If you own a car, auto insurance is not just an option. It is a legal necessity, even you are in the get paid to drive program or free car program. If you are involved in an accident or have your car stolen, owning the right kind of auto insurance can help you to ease a difficult situation.
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.
Almost every state requires you to have auto liability insurance. All states also have financial responsibility laws. This means that even in a state that does not require liability insurance, you need to have sufficient assets to pay claims if you cause an accident. If you don't have enough assets, you must purchase at least the state's minimum amount of insurance. But insurance exists to protect your assets. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident since accidents may cost far more than the minimum limits mandated by most states. If you've financed your car, your lender may require comprehensive and collision insurance as part of the loan agreement.
If you lease a car or get a free car in an advertising program, you still need to buy your own auto insurance. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You'll need to buy this coverage in addition to the others that may be mandatory in your state, such as auto liability insurance.
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