Why do I need automobile insurance?

The obvious answer to that question in the United States is very simple. It is the law! If you own a vehicle that is being driven by someone, even if it is not you, the vehicle must be insured. The main reason for the law is to guard against drivers causing injury to others and having no reasonable means to compensate the injured party financially.  There are over 100,000 car accidents each day, according to Kiplingers.com, making auto insurance a necessary evil.

An auto insurance policy is a contract between you and an insurance company.  You agree to pay the cost of the insurance policy, called a premium, and to obey the insurance company’s stated rules.  In return, the insurance company agrees to pay for certain expenses associated with an accident or other covered losses.

In its simplest sense, auto insurance is smart planning — planning that can help protect you from expensive, sometimes devastating surprises.

Think of auto insurance as part of your total financial plan; a powerful tool that can help:

• Safeguard the investment you've made in your car
• Pay for medical bills after an accident
• Shield you from the costly damages of an accident-related lawsuit
• Guard the valuable assets you've worked hard to collect (such as your home, retirement funds, stock or bond investments, etc.)
• Protect you from uninsured or under-insured motorists
• Pay for damage repairs due to theft, vandalism, or natural disasters; and, of course,
• Strengthen your peace of mind, every time you take to the road.
  
  

It's important to keep in mind, though, that not all policies (or insurance carriers) are alike. Make sure you understand the details of your unique situation — including what you need to protect, and how each auto insurance coverage option applies or doesn't apply to your situation.