Auto insurance – do you really need it?

6th May, 2019 in Car Topics

Look, insurance isn’t fun or sexy, but when you are investing so much of your cash into your drift car – financially protecting your asset is a very good move. We talk to leading insurers on the ins and outs of auto insurance.

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Everyone knows that car insurance is expensive, but it is a reason why it is mandatory. All drivers know that in case of an accident, auto insurance can bring them peace of mind because it can save them money.

But this does not mean that there are not also drivers who consider that the state mandates people to have car insurance because they want to make insurance companies rich. The questions are, “Is this really the case? Or there are other reasons why it is important to have insurance for your vehicle?”

Let’s check the reasons why all vehicle owners need auto insurance.

The state law requires it

The most obvious reason should be mentioned first, you should get car insurance because the laws require it. By having it, you are protected from all the risks of driving and owning a car. Some states require you to have car insurance no matter the case, but there are also states that require you to have coverage only if you have a loan on your vehicle.

Insurance protects your auto lender

We have mentioned earlier that coverage is required if you have a loan on your car, but the reason may require further explanation. The lender will require you to have insurance because they want to make sure that the loan is secured. In case the vehicle gets involved in an accident that would cause damage to the car, its value would diminish. This situation would weaken the lender’s collateral. Therefore, they will want you to have comprehensive and collision coverage as part of your vehicle insurance. Comprehensive insurance covers non-automotive events, like natural destruction and vandalism, and collision insurance covers auto accidents. Auto lenders require drivers to have coverage that protects the physical value of the car.

Vehicle insurance protects your assets

Some drivers consider themselves self-insured because they have enough money to repair their cars in case of an accident. However, the question is Do you want to lose your savings just because you had a car accident?

Auto insurance will protect your assets, and in case you will be the one at fault for the accident, the other party will pursue the insurance provider to get compensation. Therefore, auto insurance does not protect only your car but also your hard-earned savings.

Car insurance compensates for the other party if you cause the accident

There are chances for you to cause an accident. In case you will not have your vehicle insured, the other persons involved in the accident can bring you a lawsuit. The result is that your future will be under a cloud of uncertainty, and your credit score will crash.

If you will want to get a loan for buying a house or making an investment, the lender will want you to first pay off the judgement and then they will check if you are a good candidate.

Your vehicle insurance will allow you to get on with your life even if you are the one who causes the accident. However, it is important to note that your coverage will be more expensive if you are the one who causes the accident.

Auto insurance compensates you for an accident someone else causes

Having car insurance can help you stay calm even if you get involved in an accident caused by someone else. If you are a victim, the insurance will compensate for your injuries and for the damage of the car.

There are times when a person who has no financial resources to compensate the victim causes the accident; in this situation, the best case would be the victim to have insurance that covers all the costs.

You would have the option to bring a lawsuit against the other party but it would cost you time and money and you would have no guarantee that it will compensate you. The court will probably issue the judgement in your favour but they cannot make the other person pay you.

Most of the times it takes years to be paid if you are paid at all. But if both of you have insurance the other party’s insurance provider will probably compensate you in a couple of months. It is advisable to choose a monthly insurance plan that suits your needs.

You fix your car

Everyone knows how expensive is to repair the smallest damage to a car. There are cases when the car involved in an accident can no longer be drivable. If you will not have car insurance, you will have to pay for all the repairs out of your pocket. Your car insurance will repair or replace your car no matter if you or someone else cause the accident.

How to select the perfect insurance policy?

  1. Decide the type of insurance you need

The use of the vehicle will influence the type of insurance you need to get. If your car is the security for a loan then you will need comprehensive insurance. This option is also popular among the persons who have a new car, a valuable vehicle or a financed car. Most of the people choose an affordable insurance policy that covers only the major liabilities.

  1. The provider allows you to customise the policy

The car insurance market is highly competitive and insurance providers offer solutions that fit all needs, to gain success. This offers you greater freedom, you can decide the features you consider important and you can even get discounts, especially if you have a history of making very few or no claims over a long period of time.

  1. You can get a loyalty discount

The best strategy to retain clients is to have loyalty programs. Several discounts are available to the clients who repeat the purchase. Get the insurer that offers you a discount if you hold multiple policies with them. Some insurance providers offer insurance policies for different types of properties and belongings.

You can get a loyalty discount if you combine different policies with the same provider.

 

author avatar Written by Joe Terrell Drifted.com founder, motoring journalist and all-round car enthusiast. Visit the author's website