Have you ever crashed into a limousine?
Fortunately, I saw him in time to brake so no one would get hurt. And since the limo was empty except for the driver, no one missed the prom, either.
The driver and I had a friendly chat, he was quoted and his insurance company paid. And aside from a good story, the whole episode gave me a strange and surprising appreciation for car insurance.
because even in a simple car accident, without car insurance, the whole scenario could have gotten a whole lot uglier.
So why do we need auto insurance? why do states require it? (And is it worth paying for in the two states where it’s not required?) How does auto insurance protect our home and, yes, even our relationships, and why should we be happy to buy it?
Whether you’re wondering if you need to renew your policy or just curious, let’s investigate 7 reasons why you need auto insurance.
1. required by law (in all but two states)
The #1 reason you need car insurance is because, well, you have to. If you’re caught without a car insurance policy, you could face a large fine, or even jail time.
In georgia, for example, here are the penalties under state law for driving without car insurance, according to car & driver:
- First time: 60 days suspension of your license and vehicle registration, and depending on the circumstances of your arrest, up to 12 months in jail.
- 2nd time: 90-day suspension of your license and vehicle registration, an $85 fine, and an increased chance of being sent to clink by the judge.
- subsequent times: Same punishment as the second offense, plus an even higher chance of going to jail and permanently suspending your georgia driver’s license.
- virginia allows you to skip state minimums if you a) pay a $500 uninsured driver fee each time you renew your vehicle registration, or b) post a cash bond, that is, a large amount of cash to show that you can pay out of pocket for an accident.
- new hampshire also doesn’t require you to have auto insurance if you can “demonstrate that you can provide sufficient funds” to cover the costs of an at-fault accident, according to nh.gov. Fortunately, very few people have opted for the twisted logic of saying they’re “too rich to pay for insurance”: New Hampshire has one of the lowest rates of uninsured drivers in the United States at just 6.1%.
- The accident victim can’t access the funds they need, so their interest-bearing debt piles up (and pulverizes their credit score).
- the at-fault driver has to wait for the financial ax to fall when personal injury law gets involved and some ambulance chaser multiplies the compensation the victim is entitled to (and their commission) .
- The government has to spend court time, public attorneys, and tax dollars on the inevitable nasty legal battle between drivers. they also have to pay out of pocket for damage to public property, such as fences and railings.
Yes, law enforcement isn’t very forgiving of uninsured motorists.
It’s also worth mentioning that the government won’t lift your license suspension until you show proof of insurance coverage, and buying insurance with a suspended license is very expensive. SR-22 insurance, as it’s known, can cost anywhere from 150% to 400% of a regular policy.
Letting insurance companies abuse your sr-22 auto insurance coverage is the “hidden fee” of driving without insurance, and it can cost you upwards of $10,000 in additional premiums until your points expire.
not worth it!
two states where driving without insurance is… legal?
actually there are two us. states where you can legally drive without insurance.
Even if you live in these states, you’ll definitely want auto insurance for the rest of the reasons below.
2. to compensate another person for an accident you caused
The government requires auto insurance for the same reason it requires seat belts; both devices protect us from catastrophic scenarios.
Suppose you have a car accident. You tried to leave Chipotle during rush hour but didn’t see a car speeding up in the right lane, so it crashed into you. it’s an honest mistake and it happens every day.
both cars are totaled and the other driver and his passenger have neck injuries. In a world without auto insurance, your other driver and passenger could sue you for 100% of your medical bills, loss of use, motor vehicle damage, and more. he’ll be lucky if his total bill is less than $100,000.
That’s one expensive burrito, and we haven’t even factored in the costs to repair or replace your own car.
It is important to note that in a scenario where an uninsured driver causes an accident, everyone is ruined, not just the uninsured driver.
The only winners in an accident without insurance are the attorneys. everyone else loses tens, if not hundreds of thousands of dollars, and at least one person’s life is basically over.
The tragedy is that this entire situation could have been avoided if the uninsured driver had paid $1,000 for a 50/100/50 insurance policy ($50,000 bodily injury per person, $100,000 bodily injury per accident, $50,000 property damage). property).
That’s why governments require insurance.
3. to compensate you for an accident caused by someone else
On the other hand, when you get run over by someone else, you’ll be glad the government required them to have insurance.
Because if you’re hit by an uninsured driver, it can take a long, long time to get the money you’re entitled to. Meanwhile, he’s paying the bills for repairs, medical payments, and more, with his credit score and sanity at stake.
That’s why they call it liability coverage. the other driver is *responsible* for the damage to your car (property liability coverage) and your medical bills (bodily injury liability coverage).
That’s also why governments don’t require comprehensive or collision insurance; to be blunt, they don’t really care if you damage your own stuff. they just want to make sure you can cover someone else’s bills (including their own).
Still, you may want to get comprehensive and collision coverage for reason #4!