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The Purpose Of Auto Insurance
Many motorists often wonder what the purpose of auto insurance is. Why is it illegal to not have it and why does it often cost so terribly much? Many people have a vague understanding of auto insurance as a simple protection against monetary loss that may be incurred from accidents which may not be their fault. Auto insurance however can provide a broad range of services to help make sure you are not put into a financial disaster! For example, there are many coverage options that can include a person’s health care costs well over half a million dollars, and property damages that can cover the cost of just about any mainstream vehicle. Some auto insurance policies also include several other options such as rental reimbursement and emergency assistance.
Besides the insurance related to collisions and accident, comprehensive coverage can also protect against other unexpected events. These events vary by insurer and of course by policy, but often will cover acts of mischief, vandalism, flood and theft. The purpose of this type of coverage is usually to not only insure the motorist of receiving adequate monies in a time of loss, but also can assure banks with a sound investment when lending money. Many banks will hold a standard of auto insurance on a car loan so that even if a lendee loses the vehicle in an accident or unexpected emergency, the cost of the damages to the vehicle, even if the emergency involves things other than just other motorists.
Auto insurance also has been extended to a use that many consider to be controversial. GAP insurance is another type of auto insurance that will provide a consumer with protections that a standard auto insurance company will not. The purpose of this auto insurance is to insure that even if the consumer owes more money than what the car is worth, and the damage to the car has exceeded what the car is worth, the lender will still be paid for the difference of the loan.
Did you know that you can even be covered if you have a run in with an uninsured motorist? Many dont know this, but there is a special fee know as the uninsured fee that will cover you if you have this type of run in. Im sure you feel more secure now that you know you will be able to pay for damges to your car even if you have an accident with an uninsured motorist.
Auto insurance extends its reach to everyday buisness as well, protecting buisness owners from statistics that would sometimes seem too grim to venture off into. Drivers for trucking companies, delivery companies and other transportation based businesses rely on auto insurance to make sure their job will be worth doing even with the high rate of accidents we have today.
Auto insurance tends to be on the expensive side, which brings us to the next purpose. Often a person with a better driving record will have lower rates than a person with a bad driving record. In this way auto insurance rewards those who are responsible, reasonable drivers. It also discourages aggressive driving and dangerous habits of other drivers. Nobody wants to get into an accident, especially if it will mean more and more money per month out of their pocket!
The final purpose of auto insurance is to discourage lavished and unreasonable automobiles. Let’s face it, if you have a half million dollar car, someone hasto insure it. So if you can’t afford the few thousand dollar payment every month for that kind of vehicle, you probably wont even think about buying it. In a way this makes things more practice for new drivers to get less expensive, more timid cars. The safety rating as well as the make and model of the car can make a tremendous difference on the payment amount for insurance. This makes auto insurance a reality check for those of us who just want that really fast car to go…. really fast!
Now you know that there is more to auto insurance than you thought. So, even thought the price might be higher than we’d like, its all worth it because we dont have to worry about how we will pay for our cars or hospital bills if an accident were to occur.
Before you get an auto insurance quote online, make sure you check out Jerry Dodd’s excellent site on auto insurance and car insurance.
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