Why You Need Auto Insurance

The main purpose of auto insurance is to protect you and your assets from the financial consequences of being in an auto accident. You may resent having to make that insurance payment every month but in the long run you'll be happy you did. And "assets" means everything you own, not just the value of your automobile. Lawsuits stemming from auto accidents can be extremely costly, and can devastate an individual's financial situation for years to come. In the case of a lawsuit, everything you own is at risk-your home, your wages, your investments. It is extremely important to have sufficient liability coverage to protect you and your family from potential financial harm.

Auto insurance companies offer a wide variety of coverage options so you can tailor your policy to your specific needs and your budget. Auto insurance is a versatile tool to use in your financial planning. Among the benefits are:

Besides safeguarding the assets you've worked so hard to accumulate, having adequate coverage allows you to you feel more secure when you are driving, knowing you have the protection in place to deal with any of the perils you may face on the road. Insurance can cover your medical bills in the event of an accident. Insurance can pay the full cost of repairs or replacement of your vehicle after an accident, as well as pay for damages to another person's car or property due to an accident you are involved in. Some insurance policies will even pay for a rental vehicle while your own car is being repaired.

Auto insurance can pay for damages or repairs to your vehicle that result from such varied perils as theft, vandalism, or natural disasters. And importantly, it can protect you and your vehicle from harm caused by uninsured or underinsured motorists. Even with state laws in place that require motorists to have insurance, many people do not, or they choose to only carry the absolute minimum, which may not be adequate to compensate you in the event of an accident in which they are at fault.

Some people skimp on their auto coverage because they have a safe driving record with no prior collisions. The problem with that philosophy is, you also have to worry about the other drivers on the road. You have no way of knowing whether they are safe drivers or not. And many people don't realize that you can be sued even if you are not at fault in an accident.

When you consider the consequences of being sued, versus the relatively modest cost of the coverage, having adequate liability coverage is important to sound financial planning. Individuals with substantial assets often purchase additional coverage in the form of an umbrella liability policy, which protects you from all sorts of lawsuits, including those arising from auto accidents. The cost of this insurance is also relatively modest.

Auto insurance is part of a comprehensive financial plan to protect your assets.