Is Car Insurance Necessary?
Driving a car is expensive. You may have a car payment, gas and then, car insurance. Car insurance pays for damages in the event of an accident. But what if you do not want to pay this precautionary expense? Should you pay for something that has not happened yet, just in case it does?
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Types of Coverage
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Auto liability coverage covers damages that you are legally responsible for. This includes damages to property and any expenses incurred as a result of someone else's medical injuries such as hospital bills, lost wages and pain and suffering. Personal injury protection also covers injury-related expenses and might also pay for expenses such as rehabilitation, replacement of services (such as child care) and funeral expenses. Collision coverage covers your vehicle if it is damaged by an object, a vehicle rollover or a collision with another vehicle. Comprehensive coverage covers damage to your vehicle caused by things out of your control such as weather damage, fire, vandalism and theft. Uninsured motorist coverage covers damages caused by a driver who does not have liability coverage. Under-insured motorist coverage covers damages caused by a driver who does not have enough liability coverage to cover the amount of damages. Rental reimbursement coverage pays for a rental car while your car is being repaired after an accident. Emergency roadside covers a tow truck if your car breaks down. Gap insurance covers the gap between the amount owed on a vehicle and the amount a vehicle is worth in the event of a total loss accident.
Insurance Laws and Policies
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Almost all states require motorists to have liability insurance. Liability insurance is the minimum amount of coverage. As of 2010, 48 out of 50 states require motorists to hold liability coverage, according to the Car Insurance Comparison website. If you are making payments on your vehicle, it is often policy for the lien holder to require you to hold full coverage. Full coverage a is general term that describes a high-coverage policy.
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States With Exceptions
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New Hampshire does not require its residents to hold liability coverage. The state may require a resident to hold coverage if he has been in an accident, been convicted of drinking and driving, had numerous reckless driving incidents or he has had a traffic violation that triggers a review. Wisconsin also does not require its residents to hold liability coverage. The residents of Wisconsin have two options---hold liability coverage or leave a $60,000 deposit with the Wisconsin Department of Transportation in the event of an accident, according to the Wisconsin Unofficial DMV Guide.
Facts and Statistics
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In 2009, reports the Insurance Information Institute, iin the U.S. for every 100 cars insured with liability coverage, there were 0.95 bodily injury claims and 3.48 property damage claims. For every 100 cars insured with collision and comprehensive coverage, there were 5.47 collision claims and 2.75 comprehensive claims. The numbers in the years 2000 through 2009 consistently show that each year, there is about a one percent rate of usage on bodily injury liability insurance; there is about a three to four percent rate of usage on property damage liability coverage; there is about a five percent rate of usage on collision coverage; and there is about a two to three percent rate of usage on comprehensive coverage.
Conclusions
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If there is a five percent usage rate on collision coverage, that means that one in 20 cars are involved in a collision claim each year. Also, almost all states require the minimum coverage. Wisconsin gives an alternative to traditional auto insurance, but the $60,000 is still a form of coverage. New Hampshire is the only state that does not have a coverage requirement. New Hampshire does not force drivers to obtain coverage until they prove themselves "irresponsible." You do not have to be drinking, driving recklessly or breaking any laws to be involved in an accident. A deer can run in front of your car, you could be hit by another driver; anything can happen at any time. It is wise to be prepared. Car insurance is a necessary expense.
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References
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