6 Reasons Why Everyone Should Have Auto Insurance

The percentage of drivers without car insurance ranges anywhere from about 4% – 26%  in different parts of the United States. Some motorists don’t want to spend the money. Others believe that nothing bad will happen to them. Nevertheless, it’s important to understand the full benefits of auto coverage if you really want a safety net that will help you to avoid total financial devastation. Auto insurance policies do much more than pay for repairs. Consider some of the following advantages before going another year without coverage:

1. Lawsuit Protection

If you cause a collision, you could face costly legal action. Another driver might expect you to pay for hospital treatments or repairs to a luxury car. You may also need to reimburse them for the wages that they couldn’t earn as a result of the accident. Auto liability insurance shields you from these massive expenses.

2. Repairs and Replacement

According to statistics, the average motorist becomes involved in at least three accidents during a 54-year period. Even a minor crash can easily result in repairs that cost thousands of dollars. If you carry collision coverage, an insurer will pay to fix or replace your car when this occurs. Always keep in mind that even the best drivers can’t always avoid poorly skilled motorists. Comprehensive policies fund repairs prompted by storms, fires as well as vandalism and more.

3. Lending Rules

Many banks and credit unions expect drivers to carry auto insurance. You probably face the same requirement if you lease a vehicle. This is true because lenders and car dealers don’t want to lose money when a car suffers heavy damage in a crash. They know that customers aren’t always willing to make car payments on vehicles that no longer exist. Consequently, the “repo man” could visit your home if you don’t buy insurance.

4. Health Coverage

Car insurance often pays hospital bills when drivers lack medical insurance or have inadequate coverage. Your state’s laws might force auto policies to cover injuries. An insurer may also fund long-term care and dental treatments associated with an accident. This could enable you to avoid paying thousands of dollars in medical bills or bankruptcy lawyer fees. Auto insurance can drastically improve your access to health care.

5. Passenger Protection

If an insurance policy covers a driver’s injuries, there’s a decent chance that it reimburses passengers’ medical expenses too. You won’t need to worry about an injured friend, family member or co-worker’s ability to pay hospital bills. Insurance eliminates the risk that a passenger will ask you to pay these expenses because you made a driving error that triggered a crash.

6. Professional Guidance

When a collision takes place, you can rely on insurance company personnel to help you take the right steps and return your life to normal as quickly as possible. Staff members will suggest desirable mechanics and assist you in the process of dealing with the other motorist’s insurance provider. You’ll benefit from their experience with similar situations, especially if you’ve never been involved in an accident before.

Don’t Neglect Your Auto Insurance Policy

Always keep in mind, auto coverage offers valuable financial protection for you, your passengers, your car, and fellow drivers. It’s your only safety net and protection against expensive repairs you can’t pay and medical bills you can’t afford. Not only that – auto insurance enables you to meet borrowing or leasing requirements.  So remember, an accident can occur at any time regardless of how carefully you drive, but you won’t need to worry about facing tremendous financial hardship if you carry adequate coverage.

Leasing vs Financing: How It Affect Auto Insurance

Auto insurance is compulsory from just about everybody who owns a vehicle. Roughly 1 out of 3 American drivers choose to lease their cars. Most of the remaining motorists use loans to pay for vehicles. When you make this decision, it’s wise to consider the insurance implications. You may need to sign up for different types and/or amounts of coverage depending on whether you borrow or lease. Here are some of the most important factors to consider when it comes to insurance on your leased or financed vehicle:

Requirements

Both leasing companies and lenders expect customers to buy auto policies. They normally require motorists to acquire liability, collision, as well as comprehensive coverage. These lienholders may also cap your deductible at $500 – $1,000. If you don’t carry the right insurance, your vehicle may even face repossession.

Same Premiums

Regardless of whether you lease a car or take out a loan to finance one, insurers will charge the same rates on equivalent policies. The difference is that banks and leasing companies tend to require different coverage limits.

Liability Coverage

Leasing firms usually expect drivers to obtain better liability insurance than banks or state governments demand. Leasing firms often require customers to buy policies with property damage limits of $50,000 or higher, and medical coverage caps of at least $100,000. These amounts are several times higher than state law requirements.

You may wonder why leasing companies have such strong concerns about liability… The problem is that these businesses can face legal action if a customer causes an accident and doesn’t have sufficient insurance. A victim could file a lawsuit against the person leasing the vehicle and ask it to pay hospital and car repair bills.

High-End Autos

Some lessees find that they have much higher insurance bills because leasing gives them the ability to travel in newer or more expensive vehicles. It’s not uncommon for people to pay lease termination fees after realizing how much more it costs to insure a recent luxury or sports car.

Total Losses

If a crash damages your vehicle beyond repair, most collision policies pay the auto’s used resale value. They only supply larger amounts when drivers spend extra money on full replacement insurance. If a financed car’s worth exceeds the loan balance, the insurer will pay you the remaining money. On the other hand, leasing companies often retain any excess funds.

It’s not unusual for people to owe more than their cars are worth. If the vehicle is totaled in an accident, the motorist may still need to pay more cash to a lender or person leasing the vehicle. The good news is that gap coverage can protect you in this situation. It will pay off the remaining loan or lease balance.

Gap Insurance

Insurers and lessors sometimes refer to gap insurance under other names, such as “waiver of depreciation” coverage. Either way, it greatly improves your ability to afford another vehicle after a serious accident. Be sure to consider purchasing it whenever you buy a new auto, make a small down payment, or purchase a car with a low resale value.

Leasing firms frequently provide gap insurance. They’ll add the premiums to your monthly payments. However, it’s not always included; remember to ask about this coverage when you lease a vehicle. On the other hand, auto loans normally don’t come with gap insurance. You’ll need to buy it separately if you want this type of protection.

Dropping Coverage

As long as you lease cars, you must keep paying for full auto coverage. Financing gives you the option to drop collision and comprehensive policies after you’ve paid off the loan. You can just buy liability coverage to follow the law. However, you may benefit from retaining full insurance if you always own late-model cars.

The bottom line is that you’ll probably need to buy more coverage when you lease an auto. Nonetheless, you won’t pay higher premiums than you would if you bought an equivalent policy for a financed car. Gap insurance protects both borrowers and lessees when accidents “total” their vehicles. It’s more likely to be optional for owners.