Automobile Insurance is required by law in most states for people that own automobiles. Each state has its own requirement that tells you how much coverage is allowed as a minimum that each vehicle owner is required to carry. This is not only to protect you but also other drivers and vehicle owners. When someone is involved in an accident there is normally damage to the vehicles and many times medical expenses to the people that are in the vehicles. Selecting the proper type of insurance to cover these expenses help the vehicle owners and passengers get through these rough and trying times.
Once you know your state’s requirements, you will determine if you need full coverage insurance or just the minimum state requirement on a liability-only policy. One of the ways to determine this is to know how old your vehicle is and if you are making payments on your vehicle. If you are making payments on your vehicle, most lenders that carry your loan will require you to have a full coverage insurance. This also protects your lender if your vehicle gets totaled out and your loan has to be paid off. Not many people could afford to finish paying off a loan on a vehicle that is totaled while they are having to purchase another one so that they can get back and forth to work and doctor appointments and such.
Sometimes an additional insurance called GAP will need to be purchased either through your insurance company or your dealership. Your regular vehicle insurance will normally cover the fair market value of your vehicle before the accident, sometimes that does not cover the amount of your loan. When you have selected GAP insurance the Gap insurance has been designed to cover the difference between your fair market value amount and the amount that you actually still owe on your loan. This can save the policyholder a lot of money and headaches when they are trying to purchase another vehicle.
If you have a vehicle that you do not have a loan on and is paid for, then the choice is yours if you carry full coverage insurance or liability insurance. Both insurances are designed to help protect you when you have a legal obligation in case of an accident. The liability insurance will help to pay for your legal obligations to another person’s vehicle or medical costs due to an accident that you were deemed as liable. However, it will not cover your vehicle if it is damaged due to a storm such as a tree falling on it or something like that. It will not cover your vehicle if it is damaged or totaled in an accident that was your fault.