One of the most important benefits of car insurance in most states is that it will help keep you on the right side of the law. Only New Hampshire, South Carolina, Tennessee, Virginia and Wisconsin do not explicitly require liability car insurance, though they do require “proof of financial responsibility” as a means of assuring the state that you will be able to pay for a minimum amount of damages in the event of an accident.
Since a majority of Americans do not have an extra $35,000 sitting around in the bank for this purpose, car insurance is the only practical option. Car insurance will keep you from hefty fines, possible impoundment of your vehicle, suspension of your license, and even jail time that can result if you are convicted of driving without this important form of protection.
Read on to learn about even more of the benefits of auto insurance coverage and then when you finish be sure to enter your zip code into the free car insurance comparison tool on this page so that you can find the best auto insurance rates!
Benefits of Car Insurance: Liability
Liability car insurance is the most important element of insurance because it protects you from the financial and legal repercussions of an accident affecting another vehicle, driver, or property. The benefits of liability car insurance will apply if find yourself responsible for damages to others—not to yourself or your own vehicle—in an accident.
It is important to assess the exact amount of liability insurance you should purchase in order to derive maximum benefits. Most states require a minimum level of liability insurance, so that’s a good place to start.
In Delaware, that minimum takes the form of $15,000 toward the bodily injuries of each person affected, $30,000 toward the bodily injuries of everyone in the accident combined, and $5,000 in property damage. This is considered extremely, low.
Having only this minimum level of insurance means that you are leaving yourself open to a significant amount of risk if damages from the accident exceed your coverage levels. On the other hand, having too much car insurance means you might be paying excessive premiums for coverage you don’t need. It is important to do your research when deciding how much liability insurance you need.
Benefits of Car Insurance: Collision
“Collision” is the form of car insurance that will pay for damages to your own vehicle in an accident. If you owe any money on your car, you will likely be required by the bank to purchase collision insurance.
Choosing the right deductible for you is an important consideration. The “deductible” refers to the part of any damages that you must pay yourself before your policy kicks in. Paying a higher deductible means forking over less each year in premiums because you are taking away some of the burden from the insurance company. If you choose a lower deductible, you will pay more for your policy because the insurance company is assuming more risk.
If you own an older car, you will have the option to consider whether collision insurance is the wisest option. Some financial planners suggest that you should decline collision coverage if your premium comes out to less than 10% of what you will receive when your car is totaled. If you pay a premium of $250 per year on collision coverage, for example, as well as a $500 deductible, the $2,500 you will receive for your totaled vehicle may not justify your costs. The smarter thing may be to take that $250 per year and put it in an interest bearing savings account that you can draw from when you are in an accident.
Benefits of Car Insurance: Comprehensive
Comprehensive car insurance coverage is an extension of collision insurance that covers your vehicle when it is on the receiving end of damages from theft, weather or fire. When your windshield is struck by a rock over the course of your travels, for example, it is comprehensive insurance that will pay to repair the crack. As with collision car insurance, most banks require comprehensive coverage if you are financing or leasing your vehicle.
Benefits of Car Insurance: UM or UIM
Uninsured Motorist or Underinsured Motorist insurance will cover you if you get in an accident with a driver who is either uninsured or underinsured. There are more un- or under-insured drivers now than ever because of the current downturn in the economy. Certain areas are more prone to the problem than others. You should carefully evaluate your own situation as well as the situation of those around you in figuring out how much UM and UIM insurance to purchase.
Benefits of Car Insurance: Compare Quotes OnLine
The best way to look into all the benefits of car insurance is to compare the offerings from different car insurance companies. Online quote comparison tools like ours let you do this. Compare quotes today!
