Let me get to the point; auto insurance is not very exciting stuff, until life hit you with the unexpected (as it so often does on the road). That is exactly when auto insurance comes to the rescue, as your forgotten superhero. A fender-bend? Covered. A windshield broken by that errant pebble of the road? Well taken care of. Your car is side-swiped with your presence missing after the action happens? Yep, that gets coverage also, as long as you are insured.
In its simplest meaning, auto insurance is a legal agreement between you and your insurer. At an extra cost, you get promises of having yourself insured against this kind of losses. But the interesting part is this, it is anything but simple.
Third-party liability: It is compulsory most of the time. It insures lose or harm that you cause to others. Nor the car, nor the injuries, but theirs.
All inclusive insurance: Consider this the latter options. It deals with theft, natural disasters, a fire and even that bizarre blot on the forehead that must have come out during the previous night.
Collision insurance: This one comes in when you hit something (or get hit by something) and it is another car, and it matters not whether you are at fault or not.
Personal injury protection (PIP) or medical payments coverage- Hospital bills never wait and neither should you.
So, now, a common misconception that most people fall into is that cheapest is not always best.
Of course, cheap premiums are tempting. who does not like saving money? Or should someone be there when you need him, and the policy you bought is less than useless–was it any kind of a deal? Striking the right balance between cost and coverage is an art and not science. It will depend on how you drive, the age of your car, where you may live and even on your past driving record.
Have you ever asked yourself why two individuals having similar cars are charged a different rate? Hello and welcome to the underwriting world of statistics, algorithms and some mystery. All the details enter into the equation: age, credit score, driving record, zip code. Fair? Maybe. Complex? Definitely.
But here is the human element in it.
Insurance is not paper, nor pixels. It is a peace of mind. It is assurance that when the other things in life do not happen the way they should and the green traffic light turns red in favor of the other person, your wallet will not be broken.
The next time you read through your policy quickly or you are surfing the internet trying to get quotes, pause. Check the small prints. Ask questions. Be a smart consumer. Since in the auto insurance world what you do not know can definitely hurt you.
And luckily? You will not find a use of it. However, being smart you will prepare.