Auto Insurance Requirements
If you own and drive a car, then you are required to make sure that you carry certain types of insurance at all times. If you are driving a car and making car payments to your bank or credit union, then you are required to carry a particular type of insurance called full coverage. However, if you own your car free and clear, then you have additional options available to you. While you may continue to carry your full coverage insurance, by law you're not required to carry this much insurance. You are, however, required to carry liability insurance.
What Is Liability Insurance?
So, what is liability insurance? In short, it is insurance that protects the other vehicle in the event you're in an accident and it's your fault. Your car might be a total loss, and of course you'll have that to deal with that, but at least the damage you caused to the other person's car will be fixed through a payment from your insurance carrier. The idea is that a person will remain financially responsible for his or her vehicle, but the other person will be protected when the accident is not their fault. At a bare minimum you are required to carry this level of insurance if you own and drive a car, truck, van, motorcycle, RV, or SUV.
Insurance For Young Drivers
If there are teenage drivers in your house, then there's a good chance you already know how this can affect your monthly insurance premiums. You may also have discovered a few new dings and dents in the car they drive. Young drivers are riskier for insurance companies to cover, primarily because of their overall lack of experience on the road. However, this doesn't mean your car insurance rates will automatically skyrocket. Speaking with your local insurance agent about all the various plans and options is the only way you'll truly be able to assess the impact of carrying younger drivers on your car insurance policy.
What If I Drive Without Insurance?
Because it's the law in your state to carry the required and appropriate amounts of insurance, you run the risk of being assessed a serious fine for not carrying insurance. Additionally, however, if you get into an accident, you will be held financial responsible for any and all damages you caused. This could literally run into six figures if the accident is serious enough. The bottom line is that if it's required, it will save you money in the long run.