Auto insurance can cost a lot of money for certain drivers, but even if you are one of those drivers who is seemingly stuck paying high premiums, be aware that you still need to have auto insurance! Read on to find out ways you may be able to reduce those premiums, and to learn the three reasons why at least basic insurance is always necessary.
1. State Law — It’s what your mom and dad will tell you, but we have to say it too: It’s the law! The number one reason (in the eyes of the state) you must have car insurance is that it is a requirement for even having a vehicle registered in most states. States require car insurance to minimize the overall impact of property damage costs and to reduce the likelihood of huge accident-related medical bills going unpaid. Insurance companies step up to absorb these costs in the event that damage or injury does occur – they are able to do so because you pay your premiums.
If you are unconvinced that you need to do something just because the law requires it, think about the true financial costs of breaking the law – if you get a ticket for not carrying insurance, that is a couple hundred dollars lost. That money could have paid for part of your premium. If you get another ticket, you could lose your license and even have your vehicle impounded. The costs of paying tickets, regaining your license, and getting your car out of impound will definitely amount to far more than paying a year’s insurance premium. Not to mention, the time lost at work because of not having a car could create even more financial woes and familial inconveniences.
2. Financial Ruin — Besides obeying the insurance laws (because that’s what’s best for everyone!) another reason to carry insurance is because of the great possibility of actually getting into an accident! Who can afford the costs of an accident? Most individuals cannot. Whether you care about your own car or not, you could still hit a Mercedes, or worse yet you could hit a car full of children. And no matter what you may think, you have no control over this! Insurance insures that you will be financially prepared to fix that Mercedes, to pay those children’s medical bills, and have someone on your side in case of a lawsuit — whether you have any intention of fixing your own car or not.
In fact, you can even carry lower cost insurance called “liability” (sometimes referred to as “liability only”) which only covers damages to other cars and drivers for which you are liable. It does not repair your car, but it keeps you from being financially ruined. (In the case of either accident mentioned above, without insurance you would surely be financially ruined, and probably sued as well.) If you have an older car that you own outright, ask your insurance company about going to liability only on this car. If this saves you money, perhaps you will not have so much trouble making a basic premium payment.
3. Protecting your Investment — A final reason (though there are probably more…) to keep insurance on your car is to protect your investment. Cars are probably the second most expensive thing we buy, next to homes, and they are in much more danger of getting damaged since they are, unlike our houses, always moving about! If you do have a newer car or a nicer car, you should probably continue to carry liability and collision coverage on your vehicle. Collision costs a little more than liability only, but it will guarantee that you can fix your car no matter what happens to it in an accident. You will protect yourself from the burden of paying for damages to others’ property, but you will also protect yourself from losing money on a car you love, or a car you just bought. (In fact, most banks will require that you have collision coverage, in order to make sure you can pay back the loan no matter what happens to the car.) If you are not ready to pay for collision coverage on your automobiles, you should not be in the market for a new car. One accident would turn your investment into a huge loss.
If you have questions about what level of coverage is right for you, and how to save money while keeping at least your state’s minimum coverage, contact your insurance company. By adjusting coverage levels, raising your deductible, or applying certain discounts you may be able to find a rate that works for you. If you can’t, you must apply to the state for help, or you must simply stay off the road.