I don't have a Car Loan, do I have to Purchase Car Insurance?
Answer:
When you finance a new car, the lender usually requires


you to purchase full coverage auto insurance as a condition of the loan. This full coverage protects the bank by ensuring that should your car get stolen or totaled, the bank loan will be paid off by the insurance.

If you have paid off the loan or purchased a car with your own funds, you will not need to purchase full coverage insurance but you will still need to purchase basic liability insurance.

Most states require that you purchase liability auto insurance regardless of the car’s value or whether you have a bank loan. Of the few states that do not mandate basic liability insurance such as New Hampshire and Wisconsin, “financial responsibility” laws are in place. These laws require people involved in auto accidents must provide proof of their financial responsibility up to specified limits. Most people comply with these laws by purchasing liability insurance.

Once you’ve paid of your loan, you can drop the full coverage if you want but you will need to keep the liability insurance as mandated by your state’s laws.
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