Although having auto insurance that covers liability if you are involved in an at-fault car accident is mandatory in most states, having the best car insurance to cover anything life may throw at you goes beyond fulfilling a legal requirement – it’s the smart thing to do.
Here are five excellent reasons you need to have adequate coverage in your auto insurance policy.
1. It’s Required by Law
When it comes to auto liability coverage, each state has its own minimum requirements. Drivers are required by law to purchase at least the minimum liability limit – which is the maximum amount your insurance company will pay toward a claim.
Increasing your coverage above the state’s prescribed minimum requirements is recommended to ensure that you don’t pay out pocket for claims above the limit.
Increasing your coverage will protect you if, for instance, you are involved in a collision that injures another person and their medical bills exceed your coverage. Some states also require you to have additional coverage, such as personal injury protection or uninsured motorist coverage.
2. Your Lender or Leasing Agent May Require It
Your lender or vehicle leasing agent may require you to purchase collision or comprehensive coverage because it is in their best interest to protect their investment.
Since the lender or leasing agent is the lienholder of the vehicle while you are still making payments, purchasing a collision or comprehensive insurance policy will help cover the cost of the vehicle if it is damaged or written off as a loss.
Gap insurance is optional, and it usually works with comprehensive and collision plans. If gap insurance coverage is included in your policy, it will help you pay off the car loan if the car is stolen or written off when you still owe more than the vehicle’s value.
3. It Offers Financial Protection
If you are involved in an at-fault car accident, you could be held liable for all the expenses incurred by the third party. The potential costs include legal fees, the medical expenses of the person you injured, and even their loss of income if they are unable to work due to the accident.
These expenses can add up quickly and threaten your financial security. Liability coverage will help cover these costs and ensure that you don’t have to pay for the expenses on your own.
4. It Saves You on the Cost of Repairs and Theft
While mandatory liability insurance will protect you against the expenses incurred from damaging another vehicle, you need protection for your own vehicle, too.
Even if you own your car, comprehensive coverage will protect your asset by covering any damage to your car from storms, fire, or vandalism. Comprehensive coverage will also help you pay for a replacement vehicle if yours is stolen.
Collision coverage will help you pay for repairs from damage to your car from hitting another vehicle or object – regardless of who is at fault.
5. It Protects You and Your Passengers
Having adequate coverage goes beyond fulfilling a legal requirement – medical payments coverage and personal injury policies can help you pay for your medical expenses when you are involved in an accident, and it can also protect your passengers against medical bills that they may not be able to afford.
Personal injury policies can help pay for costly hospital visits, doctor’s bills, and even surgery.
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