When you purchase a vehicle, your next purchase needs to be insurance for that vehicle. Aside from a mortgage, the purchase of a car or truck is often the most expensive thing that the average American owns. There are a few different types of car insurance, but for simplicity’s sake, let’s assume you are an average driver who uses your car only for personal transportation. In this case, there are really only two choices of car insurance for you to choose from: comprehensive and liability.
If you took any kind of loan out in order to purchase your vehicle, then your bank will require that you keep comprehensive insurance on your vehicle until your loan has been paid off. This is in order to protect themselves from the risk of accidents or damages to your vehicle before you have paid them back money and interest. After your loan has been paid in full, many people switch to liability without realizing what liability insurance really is.
Liability insurance is minimal coverage, so it doesn’t cost as much as comprehensive. However, it covers the bare minimum, and many people are surprised to learn that in an accident, it does NOT cover the damages done to your car. If you are at fault in an accident (and therefore liable) your insurance will only cover the damages due to the other vehicle.
For most people, a good rule of thumb to ask yourself when looking at car insurance is to think, “If my car were totaled today, could I afford to replace it out of pocket?” If the answer is yes, go ahead with liability. If the answer is no, then comprehensive is best. For questions regarding car insurance, give us a call here at Curtis Helms Insurance today.