exclusions from comprehensive car insurance?
Comprehensive car insurance covers a wide range of situations and damages, but there are often gaps that may leave you hanging. Always check your policy documents to determine any gaps in your coverage, which may include tires and rims, windshields, non-listed drivers, and more.
If you find that your comprehensive coverage isn’t quite comprehensive enough, there are a few additional add-ons you may want to consider.
- Rim and tire insurance
- Glass and windshield insurance
- Gap insurance
- Uninsured/underinsured motorist insurance
- Modified vehicle insurance
How to get cheaper car insurance
When you’re price shopping for the first time and start adding in coverage like collision and comprehensive, it can seem like the bare minimum is a better deal. But you can still get cheap car insurance and not sacrifice on the coverage you need.
- Buy online. One more reason to shop online is the discount. Insurers don’t like dealing with too much paperwork or too many phone calls and will offer straight-up discounts just for buying online.
- Shop around. If there are ten different insurers, and you get five different quotes, there’s only a 50/50 chance that you’ve seen the cheapest. There are hundreds of auto insurers in the US. Do your homework and shop around to get the best car insurance rates.
- Look for price matching. Sometimes insurers will offer to match competitor prices. You might keep one of those up your sleeve and then go for it once you’ve finished shopping around to drive the price down a bit more.
You do need car insurance in most states. While liability insurance and sometimes uninsured coverage are the only mandatory types of car insurance, adding additional coverage beyond the bare minimum could save you money and stress in the long run. Having to pay out of pocket for damaging someone else’s property is bad enough, not to mention the costs of repairing your own vehicle after an accident. Compare your options before deciding on a policy that’s best for you.