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Is Auto Insurance Absolutely Necessary?

Todays Date: December 11, 2018

This may seem like a naive question: but why is Auto Insurance necessary? Simply put, auto insurance is an agreement between a policy holder and the auto insurance company. The policy holder pays a premium, and the company agrees to pay for losses as dictated by the specific policy.

Auto Insurance provides coverage of medical expenses, property loss and liability. If an accident occurs, and you are at fault, the insurance company will likely have to pay for your medical bills and property bills. Additionally, it would have to pay for any injures that were caused by you to the other driver as well as any damages that were caused to his car. Similarly, if you are involved in a car accident and the other driver is at fault, their insurance company would have to cover your losses as specified by their insurance plan.

This type of agreement effectively shields you from a potential lawsuit if you get into an accident. Furthermore, if you are the victim at a car accident, that is, involved in a car accident caused by someone else, your insurance may cover your medical bills and property damage as well (this is determined by your specific plan). In this event, your insurance company may decide to sue the other driver to recover their costs.

There is a large number of parameters that affect your auto insurance premium: your age/gender/marital status/geographical location/credit rating/education/years of driving experience, as well as the type of vehicle you want to insure, the number of accident claims you’ve had, driving distance per year, miles driven to work, business use of your vehicle, theft protection and safety devices installed in your car, and whether you have multiple drivers and cars on your policy. For example, a male driver with multiple violations and bad credit history would have to pay a higher premium than a woman who has been driving for 20 years without any driving incidents.

Living in a big city is likely to increase your premium because the chance of being involved with a car accident in an area that is highly congested are greater than, say, in a rural area where there aren’t as many cars. It is possible to receive a discount on one’s insurance by including safety and theft deterrent devices on cars, as these have been proven to reduce risk of injury and loss.

In order to get the cheapest premiums on your Auto Insurance, all you need to do is simply obtain multiple quotes from various insurance providers. Using the internet, this becomes almost effortless as most companies will offer you a quote in minutes. Furthermore, some quotes are bound to be cheaper than others, since every company has its own equation for calculating premiums (some assign greater weight to certain factors, such as age).

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