If you own a vehicle, having auto insurance is an element of good financial planning. Apart from it being illegal to drive an automobile without insurance, it is good protection for your finances. Many dealerships will not permit you to take a vehicle off the lot without making sure that you do have insurance in place, especially if you will be making monthly payments on the vehicle. There are still drivers who purchase used vehicles in a private sale and feel that they are saving money by not having an auto insurance policy in place, but such is not the case.
Owning a vehicle is a large financial commitment because of the large amount of money involved in the sale. An auto insurance policy is an essential part of protecting your investment. If the vehicle becomes damaged or completely written off in an accident, you will be left with no vehicle and a mountain of bills to pay. You still have to pay for the vehicle and if you are at fault damaging another vehicle or causing injury to any of the occupants, you can be sued for damages, which means you have to pay for the cost of repairs for the other vehicle as well as the medical treatments for the injured passengers. Such an event could force you into bankruptcy and result in the loss of your home and your assets.
This is the main reason why people have insurance – to protect their assets. If you have an older vehicle, which is perhaps a second car or one that is really not worth all that much, you don’t need to have full coverage on the vehicle. You do need to have coverage that protects others involved when you are found to be at fault even if you will not receive any compensation for the damages to the vehicle itself.
Accidents can happen anywhere so you should not think that just because you are a careful driver accidents won’t happen to you and therefore you have no need of auto insurance. Destruction of the vehicle by fire and theft of the vehicle are two types of coverage offered in a standard auto insurance policy. Even the cheapest vehicles are subject to theft if the thieves really need to steal a vehicle for any purpose. When you have this coverage, the vehicle is covered when it is parked and you are nowhere near it.
With an auto insurance policy you can take out extra coverage, such as for glass breakage due to rocks or stones flicking from the wheels of vehicles when you are driving on the roads and highways. If you intend to store the vehicle for a period of time while you are away from home, you can also have storage insurance so that if it becomes damaged during this period, you will also receive compensation from the insurance provider.
You may find it difficult to meet the premium payments on the vehicle, but you can’t afford to be without auto insurance. It is an essential household expense that you need to include in your monthly budget.