Best Reasons to Buy Car Insurance
Buying car insurance may not be on the top of your list of things you want to do, but it’s an important purchase. If you own a car, you will want car insurance. In most states, car insurance is a requirement; at least liability insurance is in every state.
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But what are the real reasons that car insurance can help you?
You May Get Financing
You probably think of your credit score and debt ratio when deciding if a lender will give you a car loan, but your car insurance plays a role too. Without car insurance, a lender won’t give you a loan to buy a car.
You may wonder why a bank would care if you have car insurance? It’s to protect their investment in your car. If you were involved in a car accident and totaled the car, without car insurance, you probably wouldn’t be able to pay the loan back and buy a new car. With car insurance, though, you get reimbursed for the amount the insurance deems appropriate. You then use those funds to pay off your loan and buy a new car.
Most banks require that you have both collision and comprehensive insurance. This protects you and the bank in the event that you are in a car crash or if something non-collision related occurs to your car causing damage.
You Have Protection
Car insurance can protect you in many ways. The most obvious is when you are involved in a car accident. The insurance may cover the damages that occur to your car and the other cars involved in the accident. Depending on the type of coverage that you have, the insurance may also cover:
- Personal injuries to you or your passengers
- Personal injuries to those in other cars involved in the accident
- Property damage caused by you
- Damage caused to your car that isn’t accident related (hitting a deer for example)
Without insurance, you’d be liable for the full cost of the damages that occur. Even with insurance, you’ll likely have some type of financial responsibility, but your insurance may help you offset some of those costs.
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You can Replace your Car
If you are in an accident and the insurance company determines that your car is totaled, you can use the insurance proceeds to purchase another car. As we said above, you will have to use the insurance proceeds to pay the bank back first. Once you pay your loan off, you can then apply for a new loan for the new car, using any money that is left for the down payment.
If you didn’t have insurance, you’d still have the liability of the original car loan that you’d have to pay off. This means you’d pay monthly car payments for a car that you didn’t own. Having this liability could make it difficult to purchase a new car with financing.
Miscellaneous Ways Car Insurance can Help
Car insurance helps during the obvious, when you are in a car accident or even when you hit an animal, but there are other ways it can help too:
- Help pay for the repairs from storm damage
- Pay for a replacement car if your car is stolen
- Pay for damages from a flood
- Pay for damages from a fire
Car insurance is necessary and important. Even if you don’t’ finance your car, you’ll want to purchase liability insurance to help protect you should you cause an accident that harms other people, vehicles, or property.
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