Why You Should Carry More Than Compulsory Insurance

By Compuquotes Team on July 13th, 2009

Auto Insurance

If you want to drive legally in most of the United States, you need to carry a minimum amount of automobile insurance. That legally minimum amount of insurance is called "compulsory insurance" and is required in all but five states in the United States. Even in those five states, some drivers may be required to carry compulsory automobile insurance. Because compulsory insurance only covers the bare minimum required in your state, it usually carries the cheapest premiums you'll be able to get in your state. Does that mean that compulsory automobile insurance is your best deal?

Frankly, the answer is no. Compulsory automobile insurance only covers the bare minimum of expenses or liabilities that you may incur if you have an accident. That minimum coverage may be woefully inadequate in case of an accident. In Massachusetts, for instance, the compulsory minimums for bodily injury only provides $20,000 per person or up to a total of $40,000 per accident, no matter how many people are involved in the accident. The property damage compulsory cover will pay out up to $5,000 for destruction of property belonging to others. Notice that compulsory insurance coverage does not include coverage for damages to your car or your property. If the only insurance you choose is the required compulsory auto insurance, you will have to pay for any damages or repairs needed on your automobile after an accident out of your own pocket.

South Carolina, Virginia, Tennessee, New Hampshire, and Wisconsin are the five states that do not require liability or any compulsory insurance except in specific cases.

Comprehensive Auto Insurance Plus Collision Auto Insurance
Until your automobile is completely paid off, your bank or finance company may require that you carry comprehensive and collision coverage in addition to compulsory auto insurance. Both types of auto insurance coverage are for the bank's protection, not yours. They insure that the bank gets its money back if your car is completely totaled in an accident, damaged by fire or stolen.

Collision insurance covers damage to your automobile in an accident, paying for necessary repairs once you've paid any deductible, and may cover various other types of damages and expenses while your automobile is being repaired.

Comprehensive insurance covers damage to your car caused by things other than collision. That includes fire, theft, lightning, tree branches falling on it - pretty much anything you can think of MIGHT be covered under comprehensive coverage. It's important to read the small print and be aware of exclusions to comprehensive coverage, though.

Is Comprehensive and Collision Coverage Worth It?
If you're paying off your car loan and carrying the insurance required by the bank, chances are that a hefty chunk of your auto insurance premiums pays for comprehensive and compulsive coverage. Is it worth it?

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