Why do i need Car Insurance

There are many reasons to insure your car and to keep it insured. There will be times in your life where you will be compelled to insure a vehicle, either by your state (which most likely requires that you carry at least liability insurance coverage), or a bank through which you have financed a vehicle (banks do not care as much about liability insurance, their concern is protecting their investment, ie your car).

While complying with the laws of your state and rules of your bank may be good reasons to have insurance coverage on your vehicle, neither of those reasons actually answers the question being asked, “why car insurance is needed.” There are reasons you should carry insurance on your vehicle without having to feel compelled by someone else to do so.

Think to yourself, what make the world go round? Scientific answers aside, the answer for most people is money. Money makes the world go round. Why bring this up in an article about the need for car insurance? The answer to that question is another question, what is an insurance policy designed to do for you after you purchase it? An insurance policy is designed to protect you in a monetary way in the event of an accidental loss.

While you may pay premiums for years without a claim, or might never have a claim, the above mentioned fact remains the same. Call it the IF factor. IF you had an accident that caused several thousands dollars of damage, maybe even tens of thousands, would the several hundred dollars you pay each year for car insurance be worth it? You bet! Some people think, “I’ll just save the money, and if I have an accident, I will pay for it myself”, be real with yourself. Some accidents cost insurance companies hundreds of thousands of dollars, and on rare occasions, millions. It would take a long time of saving $500-$1500/year to pay that type of bill yourself. The liability protection you receive from a car insurance policy is reason enough to carry insurance on your car, but there are more as well.

When is the last time you took a loan on a car? If you are like most people, it has not been very long. Insurance acts as a protection to your investment. Sure, the bank requires it, but they only care about covering themselves for what you borrowed or still owe, they really don’t care about protecting the money you have already paid them. You should! While a car and a home differ in the way their values work, you should try and view them similarly. Each time you make a payment on your loan, you have X dollars of equity in your car. If you do not carry full insurance on your car, when an accident happens, your money will most likely go bye-bye. Don’t let this happen to you.

There are other types of coverage involved in auto insurance policies, but liability coverage and physical damage coverage are the two most important coverages involved. Don’t let yourself be un-insured or under-insured. Think about the IF factor and protect yourself properly.