When you finance a car, most lenders will require you to carry a full-coverage auto insurance policy. This is because your vehicle serves as collateral for your loan, and the lender wants to protect their investment. While liability insurance only covers property damage and medical expenses for other parties when you’re at fault for an accident, full coverage goes beyond that to provide additional protection.
Understanding Full Coverage vs. Basic Coverage
Full coverage auto insurance typically includes three main components: liability coverage, collision coverage, and comprehensive coverage. Liability coverage is the minimum insurance required by law in most states, including North Carolina. It helps cover the injuries and damages you may be liable for in an accident.
Collision coverage, on the other hand, helps pay for repairs or replacement of your vehicle if it’s damaged in a collision, regardless of who is at fault. Comprehensive coverage protects against non-collision incidents such as theft, vandalism, or natural disasters.
In contrast, basic car insurance policies usually only include liability coverage. This means they cover the damage you may cause to other people and their property. Basic coverage helps pay for medical bills, repair or replacement of property, and any legal fallout resulting from an accident.
Do You Have to Have Full Coverage on a Financed Car in North Carolina?
In North Carolina, the state-required minimum amount of car insurance you’ll typically need is liability coverage. This is the basic coverage that helps pay for injuries and damages you’re liable for in an accident. The most commonly required liability limits in North Carolina are $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage.
While liability coverage is the minimum requirement, most lenders will require you to have collision and comprehensive coverage in addition to the state-required liability coverage. This is to ensure that their investment is protected in the event of an accident or other covered incident.
What is the Least Amount of Car Insurance Coverage?
The least amount of car insurance coverage you can have is the state-required minimum liability coverage. This coverage varies from state to state, so it’s important to check the specific requirements in your state. In North Carolina, the minimum liability coverage limits are $25,000/$50,000/$25,000, as mentioned earlier.
While the state-required minimum may be the least amount of coverage you can have, it’s important to consider your individual needs and the value of your vehicle. Depending on your circumstances, additional coverage beyond the minimum may be beneficial to protect your assets and provide peace of mind.
What is the Most Basic Car Coverage?
The most basic car coverage is liability coverage. This coverage helps pay for injuries and damages you may be liable for in an accident. It typically includes bodily injury coverage per person, bodily injury coverage per accident, and property damage coverage. The specific coverage limits may vary depending on the state.
While liability coverage is the most basic form of car insurance, it’s important to assess your individual needs and consider additional coverage options such as collision and comprehensive coverage. These additional coverages can provide greater protection for your vehicle and help cover expenses in various scenarios.
Also Read: How To Sell A Financed Car Without Paying It Off?
FAQs
Is full coverage required on a financed car?
While full coverage is not legally required in most states, lenders often require it when you finance a car to protect their investment.
What does full coverage car insurance include?
Full coverage typically includes liability coverage, collision coverage, and comprehensive coverage.
Can you have full coverage on a leased car?
Yes, full coverage is often required on a leased car because the leasing company wants to protect their asset.
How much does full coverage car insurance cost?
The cost of full coverage car insurance varies depending on factors such as your age, driving record, location, and the value of your vehicle.
Should I get full coverage on an older car?
Whether or not to get full coverage on an older car depends on factors such as the value of the vehicle and your individual circumstances. It may be worth considering if the cost of repairs or replacement would be a significant financial burden.
Conclusion
When financing a car, most lenders will require you to carry a full-coverage auto insurance policy. While liability coverage is the minimum requirement, additional coverage such as collision and comprehensive is typically necessary to protect your investment and comply with lender requirements. The least amount of car insurance coverage is the state-required minimum liability coverage, but it’s important to assess your individual needs and consider additional coverage options to ensure adequate protection.
