Why is Insurance Important? 7 Ways Car Insurance Can Save Your Bacon

why is insurance important

According to an Insurance Research Council (IRC) study, 13% of American motorists have no auto insurance, and that number is expected to rise.

Whether it’s to save money, avoid the hassle of signing up, or because the state doesn’t require it, skipping car insurance can have dire consequences if an accident occurs.

Why is insurance important? Here are seven strong reasons why the cost of protecting your car is totally worth it.

1. You Save Money in Case of an Accident or Damage

Basically, insurance serves one main purpose: it saves you money in case an accident happens. You pay a smaller amount now to avoid paying large sums of money later.

Buying a car insurance policy covers, at a minimum, three important things:

  1. Expensive car repairs when it’s in a collision
  2. Medical expenses (personal injury protection) for you and your passengers (optional) in case of an accident
  3. It protects your expenses should you cause property damage while operating your vehicle

These three coverage areas fall under the category of compulsory (required by law) insurance. Even if you opt for a lower priced policy with basic coverage, these will always be included.

The monetary coverage limits of each and the cost of your annual premium depends upon your insurance company and policies offered.

2. It Protects You From Uninsured Drivers

Ironically, having car insurance protects you from uninsured drivers, particularly if you’re the victim of a hit-and-run. This is known as uninsured or underinsured motorist coverage (also commonly called bodily injury caused by an uninsured auto.)

Usually, people opt for the minimum coverage limit which is $20,000 per person and $40,000 per accident. However, it’s recommended that you opt for higher coverage to have more protection and peace of mind.

3. It Can Cover Substitute Transportation and Travel Expenses

Some insurance companies and policies give you the option of renting a vehicle for free while your car is being repaired following an accident.

There may be restrictions on the size of the rental vehicle and how many days you can drive it under your plan. However, having this supplemental coverage is one less thing you have to worry about if you get into an accident and don’t have access to transportation.

Rental car prices are tough to predict since they vary by company and state, but let’s say you’d normally pay $35/day to rent a compact vehicle. If your car is in the shop for ten days, that means you’d end up paying $355 out of your pocket if you didn’t have car insurance. Add in the price of gas and that cost easily tops $400.

For just a few dollars on your policy, you’ll get out of paying this expense should you need to rent a car. And speaking of rental cars, most insurance policies will extend your coverage in case you get into an accident while driving a rental car.

Travel expense coverage is also nice to have if your accident happens far from home (usually 50 miles or more for most insurance companies.) Your policy will cover meals, lodging, and transportation back home or to a travel destination. You may also be allowed a return trip to retrieve your car.

4. Coverage if Your Car is Stolen

Few things can make the stomach sink faster than discovering your car has been stolen. If the car is not insured, multiply that feeling by about a hundred.

Could you afford to replace your wheels if someone stole them? For many people, that answer is no.

While car insurance won’t pay for a brand new vehicle, it will pay for the value of your car at the time it was stolen. This can be a lifesaver when you rely on an automobile to get you to work.

It’s important to remember that this type of protection falls under comprehensive insurance coverage, and therefore will add more to your total premium. However, it’s definitely an added expense you may wish to consider when buying car insurance.

5. It Can Save You Money on Your Home Insurance

Bundling your auto and home insurance in most cases can save you a bit of money. Many companies offer a discount when you buy both types of insurance from the same insurer.

These discounts have a wide range, from 5 to 25%, so it pays to shop around. It’s also only a good deal if your auto insurance premium hasn’t been affected by anything that could drive the cost up. Examples of this would be accidents, poor credit, and living in a state that tends to have high car insurance costs.

Your best bet is to do your research and obtain quotes from several insurance companies to find the best-bundled deal for the coverage you need.

To see quotes from over 30 car insurance companies, check out this site.

6. It Protects Your Car’s Windshield

Over 15 million vehicle windshields are replaced annually. Most of the time it’s due to circumstances beyond the driver’s control, such as an object hitting it while driving down the highway. The chip or crack the impact causes can spread and cause a windshield to shatter.

The cost of having a windshield replaced out of pocket varies, but it’s usually between $100 and $400. However, by adding this comprehensive coverage to your car insurance policy you can save yourself a lot of money should it happen to you.

7. It Protects Against Acts of Nature

A deer darts out in front of your vehicle and strikes the front end. A tree topples over onto it during a thunderstorm. A hailstorm showers down golf ball sized pellets onto your car, making dents.

With comprehensive insurance coverage, you can help protect your car from acts of nature such as storm and animal damage, and more. It’s another benefit of ponying up for a car insurance policy.

Why is Insurance Important?

As you can see, insurance is necessary if you want to protect your vehicle investment and yourself from paying out of pocket costs in case of an accident or damage. Sure, there’s always the chance that none of these things may happen, but why take the gamble? That is why insurance is important.

If you enjoyed learning more about the benefits of having car insurance, be sure to read our other posts on car, home, and health insurance.

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