Becoming an Adult

4 Disasters You Face With Minimum Auto Insurance

6 May 2014

Robin King

Cutting monthly expenses, such as auto insurance premiums, is one way for young adults to tackle debt and grow their savings. However, plans designed to meet only a state's minimum requirements backfire in a big way during certain situations. Taking out a little extra coverage now helps you avoid these four common disasters that strike underinsured drivers.

Many states set high limits for minimal vehicle coverage, but other areas allow drivers to opt out of important protections altogether. This means that tangling with an uninsured driver could become a battle in a courtroom. Accidents are stressful enough without litigation, so let your insurance company handle those details instead by investing in a better plan.

Your Lender Wants The Car Back

Buying a used car with cash allows you to choose any type of insurance. A vehicle purchased with a loan is a different story because auto lenders require you to protect the investment with collision, liability and comprehensive coverage. This means your insurance plan covers almost all types of damage so the lender doesn't lose money. If you let your insurance lapse or downgrade it after a few months, expect to face:

• Insurance charges added to your loan amount as the lender starts its own policy for the car.
• Repossession by the lender after a specified grace period.

You can't sneak a change past the lender either. Insurance companies notify both state authorities and lenders when a particular driver lowers their insurance coverage or stops paying for their plan.

Thieves Disappear With The Vehicle

Park that car in a locked garage if you gamble with your finances by choosing minimal auto insurance. Without a comprehensive insurance plan, a bold criminal can make off with your car and leave you fully responsible. Insurance companies only pay for these kinds of claims when the owner has this extra protection. Too many drivers only discover this fact after a crime, leaving them holding the entire bill for a replacement vehicle unless the criminal is found.

Of course, you still need to take reasonable steps to protect the car no matter how much insurance you have. The insurance company may turn down your claims if they discover you made it unusually easy for a thief to gain access to the car. Don't leave the vehicle running as you warm it up or run into a convenience store.

Natural Disasters Strike

With new tornado and flood records being set across the country each year, it's high time to protect your vehicle against acts of nature as well. Waking up to a waterlogged or flipped car is no fun when you skipped over extra coverage. Car insurance providers will generally include a range of natural emergencies in their comprehensive plans, including:

• Falling limbs knocked loose by high winds.
• Debris tossed through the windshield by a tornado.
• Earthquakes that leave the vehicle in a sinkhole.
• Flooding and water damage due to heavy rainfall.
• Forest fires or acts of arson.

A Friend Sues You

Sharing a ride with a friend or co-worker saves gas and cuts down on pollution. Don't let that relationship fall apart over serious injuries and financial woes by sharing your car without carrying personal injury protection. This insurance coverage pays for injuries to you and your passengers after a collision, preventing friendship-ending lawsuits that could arise if you are found at fault for an accident.

Pick full coverage auto insurance and enjoy peace of mind because you can make a call for help no matter what happens. While drivers with minimum protection are paying a few bucks less each month, they are also missing out on support when a hurricane sweeps through or a friend is hurt. Spend a little more now on auto insurance to save hundreds of thousands of dollars later.

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