If you’re considering buying a car, you might wonder if auto insurance is something you need before committing to the purchase. After all, purchasing a car is probably one of the most significant expenses people will ever face.
It’s certainly not an expense to take lightly or ignore. Auto insurance protects from financial risk during an accident. It covers you when you crash or if your car gets stolen. Without auto insurance, the cost of repairs or replacement might be so high that it would bankrupt you.
Why Is Auto Insurance Necessary?
Do you need auto insurance before you buy your car? If you own a car or want to buy one, it’s almost necessary to have auto insurance before driving it on public roads or other locations where it could cause injury or property damage.
Auto Insurance provides coverage for unexpected and unforeseen accidents – collisions, fire, theft, hail, flood, and natural disasters.
Auto insurance is also necessary to maintain your driving record. If you get involved in an accident and don’t have auto insurance, you will receive a “driving without insurance” citation. The citation carries a hefty fine and can lead to a license suspension if unpaid or ignored.
Things to Consider Before Buying Auto Insurance
Before buying car insurance, you should understand the details of the cost. Some things you should understand before you purchase auto insurance include:
Type of Car
The car you own is the primary factor in determining your insurance rates. You will likely pay more if your car is expensive than someone who owns a cheaper model.
Your Driving Record
If you have a clean driving record, you can explore ways to bring your rates down. A poor record will give you a hard time bringing your rates down.
Your Age
Younger drivers typically have higher insurance rates than older drivers.
Insurance Provider
Shop around for the best rates and find the company that best fits your needs. You can do this online at sites like NerdWallet or Insurance.com.
What Is Collision Insurance?
Collision insurance covers the cost of repairs to your car in the event of a crash. If you lease or finance your vehicle, consider purchasing a collision policy.
If you have no collision coverage and a third party is at fault for the crash, your insurer may use the equity in your car to pay for repairs.
If you don’t have a lien against your car, you will pay the total cost of repairs. Some auto insurance companies offer “pure” collision coverage that doesn’t include a lien against your car.
What Is Liability Insurance?
Liability insurance covers the cost of injuries caused by your car. If you accidentally hit another vehicle or a pedestrian, they may suffer injuries. Liability insurance will cover their medical bills and other expenses related to the accident.
If you don’t have liability insurance and cause an accident, your auto insurance company may deny coverage for injuries sustained by the other party. You can purchase Liability insurance as a stand-alone policy or as part of a comprehensive auto insurance policy.
When You Should Buy Auto Insurance Before a Car Purchase
If you are financing or leasing a car, you’ll likely purchase collision and liability insurance. If you have poor driving records, poor credit, or no proof of income, you may need to purchase collision and liability insurance before visiting the car lot.
You may also want to purchase collision and liability insurance if you have no money saved for a car down payment. If you have reliable transportation and no need for a vehicle, you may want to wait until you see the type of deals offered on cars at the beginning of the model year.
You may find that the same money has a more excellent value when purchasing a car versus paying the same amount upfront for the same amount of coverage on an auto insurance policy.
When You Shouldn’t Buy Auto Insurance Before a Car Purchase
If you’ve been saving up for a car or have a down payment toward purchasing a vehicle, you may want to wait until you’ve closed on the sale of the vehicle to purchase auto insurance.
You will have to purchase full coverage if you have a car loan or lien against your car. Full coverage includes collision and liability insurance, so you should buy the policy as soon as possible.
You may get a reduced amount of coverage when you have a large down payment or financing it. You may also want to wait until you have the car in your possession before purchasing full coverage.
If you’ve been saving up for a car and have money saved, you may want to wait to purchase auto insurance until after you’ve purchased the vehicle.
Conclusion
Auto insurance protects you and your assets if an accident occurs. Auto insurance is necessary for financial and legal reasons. If you own a car, you need auto insurance before driving it.
Auto insurance is also necessary to maintain your driving record. You should purchase auto insurance before buying a car if you have bad credit, no income, or are financing the vehicle. You should wait to buy auto insurance if you have some money saved up and a down payment saved toward buying a car.
