Reader’s Question:

I plan to a car next month. But with my tight budget, I think I can only afford a used car. Do I need to insure the car even if it’s used and has a low market value? If yes, can you give me some tips on how to buy cheap used car insurance?

Brent

Baton Rouge, LA

In LA, it is mandatory that each registered car owner get liability insurance-whether it’s a used car insurance or not. The state requires each insurance policy to have the 10/20/10 minimum liability limits. This stands for $10,000, $20,000, and $10,000 worth of coverage for bodily injuries of one person, bodily injuries more than one person, and property damages, respectively.

Just like in any other state, an insurance policy is used as a proof of financial responsibility while a person is driving a car. This is to make sure that the driver who’s accountable for the damages he has caused can take care of his financial obligations. Therefore, it is not really the type of car that matters, but the ability to be financially responsible while you are driving that car.

The car’s market value will only matter when the car insurance company computes for your car insurance policy rate. Often, companies use this factor to know how much it would cost them to repair or replace your car if it gets damaged, totaled, or lost. If they find that the cost of repair is higher than the car’ market value (this normally happens with high powered or custom-made cars), then they would charge the customer a high rate. If the repair wouldn’t cost that much, then an average rate would be given.

One way to lower down your policy rate is to drop the insurance for physical damage (this is the comprehensive and collision coverage). If you think you can handle the repair of your vehicle on your own, then I suggest you avoid getting this type of insurance for your used car.

Other than this, try to drive more safely, and avoid getting into accidents or making traffic violations because each of these incidents could pull your car insurance rates up.