Why Do You Need Car Insurance?

Why do we need car insurance to drive in the United States? While you might be tempted to forego coverage to save money, car insurance protects you against financial loss and more in the long term. In addition, it’s illegal to drive without insurance in almost every state, and each state has financial liability laws in place to protect drivers in the event of an accident.  

Is It Legal to Drive Without Insurance?

You’re required to carry car insurance in 48 out of 50 states, apart from Virginia and New Hampshire. While drivers aren’t required by law to carry insurance in New Hampshire, the state does have a Motor Vehicle Responsibility Law. This law means the driver responsible for the accident is also responsible for compensating others involved in the crash for their medical bills and other accident-related expenses, along with damage to other vehicles. The state requires drivers with major traffic violations, such as DUIs and accidents, to acquire insurance before driving again. Uninsured motorists in Virginia are required to pay a fee of $500 per year or to provide proof of financial responsibility, so most Virginians opt for some level of coverage instead.  

What Type of Insurance Is Required?

Every state has minimum liability limits—the amount your insurance will pay in the event of a loss—drivers need to meet to be considered legally insured. Insurance requirements vary by state, but most states require bodily injury and property damage liability insurance. Half of the states also require uninsured/underinsured motorist insurance, and some require personal injury protection insurance. Here’s what each of those terms means:  

Bodily injury liability insurance pays for the opposite party’s medical bills if you get into an accident. In some states, the other driver in the accident can sue you for damages, so it’s important to have enough liability insurance to protect yourself.  

Property damage liability insurance covers any damage you inflict on someone else’s property while driving. This includes damage to cars, fences, lampposts, signage, and anything else you can collide with.  
Personal injury protection insurance covers the cost of treating the driver and passengers if they get into an accident and need to go to the hospital.  
Uninsured/Underinsured motorist protection covers you if you get into an accident with a driver with insufficient insurance coverage.   

Should I Purchase More Coverage?

State liability limits are usually lower than the amount you’d need to protect your assets if you got into an accident. If you own over $100,000 in assets, you might want to consider purchasing additional coverage for protection. Experts generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident. In addition, if you have a financed car, the car’s financing institution might require additional coverage, such as comprehensive and collision, on the vehicle to protect the car. 

How Car Insurance Protects You Against Loss

Car insurance is designed to protect your assets, as getting into an accident without insurance can be expensive and even affect your financial future. The average hospital bill for a driver being treated after a car crash is $61,000, and 1 in 8 liability claims cost over $1 million.i If you get into an accident without sufficient insurance, the other party involved could take legal action to recover their losses. Insurance is also designed to protect you from paying large out-of-pocket expenses if you get into an accident and need repairs or medical attention. 

Additional Forms of Car Insurance

Full coverage car insurance typically includes comprehensive and collision coverage and personal injury protection—unless it’s mandated by your state. 

Comprehensive insurance protects drivers against damage that isn’t caused by a collision. This can include inclement weather, vandalism, falling objects, fire, animals, and theft. 
Collision insurance protects you against loss if your car crashes into another car or object. For example, if you hit a car in a parking lot, collision coverage will pay for any repairs.  

 If you decide to purchase insurance, you’re going to need quality coverage at an affordable price. The General has a range of different policies for every driver, regardless of driving record or insurance lapses. You can get a free insurance quote in under two minutes or visit our blog to read more about insurance.