Do you really need car insurance?

Question

The three types of car insurance that are universally offered are liability, comprehensive, and collision insurance. Drivers can still purchase other types of auto insurance coverage, like personal injury protection and uninsured/underinsured motorist, but they are not available in every state.

3 Major Types of Car Insurance Explained

1. Liability insurance… read full answer

Liability car insurance is coverage that pays for other people’s expenses after accidents that you cause, and there are two components of it. Property damage liability insurance pays for any damage that you cause to someone’s property, and bodily injury liability insurance pays for their medical bills.

Liability coverage is the most common type of car insurance. It is required in almost every state.

2. Comprehensive insurance

Comprehensive car insurance pays to repair or replace your vehicle when it is damaged by something other than an accident, such as vandalism or a natural disaster. It is not required in any state, but it is usually mandatory for vehicles that are leased or financed.

3. Collision insurance

Collision insurance is a type of car insurance that covers damage to your vehicle that is caused by an accident, regardless of who was at fault. It is not required in any state, but it’s usually mandatory for vehicles that are leased or financed.

Other Types of Car Insurance

In addition to the 3 major types of car insurance – liability, collision and comprehensive – there are several other types of coverage that are less frequently required but still helpful in the right situation, including:

Personal Injury Protection (PIP): Pays for several different medical-related expenses after an accident, including loss of income and child care.

Medical Payments (MedPay) Coverage: Covers medical bills after an accident.

Uninsured/Underinsured Motorist Insurance: Pays for your vehicle repairs and medical bills if you are involved in an accident with someone who doesn’t have enough insurance coverage.

To learn more, check out WalletHub’s guide to the different types of car insurance.

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Answer 1 · 2022-05-03 17:03:19

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Delaney Simchuk, Car Insurance Writer

@delaney_simchuk • 05/03/22 This answer was first published on 05/03/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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Yes, you really need car insurance if you own a registered vehicle because it is required by law in most states. Almost every state requires you to have a minimum amount of insurance to cover any injuries or property damage you may cause in an accident. Most states require at least liability insurance, and many also require additional types of coverage such as personal injury protection or uninsured motorist insurance.

However, New Hampshire and Virginia do not require car insurance of any kind, as long as other requirements are met. You can choose to not carry insurance in Virginia if you pay a $500 fee with the state department of motor vehicles every time you renew your vehicle registration. In New Hampshire, you need to deposit money or securities with the state treasurer.

Reasons Why You Need Car Insurance

A minimum amount of insurance coverage is required by law in almost every state.
Car insurance helps you avoid potentially large out-of-pocket costs for medical expenses and property damage if you are at fault for an accident.
If you are leasing or have a loan on your vehicle, full coverage car insurance is likely required by your lender or lessor.
Car insurance protects you from lawsuits when you are at fault for an accident. If you are sued for damages or medical expenses after a car accident, your car insurance will pay up to your policy limits rather than you having to pay out of pocket. You could still be held responsible for amounts in excess of your insurance limits, though.
The penalties for not having car insurance and being caught driving without insurance can be severe, including hefty fines, jail time, and mandatory SR-22.

To learn more, check out WalletHub’s guide to how much car insurance you need.

Do you really need car insurance?

Delaney Simchuk, Car Insurance Writer

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