Advantages and Disadvantages of Auto Insurance
In the world of today it’s extremely difficult to predict what will happen in the next minute, most people try their very best to be careful with the ways in which they can be protected.
Notwithstanding no matter how it comes, whether the protection comes through a response that one buys such as insurance policies (life, health, auto, home) or something as simple as safety precautions like putting your seatbelt on every time you get into the car, locking your door every time you leave your home and maintaining the speed limit as specified.
We as a society always try to protect ourselves from the unexpected, and because of this auto insurance is extremely important.
From the website Driver Knowledge, there are approximately six million car accidents per year and approximately 3 million people are injured and about 90 people die in accidents everyday.
With numbers like these, it is important to make sure that you have some sort of backup plan if something were to happen to you or to the passengers in your car. So when it comes to your auto insurance plan, it is important to look at all aspects of it and make sure that you can talk to someone who can easily break it down for you.
So why exactly do you need auto insurance? Auto Insurance is mandatory in 49 out of 50 states, and each state has their own “mandatory minimum” qualifications for your auto plan. In the state of New Hampshire, the only state that does not require auto insurance by law, you would need to have financial records that show you can be held financially responsible if you were at-fault during a collusion of some sort.
“And even though each state requires their own mandatory minimum, while traveling to different states, the driver is protected by Article IV, Section 2, Clause 1 of the constitution. Article IV states that no other U.S. state can treat other citizens [of a different U.S. state] in a discriminatory manner of any sort.
“So in this case, the state of Pennsylvania could not punish someone from the state of New Hampshire for not having auto insurance.
Also, if you were to ever get caught driving without being insured, you could receive six to eight penalty points on your license and you could be fines or disqualified from driving. The main point for car insurance is to be able to be held liable if you cause any sort of property damage or bodily damage; you do not need to have insurance for vehicle damage if you do not want to, but it is definitely a great thing to have.
“But of course this varies from state to state. Auto Insurance provides property, liability and medical coverage. The property coverage on your car covers if your car becomes damaged and even if it gets stolen. Liability coverage is the legal responsibility of others for bodily injury and/or any property damage that has occurred. Last, but not least, auto insurance also includes medical coverage, which treats injuries, rehabilitation and sometimes even lost wages, and if worse comes to worse, it can also cover funeral expenses.
“But this also depends on how much coverage you have. The amount of coverage that you have will determine the amount of money you could receive to put towards either medical bills, or car repairs, or even a car replacement.
As a result of high traffic complications, there is bound to be car accidents. Evidence and statistics have shown that accidents occur as a result of over speeding and many cars in in the road and streets. When accidents occur, it is almost difficult most times for the individual to bear the cost of repairing or replacing the vehicle solely.The best way to avoid a car and personal expenses involved with the accident is to have an insurance policy . It is also helpful because it has a lot of advantages to have insurance.
There are some advantages of having a car insurance. Assured for financial liability
It is always a great problem to fix accidental damages when accidents occur. To avoid paying through the nose when ones car is involved in an accident, then it is advisable to choose the best car insurance policy. It is always the right option to cushion the effect of huge colossal damage costs that comes from accident through insurance.
Assured of repairs and replacement
A good car insurance company with reputation is a sure way that the insurer will be doubly sure that the insurer will get a fair deal for his vehicle that is involved in an accident.
The severity of damage and other factors such as who was at fault , mental status of the driver, etc will help the insurance company to conclude whether to repair or replace the spare parts or otherwise. Car insurance policy saves your vehicle for these denoted car damages.
This rainy season might cause more damage to ones vehicle as a result of slippery roads, bumpy and patchy roads. Slippery roads can cause accident due to blurred vision or over speeding, This patched road affects the mechanical parts of one’s vehicle. All these will be put into consideration by the insurance company..
Any car owner is suppose to have a liability assurance for their new owned car, therefore , it is very to have the right insurance policy that will protect one from any kind of legal clause..
There can be a case of severe damage or injury to driver or passenger, it will be very heavy for an individual to bear the heavy medical expenses. Having an insurance cover is a surest way to tackle the medical expenses that will be accrued from it. Insurance helps to cover or support the financial expenses.
Covers driver and passenger liability
If there happens to be any kind of damage to driver and/or passengers in case of accidents, your insurance policy takes care of the damage expenses.
Having known all these, one can drive on roads without any stress due to some of these incentives involved in the car insurance policy. However this is not an opportunity to be reckless while driving hoping on the clauses in the insurance policy. The advantages of car insurance premium enormous.
Disadvantages of Car Insurance
Securing insurance for your car could feel like an extra expenses . That seems like a drawback of auto insurance to some people. There are also numerous other disadvantages of car insurance that does not seem very obvious at first but with time it causes some kind of unfairness and stress for a lot of people.
Below is a compiled comprehensive list of some disadvantages of car insurance, that have caused a negative effect on the auto insurance industry, and led to some people shying away from insurance. Even those patronizing insurance companies are doing it not willingly but because it has been made a law.
Disadvantages of Car Insurance
1. One Might Have to Pay a Certain Amount to Get Claim, Even After Paying Insurance Premiums as Required.
Most times, car owners are asked to pay a deductible amount. This amount is to be paid of his/her pocket before the auto-insurance company leverage in their damage claims. Depending on how severe the damage incurred is in monetary value, this deductible amount varies.
Normally,, this deductible amount is extrapolated as at the time when the car owner is securing the car insurance. Hence, the amount of is determined depending on the level or the magnitude of risk that the insurance company can forecast. The lower the deductible amount, the higher the monthly insurance premium.
Though , rationally it makes sense to have a shared ownership of the risk connected with the damages to avoid careless and distracted driving; as this will be a source of caution to the driver. However, this is one of the leading negative effects of car insurance because incurring damages will still make the owner to make some expenses.
2. You Might Forfeit Claiming Your Damages from Your Car Insurance Company
Car insurance assures drivers and third-party’s a safe landing if they were to get involved in an accident. However, lets examine this scenario; let’s assume that you are a great, and a safe driver, and you have never gotten into an accident for the last 10 years that you have been driving .
In this scenario, you must have paid heavily to your insurance company over the last 10 years, but never needed to claim any damages. This becomes a kind of disadvantage to you because the car insurance c ompany is not liable to give you anything back.
Now take a look at this another scenario; You are a great driver, but apart from minor bumps, patches and scratches, you have never incurred damages to your car beyond the deductible amount in the cost of repairs. In this situation too, the auto-insurance company is not liable to pay you anything for your repairs.
This also is a disadvantage of buying car insurance .In addition to paying large premiums to the insurance company for years, the cost of minor damages and repairs comes from the pocket of the driver. Most people see this as unfair.
However, recently there have been new emerging policies where some insurance companies now offer discounts on the premiums to good and accident-free driving behaviors.
3. Fake Promises Causes Major Disadvantages of Car Insurance for Common People
Most times people sign-up with car-insurance companies without first researching anything about their services. Whether they are a reputable company. And this often leads to a bad outcome. Because there are so many conditional elements in the content of an insurance company’s contract, which most times are really very confusing for common people to understand the legal nature of the contract and its interpretation.
This creates avenue for many fraudulent insurance companies to try and not pay the respective damages in times of need. This is because these fraudulent companies try to save money by not taking up their responsibilities of paying their dues and coming up with flimsy excuses just to evade the payment.
Not everyone is a legal expert, hence many are liable to get into these traps. This is the reason why it is always recommended to do proper research before signing up with any auto insurance company. And note also, that insurance companies with cheap premiums are not always good. In the event of an accident, calamity, or crises, dealing with an irresponsible and fraudulent insurance company is probably the last thing you would want to deal with.
Most insurance companies are in the business of making money, not really to protect people. That’s something you should remember.
4. The Car Insurance Company You Sign Up With Might Not Cover All Kinds of Damages.
This is one of those sneaky disadvantages of car insurance. Most times, if you take your cars for repairs and submit a quote from the car repair shop to your insurance company, your insurance company might turn around and say that they can not cover this part of your car, because it is not part of their policy. Or they might decide to dodge to cover a specific part of your damaged car, that needs to be imported from another country.
These kind of claims by insurance companies to dodge expenditure even though premiums where paid are very frustrating and really angers many customers. Experiences like these really piss car insurance customers off, because, at the time of selling the policy, these companies make all kinds of promises.
5. Car Insurance Are Very Costly
All Car insurance premiums are an additional expenses in addition to the the existing costs of maintaining a car, and it does make the decision to buy a car difficult for many people. Depending on the area where you live, having a car might be a necessity.
And in that situation, if a person is not able to afford a car due to expensive insurance premiums – that’s quite unfortunate, and a disadvantage of car insurance.
For instance in Canada, if you are a new driver with a G2 license. Insurance can cost over $6,000 to $8,000 dollars a year. This is really outrageous and discouraging because many new drivers will not be able to afford that amount to practice driving in Ontario in order to get a G License if they can’t afford a car.
This amount is almost more than the cost of getting a used car in Ontario in most cases.
6. Hidden Costs for Extra Services that You Might Not Need
The normal quotes that you receive from your car insurance company often includes extra services such as road-side assistance, insurance for riders, vehicle break-downs and a lot of different services.
These services and overages do not come free. They come at a cost, and it is advisable to really understand in details of what and what you may need or may not need.
It is very important to remove some coverage for line items that are not needed as this will help in cutting down the cost the premiums considerably.
Also, if you are looking to cover just the essential damages, then over-marketed comprehensive coverage are not needed. What you need is just the basic collision coverage.
7. Insurance Companies Take Longer Time to Pay the Claims
Because of the time that insurance companies take to verify the claims, before paying , this process usually causes a serious delay in transferring payments to their customers bank account.
This is more of an inconvenience than a disadvantage of car insurance.
8. Terms and Conditions of Payment Could Be a Disadvantage of Your Car Insurance Company
There are some insurance companies that do deny to pay the claim until the repairs are complete. This can lead to frustration as a result the delays or disagreement between repair shops and your delivery timelines mainly due to a conflict.
This is why it is important to read reviews and payment terms for claims before signing the agreement paper with your auto insurance company. In some cases, it may take the insurance company several weeks to pay out one’s claim.
9. The Insurance Company Might Reject a Quote from Your Repair Shop
This rarely happens but an auto insurance company could turn around to reject the quote that your car repairer gave you. This can be very frustrating and is considered to be one of the major disadvantages of car insurance for drivers. This usually happens when the insurance company tries to recognize and engage only a network of repair partners and reject those that are outside the recognized network.
This can be attributed to a long term business relationships or trusted networks to ensure that their payouts is under control.
10. Busy Area Attracts Higher Premium
Insurance companies do base their premiums calculation on assumed risk. One living downtown is expected to pay a higher premium than one living in a suburban area. That’s because the person that resides in downtown has a higher risk of getting into a collision, due to the increased number of cars and pedestrians in that area.
This is considered unfair and a disadvantages of car insurance for someone who likes to live in busy areas.
11. Cheap Older Car cost More to Insure
Older cars have high probability of breaking down or visiting a repair shop. Hence, it is usually very costly to insure an older car versus a newer car. The more chances your car has of breaking down, the higher the premium an insurance company will charge. For instance, a car manufactured in 2000 will have higher cost than a car manufactured in 2018.
12. Some Insurance Policies Are Tied To a Dealer
Many auto dealers these days do try to club insurance policies as a package with the cars they sell. They also do sell car repair insurance policies at prices that seem to be fair in comparison.
It is advisable to be extra careful when signing up for deals because they want to get you glued to their own repair services. You might pay lesser premium but when your car is in need of repairs, they will charge you at a very alarming cost.
Also, because these are small companies, you never can tell when they may go down with bankruptcy, and take your premiums along without giving you any dime in return.
And again, always read thoroughly before putting down your signature in any auto insurance policy.
13. Car Insurance Does Not Cover Wear and Tear
For emphatic purpose, a car insurance only covers the car owner from some kind of damage. It would have been fair if after paying high premiums and not getting involved in an accident for a long period of time, some part of the premium should have been allocated to wear and tear of your car. But unfortunately, it is not done that way.
This is not really a disadvantage, but an opportunity that an insurance company may start operating a highly competitive insurance market.
14. Mistrust and Lack of Credibility on Car Insurance Companies
There is lack of trust on insurance companies. And these are due to past experiences. There is a major mistrust on a lot insurance companies these days. This lack of credibility and mistrust are the most disappointing disadvantages of car insurance.
Conclusion: Are There Only Disadvantages to Having Car Insurance?
These disadvantages of car insurance are subjective. Some people that pays high premiums gets a sense of security from it. But to some who can’t afford it, it becomes unreasonable.
Car insurance is important in today’s world. It is obvious that we cannot live without it. There are numerous benefits to having car insurance and it’s not evil at all .However, lack of credibility in the insurance industry has created a web of mistrust that now seems impossible to regain the good reputation why insurance business was instituted.
Unless insurance companies bring transparency back, with the increasing digital demands of consumers, it will be very hard for insurance companies to gain back the consumers’ trust again.