First, it’s important to understand that liability coverage is the only type of car insurance you should have. Liability coverage is the only type you need, but other driver’s insurance policies come with a few extra wrinkles. To determine whether your car is insured, check with the Motor Insurance Bureau, a central database that maintains a comprehensive list of motor insurance policies. The Motor Insurance Bureau updates this database 365 days a year. You should note, however, that a newly purchased insurance policy may not be listed immediately. Additionally, a car that is sold without insurance is unlikely to be covered.
Car insurance follows the car — not the driver
A good rule of thumb when deciding on car insurance is to consider the limits and exclusions. Most policies provide liability coverage, which is enough to cover an insured driver when they are driving another person’s car. The limits and exclusions on car insurance vary from company to company, so be sure to check with your agent to make sure that you have the right coverage for the situations you encounter. Here’s a brief explanation of the basic concept of car insurance:
In Michigan, auto insurance follows the car, not the driver. In other states, it doesn’t. But auto insurance coverage does follow the car, which means it follows you. So, if you drive a car that is financed, it is important that you have sufficient coverage for it. This means that your policy is not just for the car that you drive, but also for your car if it gets stolen or wrecked.
Liability coverage is the only type of coverage you need
The most basic level of car insurance coverage is liability coverage. You legally must have liability insurance in most states. This insurance pays for injuries to other people or damage to their property. Depending on the state you live in, liability coverage can cover many expenses, such as medical bills, lost wages, and vehicle repair. This type of policy is not very expensive, so it is recommended for those with limited financial resources.
Purchasing liability insurance can make sense if you drive a vehicle that is older and has a higher insurance premium. Similarly, if you don’t have the cash to repair a vehicle, liability only insurance may be the best choice for you. Similarly, if you don’t drive a luxury car, you might be better off opting for liability only insurance. Clark Howard suggests that you multiply the monthly premium for collision and comprehensive coverage by 12 to determine the yearly cost. If you have a relatively new vehicle, you’ll want to buy collision and comprehensive coverage as well.