Do I Need Auto Insurance?

For many people, the car is the primary mode of transportation. Transportation by car has become so ingrained in our society that with rising oil prices, we complain, but still pay.

Cars don't come cheap either. A car is a major investment, and like all major investments, you need to protect it. You wouldn't want to invest $15,000 into a car only to get into an accident a week later. You might owe money for damages and have nothing to show for all that money spent except a totaled car.

Auto insurance protects you and your car from the dangers of the road. An estimated 6 million car accidents occur every year in the United States, and unfortunately, many of those involved in car accidents are uninsured by auto insurance companies.

While car insurance rates can get expensive, you can take measures to decrease your premium; shop around, drive safely, keep your credit rating high, and keep driving!

The Importance of Car Insurance

When you hear the word insurance, the words boring and mundane probably enter your mind. I realize that insurance is not a fun topic to discuss or think about, yet it is important and serves to protect your financial future. It is comforting to think that nothing will ever happen to you and that you are invincible. But odds are that you are likely to get into a car accident or have some type of health problem at some point in your life, and when that happens, you will want to have insurance. So when you question whether you need insurance, the answer is a resounding yes, you definitely need insurance.

It may seem like insurance is a waste of resources- spending money on something that may or may not happen. Since you cannot predict the future, it is important to protect yourself and your possessions against damage and harm. Insurance is all about protection- it protects you against an unfortunate incident such as a car accident, a robbery, or an illness. The moment an unexpected ill-fated event happens, you will be so glad you have insurance. Medical bills from a minor accident can deplete your savings and force you into bankruptcy. Insurance is not a rip off, but rather an essential financial service.

I recognize, however, that insurance can be tedious, stressful, and mind boggling-- trying to figure out what you need, what you don't need, and how much you need. Basically, there are four areas that most people are concerned about insuring: their life, their health, their possessions, and their finances. When deciding on what type of insurance you need, you must first ask yourself some basic questions. What is most valuable to you? Your health? Your car? Your material possessions? If you die what would the financial result be? Are you supporting any dependents such as a child or other family member? Most of you probably do not support dependents, so life insurance is not necessary. What type of health are you in? Would you be able to support yourself if you became sick or disabled? For most people, the answer is no, so you probably need to buy disability insurance. What would happen if you got sick? Can you afford to go to the doctor without health insurance? Health insurance is something you simply must have. Most employers offer health insurance to employees at reasonable rates, so definitely choose a health insurance plan that your employer offers.

Do you own a home? If not, then homeowner's insurance is not needed. Do you rent an apartment? If so, you probably need renter's insurance, which is the equivalent to homeowners for those who rent instead of own. A common myth is that your landlord's insurance covers you. That is false. You landlord's insurance only covers the dwelling - not your personal belongings. Renter's insurance covers all of your possessions- your tv, dvd player, stereo, skis, bike, furniture, etc. You may think that you really don't own that much stuff and that renter's insurance is a waste of money, but you probably own more than you realize. Take your CD collection for example. Imagine how much your CD collection is worth if CDs cost an average of $10 per CD? Thousands! So once you add the price of everything you own, it adds up to a lot! And protection is worldwide - if your clothes are stolen while you are on vacation in the Bahamas, you're covered.