It seems like everyone is pinching pennies these days. In society’s constant battle of paying bills like a responsible adult and having a little fun, many find themselves trying to determine which bills they can eliminate. While auto insurance can be expensive, it’s one bill you really don’t want to miss.
There are several reasons all drivers need automobile insurance. One of the most important is that the law requires it. But why? Well, in the event of an accident, auto insurance can really save you a lot of time, money, and stress.
Statistics for Auto Insurance
Sometimes understanding why you need something is as easy as looking at the numbers. The National Highway Traffic Safety Administration, also called NHTSA really helps us see why insurance is so vital. For example, according to their 2019 report, there were nearly 35,000 fatal crashes in 2017. In addition, there were about 1,889,000 crashes resulting in an injury, and 4,530,000 crashes resulting in only property damage. That’s 6,452,000 crashes in 2017 alone. Nearly 6.5 million. And these numbers don’t even include the minor fender benders that go unreported.
One of the biggest things people fail to realize about automobile crashes is that they can happen to anyone. You could be a terrific driver but because there are people out there who aren’t, you may still wind up in an accident. Having insurance protects you and your family financially from the fallout. That being said, here are the top reasons you should have auto insurance.
Automobile Insurance Compensates You for Accidents Caused by Other People
So, what happens if you are in an accident caused by another person? Shouldn’t they be financially responsible for any damages or injuries? In short, yes. Under those circumstances, you’re the victim and they should cover the costs of any injuries or vehicle damage. Medical bills and car repairs can add up quickly. The other person’s car insurance helps them compensate you when they may otherwise be unable to do so.
If the law didn’t require everyone to cover insurance, then you might have a costly lawsuit ahead of you. And, there’s no guarantee the lawsuit would end in your favor. Even if you do get a judgement in your favor, the court may not enforce the collection of the compensation. Either way, you’re out a lot of money and left with only a stack of bills. It could take years before the other person is able to pay you back, if they do at all. Thankfully, car insurance companies work much faster. You’ll typically receive your compensation within a few weeks.
Auto Insurance Compensates Others for Accidents Caused by You
Even the best drivers can make mistakes. Let’s imagine that happens and you’re in an accident that is your fault. Without insurance you might be on the wrong side of a lawsuit. This is especially true if the accident resulted in significant expenses to the other party. If you’re not able to pay them back for the damages, then they may take legal action. Losing a lawsuit can crash your credit score and greatly impact your future. If you’re trying to buy a home, you could be denied a loan if the judgement hasn’t been paid off.
Insurance protects you too. It lets you get on with your life by paying those expenses. Yes, the cost of your insurance will likely increase after the accident. However, you don’t have to worry about losing your home or struggling through the financial ruin of paying expensive medical and mechanic bills.
Vehicle Insurance Protects Your Assets
Some people make the argument that the chance of them being in an accident is so low, and they make so much money, that they don’t need insurance. The truth is, car repairs are expensive. Medical bills are expensive. It doesn’t take much to pile up quickly after an accident. Not to mention the fact that you worked hard for your money. Do you really want to throw your savings away for a car accident? What if you’re at fault and someone dies or is severely injured to the point of needing lifelong care? Are you willing to pay for their care for the rest of their life?
Insurance protects you, your savings, and other assets such as your home. If you’re the cause of a horrible accident then the other party will go after your insurance company, not you. If you don’t have an insurance company, then they’ll focus their attention on getting what they need directly from you.
Auto Insurance Protects Your New Vehicle
If you are purchasing a car and choose a financing option to pay for it, the lender typically requires insurance. This is because the loan itself is secured using the vehicle. That means that, if you don’t make your payments, they can take the car back. However, if something happens to the car then the value drops. When this happens, the vehicle may no longer be worth what you owe. This makes it impossible for the lender to get the value they need out of the car to cover your remaining loan payments.
Without insurance, you probably won’t get financing on the car you want to buy. You’d need to either purchase it with cash or some other loan secured by other means. However, if you have collision and comprehensive automobile insurance then this satisfies the lender’s needs. These insurance coverages protect the car’s physical value. Should something happen to the vehicle, the lender can then collect the remaining value of the loan from your insurance company.
Car Insurance is Required by State Law
This is probably the most obvious reason to have auto insurance. The reasons above support the law’s decision to make automobile insurance mandatory. If everyone has it, they’re all protected in the event of an accident. If no one was forced to carry auto insurance, then a lot of people wouldn’t. This greatly increases everyone’s risk for financial troubles with the nearly 6.5 million accidents.
The best thing you can do for yourself is to understand your insurance policy. Understanding your coverage helps you see if you have inadequate coverage or too much. You can then make decisions on switching coverage types, amounts, or even companies based on what you learn.
If you need help understanding insurance or would like a quote, please reach out to Complete Financial Group. We’re here to help you with all your insurance needs.
