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Let’s explore exactly why auto insurance is compulsory and what it covers.
Getting Car Insurance with the Lowest Possible Upfront Cost
Seeing as car insurance is almost always mandatory in the U.S., it’s worth looking at how you can get auto insurance with the lowest possible upfront cost before we begin to look at the reasons why the insurance is mandatory and what it covers.
While it’s not possible to get zero-down car insurance, it is possible to pay for the insurance policy in different ways to help you lower your upfront costs.
Some insurance companies require you to pay just one month upfront, so it’s always worth comparing different insurance companies to find one that enables you to pay the lowest costs upfront.
Other insurers typically require paying for forty-five days upfront.
You also have the opportunity of taking the opposite action and paying as much as possible straight away. If you choose to pay for your coverage in full upfront, you can avoid regular payments throughout the rest of the term of the insurance policy.
Also, you should know that when you make a down payment, that’s not an additional cost. It basically acts as your first payment towards your insurance coverage.
Why is car insurance almost always mandatory in the U.S.?
Like most other countries, car insurance is almost always mandatory in the U.S. for a good reason: it helps to protect people who are involved in road accidents.
The law concerning auto insurance ensures every driver who could potentially be involved in an accident has insurance coverage in place to cover the minimum level of expenses for any injuries and damage.
Having insurance in place also ensures drivers can be accountable for the risk that always comes with driving a motor vehicle.
So, ultimately, car insurance is mandatory to protect anyone who is involved in a road accident.
In which states is car insurance not mandatory?
Some level of car insurance is actually mandatory in forty-eight states. The two exclusions are New Hampshire and Virginia.
However, in New Hampshire, drivers without insurance still need to show proof of financial responsibility so that costs can be covered in the event of an accident that causes injuries or damage to another driver and his or her vehicle.
Also, if a driver in New Hampshire has had vehicle-related infractions, he or she may be required to carry car insurance.
In Virginia, the minimum insurance requirements are similar to most other states, but drivers can opt out of those insurance requirements and become uninsured drivers by paying a $500 fee.
What does car insurance cover?
While each state regulates the type of insurance that drivers must have, and the amount of coverage they should have, typically, drivers are legally required to have liability coverage, which covers property damage and bodily injury in the event of an accident.
Liability coverage could also pay for the injuries and damages that you cause to others in a car accident.
Depending on the specific state, other types of mandatory auto insurance coverage could include:
- Personal injury protection per person and per accident.
- Uninsured or underinsured coverage per person and per accident.
- Liability for death per person and per accident.
- Medical payments coverage.
Personal injury protection, which is often abbreviated to PIP and is also known as no-fault insurance, covers the cost of lost wages and medical bills for drivers and passengers that are injured in road accidents, regardless of who is at fault.
In some states, personal injury protection is mandatory. In others, it’s optional. In some other states, it’s not offered at all.
Uninsured motorist coverage protects you in the event that you’re involved in an accident in which the driver who hits your car has no car insurance in place.
And underinsured coverage helps to protect you if you’re hit by a motorist who doesn’t have enough coverage in place to pay for the cost of your injuries and the damage.
In many states, both uninsured and underinsured motorist coverage is mandatory.
As for medical payments coverage, which is also known as Med Pay, it’s additional coverage that is optional in most states.
With medical payments coverage in place, if you’re involved in an accident, the coverage will help to pay for your medical expenses and the medical expenses of your passengers. It pays for those medical costs even if you’re at fault.
In states where Med Pay isn’t offered, they typically have PIP coverage available instead.
Now you know why car insurance is mandatory and what it covers, it might be useful to learn how to keep your cool if you’re involved in a car accident.