Almost every state has laws stating that people have auto insurance, but the actual regulations regarding auto insurance vary from state to state - so the type of coverage that you require depends on the state in which you live in.

Even if there are no laws, it is highly recommended that you have some form of cover; otherwise you may end up paying out huge amounts of money in the event of an accident, or even losing your home, in a worst-case scenario.

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Ways Most People Overpay for Auto Insurance

Everything seems to be expensive these days and auto insurance is no exception. As a result, all of us need to be careful when shopping for insurance coverage for our cars.

Somehow or another there always seems to be a catch and we end up paying more for certain things than we should. It's like going to the grocery store and loading up on something you thought was for sale - or so they advertised - just to come home and find the brochure from the other neighborhood store in USA advertising the same items for half as much as you just paid. That's just plain irritating. Sometimes it's irritating and costly enough to return the items to the first store and go stock up at the second. It depends upon what you are buying.

With car insurance we are talking a few more dollars and a longer shelf life, and there are several ways people overpay without realizing it. First, just like the grocery store, they don't take the time to compare enough. When you think of the fact that car insurance is protection for you, your friends, family and passengers, it is essential to compare. After all, if there is, unfortunately, an accident, you want to be certain that you are covered the best you can be for the best price you can pay.

Another way that people overpay is to have too low of a deductible. The higher the deductible, the lower the premiums. Now, if you drive a lot and would be in a financial bind paying out $500 to $1,000 for an accident (if the other person's insurance didn't pay), and it is easier for you to pay more for the premiums on a monthly basis, then a low deductible is smart. However, if you can afford to pay a higher amount if there is an accident, you will cut your premiums by quite a bit and often come close to breaking even.

Other ways of overpaying include purchasing full coverage on an older car and/or a car that is paid off. There are some types of coverage you may not need. These are things to research not only with an insurance agent you know and trust, but on the internet and by calling and doing your homework.

There are various ways that you can pay too much for car insurance depending on your situation. If you have two cars, one spouse doesn't work and the other does, you will save money listing one car as a leisure car. Also, check with your cell phone company to find out if you have coverage for roadside assistance, such as the auto club and insurance offer. I have friends that have their coverage free or very inexpensive through their cell phone and do not have to pay on their insurance policy.

These are just a few ways people inadvertently overpay for their car insurance. Take the time to check and see what is best - and most reasonable - for you before you purchase a policy.

Car Insurance Q & A

Question: If someone borrows my car and crashes it, does my insurance apply, or does theirs?
Answer: Generally speaking, the liability follows the car, so your insurance would apply, as it is your car. The liability insurance of the driver often pays the additional amount if the costs payable are above your policy limits.

Question: If a child goes to college with mom or dad’s car, are they covered under the parents’ personal auto policy?
Answer: This can vary from company to company. Check with the insurance provider and make sure that the child is listed as an additional driver. Do this before the child goes to college, and it will avoid unnecessary disputes later on.

Question: Do I need ‘gap’ insurance?
Answer: If your vehicle is on finance, and its value is now less than the amount you owe, then yes you need gap insurance. If you owe less than its value, then no, you do not need gap insurance.