Besides getting you legal to drive in your state, what is the point of vehicle insurance? It might help first to understand what car insurance actually is.
Personal vehicle insurance is a contract in which you agree to pay an insurance company consideration (money) to obtain protection in the event you cause an incident to another person’s body or property. You agree to pay a smaller amount (the premium) to have coverage for a possible larger payout if you cause an incident to protect yourself against financial loss.
This is called Liability coverage and is most often split between Bodily Injury and Property Damage. The actual coverage is called your limits. A large portion of the population carry only what is require by the state in which they live, which is called basic limits of liability. You never actually want to use your car insurance since it would mean you caused damage to someone else or their car/property. But if you do cause damage, you have coverage up to your chosen limits for it.
The limits are the caps you choose for your policy. They're set up in your contract with your carrier. For instance, if you have "25/50/25" (as required in Missouri or Georgia) this means you have contracted for the company to pay on your behalf:
- up to $25000 Bodily Injury per person (1st number)
- up to $50000 Bodily Injury per accident (2nd number)
- up to $25000 Property Damage (3rd number)
There are more coverages, higher limits and requirements that vary by state but the above is the heart of car insurance policies, the liability. States want to make sure you have at least a minimum amount of coverage to be legal on the road in case you damage other people or things. Most policies are 6-month terms.
In a nutshell, your state is looking out for the greater good requiring some form of liability car insurance or bond; however, there are benefits besides just being legal.
Any time you get behind the wheel of your vehicle, you are in danger of being involved in an accident. If you are involved in an accident, you’ll find yourself relieved that you have some coverage! Without coverage you could be personally responsible for paying for damages out of pocket; not paying leads to suspensions of driving privileges, lawsuits, fines, et cetera. Car insurance covers up to the limits you choose, per your policy guidelines. It gives you peace of mind helping to avoid significant financial payouts or any depending upon the severity of the incident and the coverage you choose. Because you have insurance you also get help with the claims from professional claims adjusters who help with claims other people make against you in an accident.
These are just the liability benefits. You could also get your car, itself, insured with physical damage (comprehensive/collision) to protect your transportation investment. That’s a subject for another day.
So what’s the point of car insurance? Protection...protection of your wallet and assets. Peace of mind…knowing people can’t come after you until a certain point (your limits). Recently a client upped his coverage to double the state-required and added under-insured motorist coverage for a nominal amount. He did so because he had a scare that could have cost him above his minimum coverage. He said with higher prices of cars these days, it only made sense. The good thing is, that peace of mind didn’t cost much more (under $10/month in his case) even though the carrier is now responsible for twice as much in the event of an accident. And that’s the point of car insurance.
Contact Solo Insurance for more information about car insurance or to request a quote.