When you are ready to buy a car, you will also need to purchase auto insurance coverage for the car. Auto insurance is a requirement in most states, but there are many different options when it comes to the types of coverage you choose for your policy. The main two types you can choose from are liability coverage and full coverage, and here are some factors that can help you decide which type you should buy.
As you try to decide whether to purchase liability-only or full-coverage insurance, you will need to first factor in the loan you have. If you do not have a loan on the car, you can choose either type of coverage. If you have a loan on the car, though, you will not have a choice. Every car lender in this country has the requirement of full-coverage insurance for borrowers of loans. In other words, when you take a car loan out to purchase a car, you agree to carry full coverage insurance on the car until you finish paying off the loan. Failing to do so will often result in the lender purchasing insurance for you and then charging you for the premiums on the policy.
Value of the car
If you do not have a loan on the car, you should factor in the value of the car if you are still trying to determine which type of insurance policy to purchase. When you own a car that is worth barely anything, it might not make sense to purchase full coverage for the car, as your insurance company would not pay out much money if you wrecked it. If your car is worth a lot, though, the only protection you would have for your car would be your insurance policy, so carrying full coverage would be important for you.
Amount of protection you want
The other factor you should think about is how much protection you want. Do you like peace of mind knowing that you have all the protection you need, or are you fine with handling some risk with your vehicle? This is an important question to think about and answer as you try to decide which type of insurance is right for you.
If you are still not sure which option is right for you, ask an insurance agent. An insurance agent can give you advice and quotes for each type of coverage.