New car insurance requirements vary from state-to-state, with specific insurance types and amounts dictated by your auto finance company. Auto insurance not only protects you and others from direct medical and repair bills, it also protects your hard-earned personal assets. Especially if you are a homeowner, not having adequate insurance can be financially devastating, especially in cases where you are sued for damages.
Correct answers would include "because it's irresponsible, illegal and dumb not to insure your auto." Auto insurance is inexpensive compared to the replacement and repair costs associated with auto theft or an accident, not to mention medical bills and lawsuits resulting from property damage, injury or death. Besides that, not having insurance can result in fines, loss of license and even imprisonment.
Every state requires auto insurance for new and used cars except New Hampshire, but even this northern New England state requires proof of financial responsibility and uninsured motorist protection. Insurance specifics and minimum requirements can be found by visiting your state's department of motor vehicles or insurance commission online.
Auto Lender Requirements
When you lease or finance a new or used automobile, your finance company will require you to insure the vehicle to their satisfaction. Sometimes these requirements are over-and-above state mandated minimums, and are in-place for a reason. If your car is stolen or totaled in an accident, you are still responsible for payment. The finance company is protecting their own interests to ensure that they will be reimbursed for the amount owed on the vehicle. When obtaining or renewing your insurance policy, be sure that it covers at least the amount owed to the lender. Insurance companies will only pay industry book value in cases of total loss, and this value may be less than your financial obligation. Nobody wants to find that they are still obligated to pay the balance owed on a vehicle they no longer have.
Auto insurance includes various coverage options, including liability, physical damage, theft, personal and bodily injury, uninsured or under-insured motorist coverage and other add-ons. States requiring insurance have minimum requirements with set dollar amounts that generally include liability, property damage and bodily injury protection. Comprehensive insurance includes other coverage add-ons that you choose or are required by your lender. You can increase coverage amounts from state minimums if your financial situation warrants, so be sure to check with your financial adviser or insurance agent to make certain that you are adequately protected.
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