Cars are an integral part of our lives. Our daily life depends on it, and so does our work. From commuting to taking weekend trips, cars are needed everywhere. But did you know that driving your car without the proper auto insurance policy can lead to severe fines and expensive accidents that can cost you a fortune, and probably land you in prison?
Car insurance policies are just as important as cars. Some of them are mandatory, some are optional, but all of them are important and can save you from a lot of financial and legal trouble. But they are not created equal and some cost far less, such as cheap car insurance from Freeway Insurance. Let’s look at some of the benefits of having a car insurance policy.
Saves You from Legal Actions
Depending on the state you live in, two car insurance policies are mandatory to have if you want to drive a car legally. In 48 states, liability coverage is mandatory to have, while in 12 states, you need to have a personal injury protection plan along with liability coverage to drive a car without getting fined. Let’s take a look at what these policies are.
Liability coverage is the policy that can be claimed by the other driver, and not you. Let’s say that you get in a car accident and it is your fault. Then you are liable to pay for the cost of the accident for the other driver. But what if you do not have enough money to pay?
To prevent such deadlocks, the government has made it mandatory to have liability coverage with a sufficient coverage limit so that an insured driver can pay for the medical treatments and car repairs of the other driver.
If you are driving without liability insurance, you’ll not only get sued and will be asked to pay an enormous amount, but you also might get a big fine, and your driver’s license will be suspended. Speaking of enormous amounts, let’s segue into the next benefit.
Prevents Accident Expenses
Car accidents are expensive. How expensive? If there’s a death, then you could be looking at spending almost $2 million. Disabling injuries will result in a cost of almost $1 million. Even a minor accident with no injuries at all can easily cost you $5,000 to $10,000. One minor bump and your bank account take $10K damage. That’s unacceptable, right?
The other benefit of car insurance apart from preventing legal action is saving you a fortune. A car insurance policy (liability coverage) will cover the cost of medical treatments and car repairs of the other driver, saving you potentially hundreds of thousands of dollars.
One thing to note. Liability coverage and other optional auto insurance policies come with a coverage limit. A coverage limit is the maximum amount of money your policy will pay in an insurance claim. You get to choose your coverage limit. Higher coverage limits mean higher insurance premium rates.
You must have a higher coverage limit to cover the cost of accidents. If the cost of the accident exceeds your coverage limit, you’ll have to pay the remaining amount from your pocket. It is better to be safe than sorry and in debt.
Liability coverage can be a little expensive, so be sure to search for the best options based on your location. For example, if you live in Texas, look for the lowest car insurance in Texas and select the best plans available.
Covers your Car Damages
Your car is valuable to you, and if you haven’t been to a car mechanic ever, you have no idea how expensive car repairs can be. According to statistics in 2019, the average cost of car repairs was around $2,000. That’s not an insignificant amount. To save you from spending thousands of dollars on car repairs, there’s a policy called collision damage waiver.
Collision coverage covers the cost of repairs to your car if it gets damaged due to any collision accident. It does not matter what your car collides with, if it is damaged, you can claim collision insurance and pay for the repairs. Some collision policies also cover damage due to potholes.
Protects Against Theft
Comprehensive coverage is one of the most popular auto insurance policies because this policy will reimburse you if your car gets stolen. The company will pay you the actual cash value of the car once it confirms that your car has been stolen.
Apart from theft, there are other damages that comprehensive policy covers. For example, the most important one is projectile damage. Imagine a rock or anything hard hits your car’s windshield and cracks it completely. Depending on the model of the car, you could be looking at an almost $1,000 repair bill (Teslas and other luxury cars). Comprehensive coverage will cover those charges.
Comprehensive coverage also includes damages due to fires, earthquakes, hailstorms, hurricanes, animal damage, damages due to riots, vandalism, etc. The best thing about this policy is that it hardly costs $300 – $400 but provides excellent coverage.
Medical Treatments and Lost Wages
The 12 “no-fault” states have made it mandatory for everyone to have a personal injury protection plan. A personal injury protection plan covers the cost of your medical treatments required after an accident. It can be claimed irrespective of whose fault the accident was, unlike liability coverage.
You must be thinking about how a personal injury protection plan is different from Med Pay. While they are very similar, and in many states, companies offer a hybrid plan that includes both personal injury protection and health insurance, there’s one difference that makes them distinct.
While health insurance may include road accident treatments, it might not cover lost wages. Personal injury protection covers lost wages. What this means is that during the time of treatment, all the days you miss work and as a result, don’t earn, the policy will compensate you for the lost wages.
These were the benefits of having car insurance. Paying an upfront cost might be difficult for people who are keen on saving money. But for what these policies cover and how much money they can potentially save you, they become worth the cost.