Why Should You Buy Auto Insurance?

Insurance is based on the theory that it is unlikely most drivers will be involved in accidents. The premiums paid by all drivers during the year are used to pay for the losses of the few drivers who have accidents. When you buy insurance, you receive financial protection in case you become involved in an accident. You also make sure that a person injured through your fault will recover for losses you cause.

For example, if you are in an auto accident, you may be found responsible for the losses of the other people involved. A claim may be made or a lawsuit filed against you, and you may have to pay not only for the property damage but also for the medical expenses, lost wages, and pain and suffering of any injured person. The amount of money you may have to pay could be substantial.

If you don’t have insurance, anything of value that you own, including your home, savings, future wages, and other assets, may be taken to pay for those losses. Auto liability insurance can help protect you so that this doesn’t happen. Liability insurance also pays for an attorney to defend you against any claim or lawsuit that may be payable under the policy.

You can also buy insurance to cover damages to your auto. This optional coverage will help pay for your losses whether or not you were at fault.

Components of Auto Insurance

There are many components of auto insurance including mandatory and optional coverage. Your policy must contain three major parts—liability insurance for bodily injury, liability insurance for property damage and uninsured motorist coverage. Optional coverage includes underinsured motorist, medical expense coverage, collision and comprehensive coverage.