Alternatives to Car Insurance: Can I Put Money in an Account to Pay for Damages Instead

Having auto insurance coverage in place is a legal requirement in all states. Some jurisdictions allow a driver to post a bond instead of buying a car insurance policy. A person who chooses this option must put up a certain amount, which is deposited with the state or a bonding company licensed to provide this type of product.

Buying a bond for insurance purposes is not the same thing as putting the funds into a savings account. If the money is put into a personal savings account, the accountholder receives a certain amount of interest on the funds. No interest is payable on the money used to buy a bond, though.

Liability Coverage Basics

Liability auto insurance coverage is put in place to pay the claims made by the occupants of the other vehicle when an accident occurs. Having this type of protection in place is crucial for drivers, since the insurance company pays out on these claims, up to the policy limit the driver has chosen to buy, instead of the driver having to pay for them personally.

This type of coverage has two elements: bodily injury and property damage. Bodily injury liability insurance pays for personal injury and economic loss claims made following an at-fault accident. It covers medical bills and rehabilitation costs incurred by accident victims. In some states, the bodily injury liability portion of the policy also pays out on claims for pain and suffering.

If an accident victim was left unable to work for a time following an accident, he or she can also make a claim for lost wages. In a situation where the accident victim was permanently disabled and unable to return to work, the economic loss claim would be calculated based on the accident victim’s projected earnings.

The property damage liability part of the policy pays for repairs to the other driver’s vehicle following the accident. It also pays for the cost to repair or replace public property damaged or destroyed in the incident. Public property includes buildings, sheds, fences, guard rails, sign posts and mail boxes.

Keeping Auto Insurance Costs Down

Rather than looking at one of the alternatives to buying a car insurance policy, a much better choice is to consider ways to keep coverage costs down. Shopping around and getting quotes from several companies before choosing one is a great way to find the best rates on the coverage that a driver needs.

Insurance providers also offer discounts to their customers in various circumstances. One way to qualify for better rates is to maintain a clean driving record for several years. Insurance providers also offer discounts to customers who insure more than one vehicle or who buy more than one policy (home and auto) from the same provider.

To find out about available discounts, contact an insurance company’s customer service department to ask for a list of price breaks that it offers to its policyholders. That way, the buyer will be sure that he is getting all the applicable ones.