Auto Insurance Requirements: Why it Is Important

Fran
Fran Majidi
July 26, 2019

Everyone who owns, leases or finances a vehicle needs to have auto insurance to drive that vehicle legally. Consider the costs involved when two or more cars collide with one another. Consider the medical expenses if people got hurt or were killed. If you don’t have insurance, not only are you breaking the law, you will be held personally liable for costs of property damage, injuries, even death. You’ll also have to pay the legal fees to fight charges in court, if you have a fighting chance. If you’re caught with a DUI and no insurance, you may get jail time on top of overwhelming financial penalties and a suspended license. The laws regarding car insurance are in place for a reason.

You may have no choice but to buy collision and comprehensive insurance if you take out a loan to buy your car or if you lease it through the manufacturer. You need these products because the car technically still belongs to the lienholder or lender. They require that you have these coverages to guarantee your financial responsibility in case of an accident. For instance, imagine that you totalled a car you are financing. With insurance, the lienholder or lender would get their money back for the car after the accident and you wouldn’t be responsible to make payments on a total loss. Even though you’d lose the investment you made in the car (down payment and payments made), chances are that you will lose far less money if you have insurance coverage.

You should seriously consider buying collision and comprehensive insurance even when it’s not required because financing a car accident can be expensive. Medical payments coverage and personal injury protection (PIP) may also be helpful because they ensure that you will never pay for costs if you or your passengers suffer injuries. These coverages help pay for hospital and doctor visits and any necessary surgeries related to an accident.

Even though it’s illegal to do so some people drive without any insurance. When you get into an accident with an uninsured driver, or if that person has really low limits that do not cover all of your losses, you will only be covered completely if you have uninsured/underinsured motorist coverage. Otherwise, you’d have to sue the other driver, who may not have the money to pay for damages. Your car insurance would not cover the legal fees in this instance, but it would cover you if the accident was your fault and the other party sued you.

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