Why You Shouldn't Let Your Car Insurance Policy Lapse

If you have a tight budget, you may hate paying for car insurance and wish you could eliminate the bill. The only safe way to get out of paying insurance for your automobile is to get rid of your car and stop driving. If you're going to drive, then insurance is mandatory in most states. That means, if you're not insured, you're breaking the law. However, there are more important reasons for having car insurance. Here's why you need to keep paying that insurance bill.

Liability Insurance Pays For Damage To Another Person

Liability insurance is one type of insurance most states require. This insurance pays for damage to someone's property when you are responsible for the accident. If you cause a lot of damage to someone's car, fence, or garage, then they will probably be motivated to come after you for money. If you don't have insurance, you might have to pay for repairs out of your own pocket, which could hurt your finances and cause you to lose your own property by selling it to come up with the funds.

Insurance Protects Damage To Your Car

Insurance also covers your own car, whether it's damaged in an accident, by a tree falling on it, or by vandalism. The good thing is that you can buy the amount of insurance that's best for your car. If you drive an older car that isn't worth much, then you can buy the minimum insurance required by your state so you can save money. However, if you have an expensive new car, then buying more insurance coverage might be the best option so you're fully protected.

Insurance Can Pay For Medical Bills

If you or passengers in your car are hurt in an accident, you can pile up medical costs quickly, even if all you need is a visit to the emergency room. If you need a hospital stay or surgery, your medical bills will skyrocket, and you'll have to pay out of pocket if you don't have the right insurance coverage. Your auto insurance agent can help you determine the right type and amount of insurance to obtain so you're protected at a cost you can afford.

Insurance Is Required By Your Lender

Auto insurance is not only required by state laws, it's also required by the lender who provides the money to buy your car. If your car is paid off, this isn't a concern, but if you are making payments on the car, it needs to be insured so the lender's investment is protected. If you let your insurance lapse, then the lender might force you to pay a higher rate for insurance they provide or give up your car.

Another reason it's important to keep up with your insurance payments is because a lapse in coverage can hurt you. It's difficult to get insurance again when you've let it lapse, and you may have to pay a higher rate than you do now. So while you may hate making that monthly payment for something you may never use, insurance is something that's necessary if you own a car. Plus, it provides protection for your finances in case an accident occurs.

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