Do I have to get full coverage auto insurance for my new car?

That depends on if you financed the vehicle or not. If you financed the vehicle, the lien holder will most likely require that you carry full coverage insurance. They will also require that you send in proof of insurance coverage. If you do not provide proof of insurance or do not maintain auto insurance coverage for the life of the loan, the bank has the right to repossess your vehicle or take out an auto insurance policy on the car and send you the bill.

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If you bought the car with cash and did not finance any of the cost, you do not have to get full coverage car insurance. It is not recommend to only carry liability insurance though because it does not provide any coverage for your vehicle if you get in to an accident or the car gets stolen. For example, let’s say you pay $20,000 cash for a car and the car gets stolen a couple of months later. If you only have liability coverage, the insurance company will not give you any money for the vehicle, so you are basically out $20,000. That’s why it is usually a good idea to keep full coverage auto insurance on a newer vehicle even if it’s paid off.