The Importance of Good Auto Coverage

Insurance is important. Everyone knows that. We need to protect ourselves in case events and circumstances take an unfortunate turn. But, why, exactly?

This lesson:

Lays out the two principal reasons why proper coverage is key

Presents statistics that reinforce the value of insurance

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Why do you need insurance?

Every insurance policy you carry is an important one, but we think that right now is an especially important time to examine your auto insurance.

Why?

Two big reasons:

  • Your bottom line. Auto insurance premiums are increasing at an average rate of close to 10% a year. Both new car prices and the number of vehicles per household are steadily rising, too. Count on the cost of your auto insurance policy to follow suit.

  • Your financial protection. One big reason auto insurance rates keep rising is the cost of liability. Large amounts of money for the injury, pain and suffering, and economic losses caused by an auto accident are more and more commonly being awarded by sympathetic juries. (And let's not forget the legal fees involved in any such suit.) If you're on the paying end of a suit or settlement, you'd better have the liability coverage to protect your assets.


These two facts taken together may make you feel like you don't have a lot of options. Auto insurance rates are going to rise, and you're going to have to keep your coverage high. You're going to have to pay more. Right?

Not necessarily. There's actually a lot of wiggle room between those two statements, and we can help you find it. We think that if you really understand a few important "principles of insurance" and put those principles into action when you design your policy, you can keep your coverage high and your costs low.

Auto Insurance Facts and Figures

Consider the following insurance statistics:

  • The average annual premium for American drivers is $786. This varies from a low of $558 in Iowa to a high of $1146 for Drivers in New Jersey.

  • The cost of the average disabling injury caused by an auto accident is $35,000.

  • The average cost of an auto accident resulting in one death is over a million dollars.


So, auto insurance is expensive, but not nearly as expensive as the unlucky events it protects you from. It's a wise and reasonable trade-off.

But that doesn't mean you should just pay any old premium you're quoted. We think that, instead, you're entitled to a reasonable price for coverage that you understand and value.


Next: Lesson 2: The Basics of Auto Insurance.

Want to learn even more?

Take our quick auto insurance course, and learn the step-by-step to get the most out of your auto insurance policy for the least amount money.

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