MoneyLife

Why Do You Need Car Insurance? (10 Critical Reasons To Be Insured)

By Marc Guberti
Why Do You Need Car Insurance

Car insurance is required in most states. It provides a blanket of financial protection. Regardless of how well you drive, you will come across bad drivers. 

No one expects to find themselves in the middle of a car accident, but each ride on the road is unpredictable. If you’re debating getting car insurance or questioning your existing car insurance’s value, here are a few reasons why you need car insurance.

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1. Legal jeopardy

The consequences of driving without car insurance vary by state, but even so, all of these consequences are unfavorable. You can lose your license, have to pay thousands of dollars in fines, lose your car to a pound, and even face jail time. 

Paying for car insurance allows you to evade these penalties and reap additional benefits. For people wondering, “Why do you need car insurance?” these legal repercussions present a strong argument.

2. Car insurance provides a financial safety net 

If you drive without car insurance and get into an accident, you must compensate the other driver financially. These out-of-pocket expenses add up in a hurry. 

The average auto liability claim for property damage is $3,638 in the United States. Bodily injuries cost an average of $15,270 in auto liability claims. These surprising and unexpected out-of-pocket expenses can bankrupt some people, but with car insurance, you’ll have a financial safety net to cover these expenses.

3. Hit and run coverage

According to the AAA Foundation for Traffic Safety, a hit-and-run accident happens every 43 seconds. Car insurance provides hit-and-run coverage, and it can also help cover repairs. 

With car insurance, you can avoid out-of-pocket expenses that add up quickly. This coverage is another answer to the common question, “Why do you need car insurance?”

4. Car theft is covered

Comprehensive car insurance coverage will replace a stolen car. No one anticipates their car getting stolen, but it can happen. The out-of-pocket expenses for replacing a stolen car will put a considerable financial strain on most people. 

While motor vehicle thefts have been declining for over a decade, 748,841 vehicle thefts took place in 2018. That’s an average of 2,052 stolen cars and other motor vehicles per day.

5. Car insurance covers payments even if it’s your fault 

If an accident is entirely your fault, car insurance still covers the payments. While you will pay a little extra in car insurance premiums after the accident, those extra premiums are nothing compared to paying out-of-pocket expenses for repairs and other damages. 

If you know you’re covered, you are less likely to perform a hit-and-run after causing an accident. The punishments for hit-and-run car accidents are severe, with thousands of dollars in fines. Plus, the severity of the accident can lead to even worse consequences. Having car insurance decreases the chances of going down this path. 

6. Increase your credit score

Staying on time with your monthly car insurance payments will help your credit score. A good credit score helps with buying real estate and lowering your interest rates. A high credit score creates more financial opportunities and paying your car insurance on time contributes to your credit score.

7. Car insurance gets cheaper as you get older 

The great thing about car insurance is that it becomes more affordable as you get older. Younger drivers are at greater risk of getting involved in an accident. As drivers get older, that risk decreases. 

See what age car insurance payments go down. Car insurance companies always reward customers who practice safe driving. Your monthly payments will dwindle as you continue staying safe on the road.

8. Protect your assets 

Regardless of your car’s age and mileage, it has value. Whether you trade it into a dealer or resell it, a car is an asset worth protecting. 

Car insurance provides various levels of coverage designed to shield you from massive losses and out-of-pocket expenses. If you plan to buy a new car soon, protecting your current vehicle will make it easier to close the gap and cover the payments for your new vehicle.

9. Protect the passengers

Not only does car insurance protect you, but it also protects passengers. As a passenger involved in a car accident, you can file a claim to the driver’s car insurer at fault and document your lost wages and medical expenses. In most cases, the driver’s car insurance policy covers passengers. 

You might get into a car accident with your friends. While no one wants to envision this scenario, having the right car insurance to protect your friends will alleviate the pain to a certain degree. Most people think along the lines of. “Why do you need car insurance?” but it’s not just about you. Consider your passengers as well.

10. Protection from natural disasters

Hurricanes, forest fires, and landslides can destroy your car. These unpredictable natural phenomena can make a big dent in your wallet. Car insurance allows you to evade these out-of-pocket expenses if a natural disaster damages your car. 

Natural disasters are growing in numbers and impact, and you don’t want to get caught by surprise. Last year, twenty-two climate disasters in the United States caused more than $1 billion in damages.

Keep yourself protected

Car insurance allows you to avoid costly out-of-pocket expenses. While no one ever expects to end up in a car accident, you never know when you could find yourself in the middle of one. It’s better to hope for the best and prepare for the worst than leave yourself exposed to significant out-of-pocket expenses. This mentality is yet another reason why you need car insurance.

Granted, people still don’t want to pay for car insurance. While it’s a necessary expense to keep yourself and others safe, you can trim it down. You can use a Credit Builder loan to improve your credit rating. When you improve your credit score, your car insurance payments could decrease. A gradually declining cost of insurance that protects a valuable asset is an excellent recipe for success.

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