When Is Liability-Only Coverage Enough?

Do you realize that you can pick and choose your auto insurance plan to meet your needs? Most people know this, yet they might not know what types of coverages to pick. For some people, full-coverage insurance is necessary. For others, liability-only coverage is plenty. If you want to save money by having liability-only insurance, you might wonder when this option is enough. Here is some information to help you learn about this option.

You Do Not Have a Loan

The first factor to consider is your car loan. Do you have one? If not, you are free to choose a liability-only auto insurance plan, as you do not have a lender telling you to buy specific coverages. If you have a loan, it is a different story. Most lenders will not let borrowers have liability-only plans. Instead, they require full-coverage plans. Lenders reduce their risks by requiring this with all their loans. As a result, this factor might stop you from even considering a policy that only offers liability insurance.

You Can Handle the Loss

If you passed the test when it comes to having no loan, you can move on to the next factor, which is your potential losses. Liability coverage does not pay for damages you cause to your vehicle. It only pays for damages you cause to others. Therefore, if you wreck your vehicle and end up with damages or a totaled car, you suffer the loss. Before you choose liability-only coverage, you should consider if you can handle the loss. If you totaled your car and had to scrap it, could you handle it? If so, liability coverage is probably enough. If not, you might want to add more coverage.

You Are a High-Risk Driver

The last factor is your risk level. If you are a high-risk driver, you might pay higher rates for coverage. If you meet the other conditions, choosing a liability-only plan might be the best option for your budget. Paying for liability coverage is more affordable than paying for full coverage. Because of this, many high-risk drivers choose plans that only include liability insurance.

As you read through this information, you might realize that liability-only coverage is not right for you. If so, you can choose other types for your plan. If liability-only is right for your situation, you can choose this option. You might want to talk to an auto insurance agency for more information.