Insurance for Used Cars

Every car insurance policy is comprised of various types of coverage. Once you have chosen the coverage that complies with the laws of your state and, when applicable, the policy of your lender, you are free to choose to accept or decline the optional coverage that make up your policy. Since every state requires drivers to carry at least liability insurance, you will need to keep at least the minimum amount of coverage mandated by the laws of the state in which you reside.

Examine Your Liability Policy

Not only does every state require that drivers carry liability car insurance, but they also set minimum levels of coverage that each driver must carry. There are minimum amounts of insurance drivers must carry that will pay when bodily injury has occurred as the result of an accident as well as minimum amounts that cover property damage. However, the minimum amounts that states impose and drivers must carry doesn’t always cover the actual amounts of damages incurred. For this reason, drivers should be aware of how much coverage they are actually purchasing and make sure they are purchasing adequate coverage instead of just getting the minimum amount the law requires.

State Laws Differ

There are some types of car insurance coverage that are mandatory in some states and optional in other states. Even if your state doesn't require a particular type of coverage, you should make your decision on whether or not to carry that coverage based upon your needs and circumstances instead of blindly declining the coverage based solely upon the law. Uninsured/underinsured motorist coverage and medical payments coverage are two examples of coverage that is required in some states while optional in other states. Again, base your decision to carry or decline a particular coverage based on your individual circumstances.

Optional in Every State: Collision and Comprehensive Coverage

Both collision and comprehensive coverage involves payment to cover damage to your own vehicle, which results not only from collisions, but other causes as well. When considering whether or not to carry the latter coverage, the value of your car should be a big part of your decision. That's because if you drive a car with a low monetary value, you could pay more in insurance premiums than your car is worth. In addition, you may also have a high deductible to pay when you file a claim so it's important to look closely at the value of your car when assessing this kind of insurance coverage.