Do I need auto insurance?

Some people ask, do I need auto insurance? My car's a piece of junk, I don't care if it gets totalled. I realize some cars aren't worth much but the fact remains that if you were at fault in an auto accident and didn't carry liability insurance then you could get sued. Some states require that you carry at least liability auto insurance and if you have a loan on the vehicle most likely your loan company will require you to have full coverage auto insurance.

So there are two types of auto insurance, there is full coverage (which included comprehensive and collision coverage) and there is basic liability insurance coverage. Comprehensive coverage is the portion of your car insurance policy that covers claims associated with your vehicle in which an accident with another vehicle doesn't occur. Common claims include theft, car catches on fire, flood etc. Collision insurance coverage is the portion of your car insurance policy that covers claims or expenses associated with your vehicle when you are at fault in an accident with another vehicle. I always think of it as when you collide with another car your Collision insurance will pay for your expenses. Neither of these usually cover rental car reimbursement, something you should defnitely consider when purchasing your car insurance policy.

Finally, Liability insurance coverage covers claims or expenses assocaited with other vehicles when dealing with an at-fault accident. If you run a stop sign and plow into Mrs. Smith's Ford Focus then your liability coverage will pay for those damages. If you total your car out in the process and don't carry Collision Insurance then your in trouble. You're either out-of-pocket to fix the damages or you see what you can get at the local scrap yard.

It's true that Collision and Comprehensive Insurance are expensive in comparison to liability but consider the expenses you may incur when buying a new car.