Most people realize that they need auto insurance if they own a car and want to drive. However, many people do not realize all the purposes of auto insurance. An auto insurance plan provides three main purposes, and it is important for you to know these. Here is an explanation of the three purposes of auto insurance.
1. Your Own Protection
The first purpose of auto insurance is for your own protection, and this is one of the most common reasons people buy auto insurance plans. When you have collision coverage, for example, your insurance company pays for the damages you experience to your car if you cause an accident. If you have comprehensive coverage, it protects you from a lot of other types of damage. For example, if your car encounters hail damage, your comprehensive protection covers you. If someone steals your car, your comprehensive coverage protects you.
2. The Protection of Others
The second purpose of auto insurance is for the protection of others. When other people drive on the road, they expect the other drivers to have insurance coverage. After all, having coverage is the law. Your insurance policy comes with liability protection, which means it pays for the damages you cause to other people. It pays for the damages they encounter to their vehicles, and it also pays for medical bills and other things. If you do not have insurance, someone could sue you if you cause a collision with another driver.
3. It Satisfies Legal Requirements
The final purpose of an auto insurance policy is to satisfy the legal requirements in your state. States require auto insurance for the protection of everyone that goes on the roads. While every state is different, you will need to buy liability coverage for sure. The other types of coverages are optional, except for people with car loans. When you have a car loan, your lender will tell you what types of coverage you need. Lenders can dictate this because they have risks when offering car loans. The requirements that lenders have are different from the legal requirements that states create, but you must meet both if you have a loan.
Having auto insurance is vital for these three reasons. If you are driving without it, you put yourself and others at risk, and you violate the laws in your state. If you would like an insurance quote, contact an insurance agent today.