Why is Auto Insurance required?
Car insurance is expensive, but states require it for a reason. In case of an accident, it can save you a lot of money and a lot of stress. Here's why you need car insurance.
Sometimes it seems that states mandate us to have car insurance just to make insurance companies rich.
But is this really the case? Or are other factors at work?
Let’s dig a little deeper.
According to the National Highway Traffic Safety Administration (NHTSA), there were 6,264,000 auto accidents in the US in 2015. Those accidents resulted in 35,092 fatalities and 2,443,000 injuries. Property damage occurred in 4,548,000 of accidents.
Those statistics represent the cumulative driving experience of 210 million licensed drivers in the US. That means that there’s about a 3 percent chance you’ll get into an accident of some kind in any given year. That may seem low, but if you do get into an accident and you don’t have insurance, the consequences can be overwhelming and even financially devastating.Back to TopWhy Is Auto Insurance Important?
When you get behind the wheel, you take a risk. You may attempt to be the best possible driver, but you also have to trust that everyone else on the road is driving well and paying attention, too. Auto insurance provides a safety net when drivers make mistakes.
In the event of an accident, you are at risk financially. If the accident is not your fault, and the other driver does not have adequate insurance, you have to pay for all damages to your own car plus pay for any medical bills if you are badly injured.
When you are at fault, you are typically liable for damages to the other person's vehicle as well as the medical costs of injured victims. Additionally, you must cover the repairs to your own vehicle and the costs of legal fees if you are sued. All of your assets are at risk if you are uninsured or under-insured. Back to TopWhy do I need Auto Insurance?
To compensate you for an accident caused by someone else.
As much as you might hate the concept of car insurance, the fact that it’s required can be a major comfort if you get into an accident that’s caused by someone else.
In that situation, you’re the victim and in need of compensation for injuries that you sustained, as well as any damage to your vehicle. Car insurance enables a person who may have no other financial resources, to compensate you for your loss.
Were everyone not required to carry car insurance, you’d likely have to bring a lawsuit against the offending party. Not only would that cost you money in legal fees, but there’s no guarantee that you’d collect compensation even if a court decides in your favor.
A court can issue a judgment in your favor, but they do not enforce collection of the judgment proceeds.
You may be forced to wait years before the defendant is able to make the payment, if they ever pay at all. On the other hand, if you have car insurance, you can usually be compensated by the other party’s insurance company within a few weeks.Back to TopWhat about if I caused the accident?
Let’s say you’re involved in an accident that’s clearly your fault. If you didn’t have car insurance, you can be the person on the other side of a lawsuit. That can cause your credit score to crash and put a cloud of uncertainty over your future.
For example, if you needed a mortgage to purchase a home, the lender would require you to pay off the judgment before you can close on the loan.
Having car insurance enables you to get on with your life, even if the accident is your fault. Sure, your premium will go up after the accident, but you will be able to drive off knowing that the real cost of the accident will be covered by your insurance company.Back to TopSo, what if my car damage?
Car repairs are expensive. A single, seemingly harmless fender bender, could easily cost a couple thousand dollars. In more serious cases, your car may not be drivable.
If you didn’t have car insurance and you were the cause of an accident, you would have to pay out-of-pocket for the repair.
But because of car insurance, your car will be repaired or replaced fairly quickly.Back to TopWhat is Bodily Injury Liability?Is coverage for injuries that you cause to others that you become legally liable to pay for. Your policy will pay for these injuries to other up to the limit of the policy, which you determine at the time you purchase the policy.Back to TopWhat is Property Damage Liability?Is coverage for damage to the property of others, cause by you that you are legally liable to pay for. Your policy will pay the cost to repair or replace this property up to the limit of your policy which you determine at the time you purchase the policy. Back to TopWhat is Uninsured Motorist/ Under-insured Motorist?Is coverage you purchase to protect yourself from those who for whatever reason, do not have liability coverage (or enough coverage) at the time they would become legally liable to you. Coverage can be purchased for bodily injury and in some states property damage as well. Back to TopWhat is Comprehensive coverage?
Is coverage for damage to your vehicle caused by such things as theft, fire, hail, hitting a deer, etc ... Your policy will pay for the cost to repair or the
(ACV) actual cash value, if the vehicle is determined to be a total loss, less the comprehensive deductible that you chose at the time you purchased the policy. Back to TopWhat is Collision coverage?Is coverage for damage to your vehicle caused by a collision or upset. The policy will pay for the cost to repair or the (ACV) actual cash value if the vehicle is determined to be a total loss; less the collision deductible that you chose at the time you purchased your policy. Back to TopWhat if I want to pay out of my own pocket?
Let’s say that you think you have enough money that you could be “self-insured” in the event of an accident. Maybe you have at least a quarter of a million dollars, and feel that you don’t need car insurance.
That may be the case, but do you really want to lose your hard-earned savings in a car accident?
If car insurance does nothing else, it will protect your assets. This is because if you’re determined to be at fault, the other party will pursue your insurance company, not you, to get compensation.Back to TopWhy do business need Insurance?
Business insurance helps protect business and small business owners, like you, from financial losses. These losses can be caused by a variety of risks to your property. Covered risks include:
- Property damage
- Professional errors
Insurance for businesses also known as commercial insurance can cover some of an injured workers’ lost wages. It can also provide access to programs to help them get back to work. Commercial business insurance can help protect you from losses resulting from liability claims.Back to TopWhat is General Liability Insurance?
General liability insurance (GL) helps protect your business from claims alleging:
- Bodily injury
- Property damage resulting from your business operations
- Personal and advertising injury
Commercial general liability insurance (CGL), also known as business liability insurance or general liability insurance, provides coverage for:
- Customer injuries
- Damage to customers’ property
It can help pay for medical expenses as well as legal costs if an incident leads to a lawsuit.Back to TopWhat Is Workers’ Compensation Insurance?Workers’ compensation insurance (also known as workman’s comp insurance) provides benefits to employees for work-related injuries or illnesses including medical care, wages from lost work time, and more. Workers’ compensation insurance covers a deceased worker's family with a financial benefit as well. If a worker's family decides to sue the company, it can also help cover the related legal fees.
Workers’ compensation insurance can help protect your business and employees in events such as these:
- An employee slips on ice, injures himself while walking up the stairs to the office, and requires an emergency room visit and weeks of recovery time.
- An employee injures her back lifting a box of printer paper and requires a doctor’s attention, medication and physical therapy.
- An employee returning to the office from visiting a client is injured in a car accident and requires hospitalization.
With workers’ compensation insurance, will help pay for the medical expenses needed to treat these job-related injuries and illnesses. Workers’ compensation will also help employees keep their income while they take time off to recover from an injury.Back to TopWhat is Special event insurance?sometimes referred to as one-day event insurance is an insurance policy that helps protect your investment in a specific event, such as a wedding, quinceañera quiceanera, concert or a soccer, baseball or any sports tournament. Also can help you protect conferences, receptions, exhibitions, and festivals Event insurance may help cover your costs if you're found responsible for property damage or an injury caused during your event.Back to Top