What Kind of Insurance Do I Need for My Car?

There are many different kinds of car insurance, and it can sometimes be confusing to know which kind of insurance you need to purchase for your specific car and situation. Here are some of the basic terms you need to know and advice on what kind of car insurance you will need.

Types of Car Insurance: Do I Need Liability Insurance?

Yes. In every state, it is required by law that you have liability insurance, which will pay for damages done to people or property when you are at fault in an accident. It is illegal to drive without liability insurance, so you absolutely must have it.

When you are purchasing car insurance, you should consider getting more liability insurance than is required by law, because in some states these amounts are ridiculously low and will not pay for the full replacement cost of the average car on the road these days. Your liability insurance will protect your other assets when a claim is made, so it is very important to have solid coverage.

Types of Car Insurance: Do I Need Collision Insurance?

Most people will choose to get collision insurance as well, which will pay for repairs on your vehicle if you get in an accident. In addition, if you are leasing your vehicle, the dealership will probably require that you have collision insurance on that car so that it can be replaced if it is totaled.

However, if you have an older car, you might want to not purchase collision insurance. This is because the insurance will cost you a lot of money over time, plus you have to pay a deductible when you make a claim, and your car really isn't worth that much, even if it is totaled in an accident.

Types of Car Insurance: Do I Need Comprehensive Insurance?

The last main type of car insurance is comprehensive coverage, which covers non-accident damages to your car, such as those caused by a rock hitting the windshield, a fire, or a large hailstorm. It is wise to purchase this as well if you have an expensive vehicle, but again, if your car is old and would not cost that much to replace, you could skip comprehensive coverage.