In North Carolina, drivers are required to have liability insurance coverage in place. If they are the at-fault driver in a car accident, this type of insurance pays for the injuries sustained by the occupants of the other vehicle. The state sets minimum levels of coverage, but car insurance buyers are always free to buy a higher level of protection if they choose to do so.
When considering what kind of liability insurance to buy, it’s a good idea to learn something about insurance regulations in neighboring states. For example, Virginia does not require drivers to have liability coverage. Being involved in an accident with a driver from that state may make it difficult to collect damages. A better choice is to buy uninsured or underinsured motorist coverage to provide adequate protection.
Collision and comprehensive coverage is not required in North Carolina, but it’s usually a good idea to have it in place. When a car insurance buyer gets a loan to pay for his or her vehicle, the lender will generally insist that this type of coverage be purchased as a condition for advancing funds.
The reason the lender wants protection against damage to the vehicle if it’s involved in an accident (collision) or damaged by fire, vandalism, or is stolen (comprehensive) is that it wants to protect its investment. Until the loan is paid off in full, the lending company is a part owner of the vehicle.