Since commuting is something everyone in the world does, a car has become our necessity. But a car’s necessity is auto insurance. With over 6 million road accidents every year in the US, it is a no-brainer why the auto insurance market is growing so much. A lot of confusion can arise because of the sheer vastness of auto insurance. Which is the right policy for you, should you get every insurance policy for your car or skip some? These questions need answers.
One of the questions that this article will focus on is do you need insurance before buying a used car? Since when you buy a car from a dealership, the dealership will not hand you the keys before you show them proof of insurance. This is because the government has made it mandatory to have liability insurance to legally drive a car.
But things are different when you buy a car from a friend, colleague, or even on Craigslist. You don’t need to show proof of insurance to them to take the car. But this could be a big risk for you, both legally and financially.
Need for Insurance
The government has made it mandatory to have liability insurance in almost every state if you want to drive a car legally. Every state has its minimum coverage limit and some states have made personal injury protection coverage mandatory as well.
In an accident, where you ram into someone else’s car, house, or even at people, who will be paying for the repairs and medical treatments? Legally and morally it should be you, the person at fault. But the cost of repairs is very high, and medical treatment takes a fortune. What if you don’t have the money to pay for it?
This is the reason why it is mandatory to have liability insurance (with a minimum coverage amount) so that your insurance policy will pay for the repairs and medical treatment of other people who are injured.
Driving a car without liability insurance (or any other insurance that has been mandatory by the state) is a felony. Not only will it get you a hefty fine, suspension of license, and even imprisonment, but if you get in an accident, you’ll have to pay every penny from your pockets that you were going to use to decorate your home. Accident settlements are expensive, some even costing millions of dollars.
Do You Need Insurance Before Buying a Used Car?
So when you get a used car, it is mandatory to have liability coverage before you drive the car. If you live in one of the twelve no-fault states, then you need to have personal injury protection insurance coverage as well. Whether used or new, auto insurance is mandatory.
Do you need to buy a separate auto insurance policy for the used car? Not at all. If the used car is going to be your first car, then look for affordable provider of auto insurance and get your policy to save money. That’s all, your car is covered and you can safely drive the car around.
If you already have an auto insurance policy then all you need to do is add the used car to the policy. The entire process is very simple, with some insurance companies having an online process to add new cars. If you don’t know how to add the car to your existing insurance policy, just contact your insurance agent and it will be smooth sailing from thereon.
Can You Skip Some Policies?
Since you are buying a used car, you don’t want to spend too much on it. Liability coverage is expensive in itself, but you can save some money by skipping some insurance policies that might not make sense for an old, used car.
Apart from liability coverage and personal injury protection plans, there are some other insurance policies to protect your car. You can skip some of them if you want to save money.
Collision insurance coverage is for your car’s damages in an accident. If someone else hit your car and it was not your fault, the liability insurance of the person at fault will pay for the repairs. But if you were at fault, then your collision insurance will be used to pay for the repairs of your car.
Collision insurance is very important as it covers the damages to your car even when the accident is your fault. It also covers for the damages to yours when it is parked. So it makes sense to have this insurance policy.
The problem is that it costs just as expensive as liability insurance, and it needs deductibles. So if there is an accident, you’ll have to pay the deductible first before the insurance company pays the rest of the amount. Plus, claiming this policy will increase your insurance rates.
Tip: If the used car is very old, say older than seven years, then getting collision insurance for it makes little sense. Fixing an old car by making an insurance claim, paying the high deductible and getting the accident in your driving record, and increasing the cost of insurance for other future cars that you will own is not worth it.
So skip collision insurance and if you crash it, it is better to just get it fixed only as much needed to function properly unless there is no scope left because you got bashed into an electric gate.
Comprehensive insurance covers all the damages to your car that may happen when it is parked. For example, this policy covers the damages to your car from natural calamities like floods, earthquakes, hailstorms, etc. It also covers damages from riots, vandalism, theft, etc. For a new car, it makes sense to get this coverage, but if you feel your used car is safe from such damages, you can skip comprehensive coverage and save some money.