3 Reasons Cheap Liability Auto Insurance Could Be Enough

When you start considering coverage for your car, there are three reasons cheap liability auto insurance could be enough. Once you have the facts, you can determine whether you should stop at this level of coverage or pursue additional options.

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With so many people giving you advice on how to get low-cost car insurance, you can have a hard time deciding which level to accept. Friends’ recommendations can be helpful, but if you don’t include self-evaluation in the process, you may wind up paying for something you simply don’t need.

It is great that people want to offer their opinion, but remember: this is a personal choice. It is important that you complete the research portion to determine how certain insurance programs can meet your unique needs.

Remain Compliant with Most State Laws

Not everyone fits in the same category — and everyone’s driving history and residential location differ. Unlike your friends, you may require minimal coverage, like liability auto insurance.

If your basic needs are simple, you should have no problems obtaining solid coverage for your vehicle at a decent price.

If you want to ensure you do not break your state’s laws, you should, at least, have liability car insurance. Depending on where you live, this is the minimum amount of protection you must purchase. Although some states, like Oregon, require more coverage, most areas allow you to have this one level.

The reason you can find cheaper rates with basic liability is because you choose the limits and this dictates the price.

For example, if you live in Pennsylvania, the least amount you can have is 15/30/5. In other words, your car insurance company would pay $15,000 for every person involved in an accident, $30,000 for every crash for the person injured and $5,000 for property damage.

At first glance, that may seem like a lot of coverage. On the contrary, these numbers are not very realistic when you think of medical bills and car repairs or replacement. The Centers for Disease Control and Prevention reported how much each state pays for motor vehicle accidents and the answer is “not cheap.” The numbers soar into the millions when such accidents include fatalities.

Although you can certainly choose a simple liability policy, you may want to increase your limits above the state minimum.

In many cases, your car insurance company will allow you to select as much as $500,000 for bodily injury, per person and accident, and $100,000 for personal property damage.

However, most customers find levels somewhere in the middle — around $100,000 to $300,000 for bodily injury, per person and accident, and $50,000 for property damage — to be suitable.

This helps ensure the majority of injuries can receive proper medical care if necessary. The higher limits also provide a cushion for anyone who needs to have property repaired or restored.

Protection from Litigation

In addition to protecting you from injuries and property damage, liability automobile insurance steps in when you have a lawsuit pending. This is extremely important in fault-based litigation situations when costs can add up quickly.

According to the Alabama Department of Insurance, 27 states currently operate with a tort-based system, nine – and Washington D.C. — have personal injury protection, and 14 are no-fault states.

A tort-based car insurance system makes the at-fault driver responsible for all costs associated with an accident. In other words, the driver pays all medical expenses, lost wages and, sometimes, punitive damages, also known as pain and suffering. In a tort-based state, likelihood of a court appearance is slim, as cases are straightforward.

The Rocky Mountain Insurance Information Association reports that just 10% of all motor vehicle collision cases result in lawsuits. Out of this small percentage, most motorists settle claims with the at-fault driver’s insurance company. The arbitration process – having two sides state their case before an impartial third party — takes the place of a courtroom.

However, assets are often the major objective during these procedures. To secure your finances, legal representation is highly recommended. Otherwise, you are on your own.

Having liability auto insurance supplies you with an attorney who acts on your behalf. He or she suggests a fair and reasonable amount that will provide the victim with an acceptable quality of life.

Anyone with a License Can Drive Your Car

When you have liability car insurance, anyone with a valid driver’s license may operate your automobile. Your policy’s protection provides a licensed motorist the same security if there’s a collision or incident.

Although it is not generally a good idea to loan out your car, especially since your insurance will pay in case of another driver’s accident, many people feel a certain level of obligation. Parents, for instance, may let their children drive their cars to spread household responsibility. Allowing teens to shop for groceries means Mom and Dad can stay home to cook or work on the family budget.

Your friend doesn’t have to walk or take a bus to work if you can loan her your car. Such arrangements particularly help during hard economic times.

However, use wise judgment. If you have an excellent driving record and someone has an accident while driving your car, you may receive a notice in the mail from your car insurance company.

Ideal for Classic Cars

Since the cost of liability auto insurance is so low, you can afford to insure your older car without breaking your budget. Even if you only drive this vehicle on rare occasions, you can spend a few hundred dollars per year to ensure it has enough protection.

Typically, a basic liability car insurance policy ranges from $550 to $1,100 per year.

Of course, this varies by state and location. People in small rural towns pay a significantly lower rate than those in metropolitan areas.

Additionally, people who purchase new vehicles may want to insure an older car for use as a backup. If you just bought a brand new car, but still have the title to your 10-year-old functioning vehicle, you may want to leave the older car in the garage for emergencies.

When bad weather like snow arrives, or hazardous road conditions like black ice and sleet become a factor, you may want to reconsider driving the new vehicle. This is when the second car will definitely come in handy. Since you maintained a certain level of insurance on the older car, you can leave the new car at home and take the older one to work.

Motor Vehicles Depreciate in Value Quickly

During the first 12 months of ownership, your new car depreciates in value between 25% and 30%, depending on the manufacturer. You can review statistics–like these for the 2012 Dodge Avenger–at automobilemag.com.

For instance, the Avenger’s retail price is $18,895. After the first year, this vehicle loses $6,025 in value. Over the next four years, the amount continues to drop, until the five-year mark shows a total book value of $12,738.

However, although the book value steadily declines, the insurance premiums stay high as ever. For instance, the average cost to provide full-coverage insurance on a vehicle is $1,352 per year.

This amount rarely changes and reflects your personal driving history. For the Avenger, the five-year insurance cost is $6,760 – just less than half the vehicle’s entire book value.

Pay close attention to how much car insurance companies rate your vehicle’s worth — and then select the appropriate amount of coverage.

Insurers never pay for a claim that exceeds the cost of the car they insure.

Your vehicle’s value, of course, isn’t the sole factor that can affect auto insurance rates. Where you buy the insurance even can play a role in the price. You can save on premiums when you purchase coverage online.

Excellent Health Plans Let You Skip Extra Coverage

You can forgo extra costs and select liability coverage when employee or private health insurance pays for your personal injuries. This means you can relax if you have a back injury or sprain your wrist in a crash — your health benefits will pick up the slack.

Suppose you require skilled nursing or physical therapy due to a car accident. Even if the accident was your fault, you can still report to your personal physician and utilize his or her expertise to help you find a suitable rehabilitation center.

Of course, this only covers your own personal injuries; it will not cover people who don’t receive your health benefits.

One great reason to purchase liability car insurance is the peace of mind that comes with adequate coverage. You will ultimately save a lot of money because you are not spending more than necessary. The extra amount you would have spent can go toward a savings account or a big-ticket item, like taking a vacation.

You can find great car insurance rates by adding your ZIP code into the FREE box!