Whether you're skeptical of your insurance policy or simply curious about why it's necessary, it's helpful to understand what you're paying for. Aside from the fact that it is required in most states, car insurance is a good investment because it protects you and your assets.
So, why do we require automobile insurance? Why do states require it? How does auto
insurance protect our homes and, yes, even our relationships, and why should we be happy to purchase it?
Whether you're unsure about renewing your policy or simply curious, let's look into the
five reasons you need car insurance.
1. It is mandated by law (in all but two states)
The most important reason you need car insurance is that you have to have it. If you are
caught driving without car insurance, you could face a hefty fine — or even jail time.
According to Car & Driver, the penalties for driving without car insurance in Georgia
are as follows:
First offence: a 60-day suspension of your license and vehicle registration and up to 12 months in jail, depending on the circumstances of your arrest.
Second offence: 90-day suspension of your license and vehicle registration, an $85 fine, and a higher likelihood of being sent to jail by the judge.
Subsequent offences: Same punishment as the second offence, plus an increased likelihood
of going to jail and having your Georgia driver's license permanently suspended.
Yeah, law enforcement isn't very lenient toward uninsured drivers.
It's also worth noting that the government will not un-suspend your license until you
show proof of insurance coverage — and getting insurance with a suspended
license is prohibitively expensive.
The cost of SR-22 insurance, as it is
known, can range from 150 per cent to 400 per cent of the cost of a standard policy.
Allowing insurance companies to gouge you for SR-22 car insurance coverage is the
"hidden fee" of driving without insurance. It can cost you $10,000 or more in extra premiums until your points expire.
2. To make amends for an accident that you caused.
The government mandates car insurance because seat belts are mandated; both devices
protect us from catastrophic scenarios.
Assume you are in a car accident. You attempted to exit Chipotle during rush hour but
failed to notice a car speeding in the right lane, causing them to collide with you. It's a genuine blunder that occurs daily.
Both vehicles have been smashed, and the other driver and her passenger have suffered neck injuries.
In an uninsured world, the other driver and her passenger could sue you for 100 per cent of their medical expenses, loss of use, vehicle damage, and other damages. You'll be lucky if your total bill is under $100,000.
That's one pricey burrito — and we haven't even accounted for the costs of repairing or
replacing your vehicle.
It's important to note that when an uninsured driver causes an accident, everyone
loses — not just the uninsured driver. Because the accident victim cannot obtain the funds they require, their debt with interest accumulates (and pulverizes their credit score).
When personal injury law is involved, and some ambulance chaser multiplies their victim's entitled compensation, the at-fault driver must wait for the financial axe to fall (and their commission).
The government must devote courtroom time, public attorneys, and tax dollars to the
inescapable legal dispute between the drivers. They, too, must pay for damage to public property, such as fences and guardrails, out of pocket.
3. To safeguard your assets
Assume you are involved in a $50,000 accident but only have $5,000 in your bank account.
The lawyers for the other driver can legally seize additional assets in your name to cover what you owe. This includes your investments, car, and even your home. Yes, a fender bender can cost you your home.
Remember that liability insurance protects your net worth rather than you. It establishes a "buffer zone" between the victim's owed compensation and all of your belongings.
As a result, when you purchase a home, you should increase the liability limits on your auto
insurance. A buffer zone of 50/100/50 is a much larger buffer zone to protect your home equity.
4. It provides everyone with peace of mind.
The final reason you need car insurance is that it provides everyone with peace of mind.
How would you feel if every time you left the house, you could be hit by another driver
and left with $136,261 in bills until the other driver paid you back?
I'd be scared to leave the house. I'd sell all of my cars and begin saving for a
helicopter. With so many careless drivers on the road these days, I prefer a system in which everyone is required to have insurance. An auto insurance policy does not make them better drivers, but it does protect you from being harmed due to their carelessness.
5. Replaces a stolen vehicle
Consider the following scenario: you've just finished your shopping and are on your way to
your parking spot, only to discover it's empty. Unfortunately, we're all familiar with that sense of foreboding. At the very least, you can put money
towards a replacement vehicle with car insurance (assuming you've selected the theft option).
Conclusion
Insurance may appear to be a scam at times, but it is essential to keeping society running. It promotes mental health, safeguards livelihoods, and keeps our courtrooms clear.
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